Permalink Submitted by mk foss on Tue, 2008-12-16 17:30
There isn’t any specific insurance for IRAs. If they’re invested in CDs or savings accounts, the FDIC has a $250k limit.
Brokerage firms have some sort of insurance but you’d have to check with the broker as to how much coverage any one account would have with a fraud of this size.
There is no income tax relief, capital losses and theft losses occuring in a retirement plan simply reduce the funds available for further benefits.
When individuals are able to make some recovery from a broker or a class action lawsuit, there is a question of whether the funds can be rolled back into an IRA. There are some PLRs that say yes.
Permalink Submitted by Alan Spross on Wed, 2008-12-17 00:28
If the actual IRA custodian was deemed to have stolen funds through certain acts of misappropriation (eg ponzi scheme), and if that custodian had SIPC protection, there would be a source of recovery. In addition, some custodians carry excess liability limits from private insurers above the basic SIPC limt which I believe is 500,000.
However, if you just selected the bad investment on your own, about all you can hope for is class action recovery, which usually amounts to only pennies on the dollar. Legal costs absorb the lions share of these settlements.
Permalink Submitted by mk foss on Tue, 2008-12-16 17:30
There isn’t any specific insurance for IRAs. If they’re invested in CDs or savings accounts, the FDIC has a $250k limit.
Brokerage firms have some sort of insurance but you’d have to check with the broker as to how much coverage any one account would have with a fraud of this size.
There is no income tax relief, capital losses and theft losses occuring in a retirement plan simply reduce the funds available for further benefits.
When individuals are able to make some recovery from a broker or a class action lawsuit, there is a question of whether the funds can be rolled back into an IRA. There are some PLRs that say yes.
Good luck!
Permalink Submitted by Bruce Steiner on Tue, 2008-12-16 23:11
I wrote an article for Trusts & Estates in August 2007 on the rulings allowing the recovery to be put back in the IRA: http://www.kkwc.com/docs/T&E_Wealth_Watch_News_August_2007.pdf
Permalink Submitted by Alan Spross on Wed, 2008-12-17 00:28
If the actual IRA custodian was deemed to have stolen funds through certain acts of misappropriation (eg ponzi scheme), and if that custodian had SIPC protection, there would be a source of recovery. In addition, some custodians carry excess liability limits from private insurers above the basic SIPC limt which I believe is 500,000.
However, if you just selected the bad investment on your own, about all you can hope for is class action recovery, which usually amounts to only pennies on the dollar. Legal costs absorb the lions share of these settlements.