Retirement investors are targeted by fraudsters who encourage them to move funds from a traditional 401(k) into a self-directed IRA and then use those funds to purchase expensive, difficult-to-value precious-metal coins. These transactions are often promoted as a way to protect principal and preserve a retirement nest egg, but excessive markups can cause investors to suffer immediate and substantial losses.
In this video, the U.S. Commodity Futures Trading Commission explains how these so-called “401(k) rollover scams” operate, why self-directed IRAs can leave investors without the protection of a fiduciary or trusted intermediary, and how elderly investors may be particularly vulnerable. The CFTC describes cases in which consumers discovered that their retirement accounts had lost 40%, 50%, or even 60% of their value after purchasing overpriced coins.