Consumer Alert: Self-Directed IRAs

Tallahassee, Fla. – Individual retirement accounts (IRAs) are an important piece of your retirement planning. Self-directed IRAs have become a popular choice for those looking to supplement their nest egg. While most IRAs invest your money in stocks, bonds, mutual funds, etc., which are registered with regulatory organizations, a self-directed IRA allows the owner more control over where the money is invested, including unregistered investments. Typically, people invest in real estate, private placements, etc., though increasingly, self-directed IRA owners are investing in cryptocurrencies. The Florida Office of Financial Regulation, together with Chief Financial Officer Jimmy Patronis, are encouraging Floridians to be extremely cautious when choosing to invest in cryptocurrencies through a self-directed IRA.

Interim Commissioner Pamela Epting said, “The Florida Office of Financial Regulation is committed to protecting Floridians from financial fraud. Verify the financial services individual, company or investment with us online at  www.flofr.gov or by calling (850) 487-9687.”

Chief Financial Officer Jimmy Patronis said, “Consumers should always do their homework before investing their hard-earned money, no matter how enticing the possibility may sound. Florida is a top state for cryptocurrency and unfortunately, fraud. It’s my job to make sure we do everything possible to protect you from being taken advantage of. Always verify before you buy and remember if it sounds too good to be true, it probably is.”

Protect yourself by doing your homework on retirement accounts and investments before committing to a decision.

• Make sure that the company or investment is properly registered or licensed. Investments in cryptocurrencies are subject to little or no regulatory oversight, and reliant upon unregulated companies. Before you choose an unregistered investment, be sure you can independently verify all the information provided.
• Talk to multiple professionals beforehand, and find someone who aligns with your priorities. Even with a self-directed IRA, you may choose to speak with a licensed professional to help determine the suitability of investments. Cryptocurrencies are highly volatile, vulnerable to cyber hacks and susceptible to fraud or theft, making them unsuitable for most investors.
• Stay away from unsolicited offers, high pressure sales tactics, or offers that sound too good to be true.
• Get everything in writing, and read the written agreement carefully and completely before signing it. Ask questions if there is something you don’t understand.
• Don’t let yourself be rushed, take the time you need to make an informed decision.

The Florida Office of Financial Regulation offers Floridians a robust online collection of  Consumer Resources, where you can find more information on several financial topics, including tips on how to protect yourself from potential scams.