Some investment promoters are trying a new tack this spring, touting their Individual Retirement Accounts (IRAs) as being approved by the Internal Revenue Service. Apparently some people are getting sucked in by the ads, or at least the government is afraid people won't know the ads are hype. On Wednesday the Federal Trade Commission (FTC) issued a consumer alert warning the public that there's no such thing as an "IRS-Approved" IRA.
Technically, every IRA is IRS-approved, in that to be an IRA, an investment account has to meet certain standards promulgated by the IRS. But the IRS isn't in the business of putting its stamp of approval on some IRAs as being better investments than others. The promoters of these approved IRAs are engaging in fraudulent advertising according to the FTC.
"The fraudulent promoters are trying to take advantage of consumers who may be confused about the role of the IRS when it comes to IRAs," says the FTC.
If you're looking for approval of an IRA before deciding to make an investment, the FTC recommends you check with your state securities regulator to make sure the IRA and the account administrator are registered with the state. The phone number for your state securities regulator can be found in the government pages of your telephone book or by calling your state government switchboard. Or, you can find the address and telephone number of your state securities regulator at the NASD Website.