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SEC Alert on Self-Directed IRAs

Self-directed IRAs can hold a variety of nontraditional/alternative assets - real estate, precious metals, commodities, collectibles, cryptos, private placement securities, etc. These types of investments may be unregistered (with the SEC, etc), illiquid; may have limited disclosures, withdrawal restrictions, stale or book value prices (plus markups), unreasonable but meaningless guarantees. The main point of this Alert is that for regular IRAs, the custodian firms/sponsors have some restrictions and safeguards, but for self-directed IRAs, they have none, and they are basically the asset holders and administrators. This allows some bad operators (many are unlicensed promoters) to exploit customers, and customers may have limited or no recourses. The self-directed IRA custodian could even be fake; fees/ERs may be high. Some fraudsters may hide behind the complex rules for IRAs.
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