Taxpayers
With IRAs: FYI: The IRS Does Not Approve IRA
Investments
Washington,
D.C. Investors with
Individual Retirement Arrangements (IRAs) should be on the lookout for ads and
solicitations that claim that certain types of investments for IRAs are
"IRS-Approved" or "IRA-Approved." The government says these ads are
misleading, because the IRS does not approve investments for IRAs.
According to the Federal Trade Commission, the Securities
and Exchange Commission, and the North American Securities Administrators Association,
investors are getting misleading sales pitches for specific IRA investments via the
telephone, the mail and the Internet. Most solicitations are variations on this theme:
"This investment has been approved for your IRA.
You can use your IRA for this investment by filling out the forms in the attached
information package. Our agent will take care of the rest. This has been reviewed by the
government (or the IRS). This investment is so safe you can use it for your IRA. Only
certain investments are approved for IRAs."
The agencies say that fraudulent promoters are trying to
take advantage of consumers who may be confused about the role of the IRS when it comes to
IRAs. The IRS issues letters to IRA sponsors, trustees and custodians certifying that they
are complying with requirements concerning investor rights, account administration, and
standards that allow contributions to be deductible. But the IRS does not:
- review or approve investments;
- advise people on how to invest their IRAs;
- endorse any investments; or
- issue statements that an investment in an IRA is protected
because the IRS has approved a particular trustee or custodian.
Before you invest, check with your state securities
regulator to make sure the investment and person selling it are registered. You can find
the phone number for your state securities regulator in the blue pages of the phone book.
For questions or complaints about claims for IRA
investment opportunities made through telephone, mail or online promotions, the Securities and Exchange Commission (1-800-SEC-0330), or the
North American Securities Administrators Association
(202-737-0900).
The FTC works for the consumer to
prevent fraudulent, deceptive and unfair business practices in the
marketplace and to provide information to help consumers spot, stop and
avoid them. To file a
complaint or to get free information
on consumer issues, visit
www.ftc.gov or
call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The
FTC enters Internet, telemarketing, identity theft and other fraud-related
complaints into
Consumer Sentinel, a
secure, online database available to hundreds of civil and criminal law
enforcement agencies in the U.S. and abroad.
|
FEDERAL TRADE COMMISSION |
FOR THE CONSUMER |
1-877-FTC-HELP |
www.ftc.gov |
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For
information about setting up, contributing to, and deductions for an IRA, contact
1-800-TAX-3676 and ask for the free IRS Publication 590, "Individual Retirement
Arrangements (IRAs)."
August 1998