You know that latest investment you were sold on the basis that it is “IRS-approved”? Or maybe that vendor who offered you a so-called “IRS-approved” checkbook IRA? Well, my friends… they’re lying to you, and I’ve got the evidence for you right now. I’m Bryan Ellis. This is episode #277 of Self-Directed Investor Talk.
Today, my friends, we address an issue that’s a bit of a hot-button for me: All of those providers of investments and of certain types of self-directed IRA’s who claim that their offers are “IRS-approved”. Well, they’re lying to you, rather blatantly, and I think it’s time you know.
Today’s show page can be found at SelfDirected.org/277.
My friends, it falls to me to call out the BS in our industry. I wish somebody else would do it, but I guess this is part of the unsavory part of being the voice of the Self-Directed Investor Revolution, so I nevertheless gracefully accept the responsibility hehehehe
So here’s the deal…
There are a lot of people who throw around the term “IRS-approved” for the things that they offer that are IRA-related.
Whenever that statement is made with regards to any investment asset, it’s blatant lie. Or for those of you who prefer a watered-down term… a “misrepresentation”. Ahem.
There is one exception to this. OH WAIT. Nope, not a single exception to the rule that the IRS doesn’t approve investments for your IRA. NOT ONE SINGLE EXCEPTION.
As usual, you need not merely believe me, even though there’s really not much left to be said about a subject after I speak my piece on the matter hehehehe
Nevertheless, you need not believe me on this matter because I’ll point you to precisely where the IRS made an unambiguous statement on the matter quite recently, just last week, on September 19, 2017.
They did so in the form of a document that they titled:
“An Important Message for Taxpayers with IRAs: The IRS Does Not Approve IRA Investments”
Hehehehehe. That’s pretty clear, wouldn’t you say. It gets better still though… and if you’d like to see that publication, it’s available for you on today’s show page at SelfDirected.org/277.
Now I hate to just read anything to you during this show for fear it will be dull. But I think you’ll find what I’m about to read to you quite interesting, particularly since, immediately thereafter, I’m going to show you two current – as in online right this very moment – examples of people who should know better making what the IRS considers to be “fraudulent IRS-approved sales pitches”.
So here goes, just a bit from this interesting notice:
Here is an Example of a Fraudulent “IRA Approved” Sales Pitch
“This investment has been approved for your IRA. You can use your IRA for this investment by filling out the forms in the attached information package, and our agent will take care of the rest. This has been reviewed by the government (or IRS). This investment is so safe you can use it for your IRA. Only certain investments are approved for IRAs.”
Our pals at the IRS go on to say this about such sales pitches:
We urge you to carefully consider the soundness of your IRA investments and to be aware of the current tax rules for IRAs.
Yeah… that would be wise advice, to consider the soundness of the IRA investment if the promoter is make a bald-face lie as part of the promotion.
But surely nobody actually does this, right? Surely!
Wrong-o, my friends.
First up, we have the venerable InvestOpedia.com.
While this isn’t the only article with absolutely false content about this topic on Investopedia, this particular article – which I’ve linked on today’s show page at SelfDirected.org/277 – is one of the most egregious.
The title of the article is: “This is the First Bitcoin IRA Approved by the IRS”.
Bitcoin, of course, being the wildly volatile cryptocurrency that’s getting a lot of press – both positive and negative – and is still in its infancy.
Note that the issue here isn’t bitcoin. It’s the statement about bitcoin as an approved IRA investment.
I remind you that the IRS describes as fraudulent anything that says: “This investment has been approved for your IRA”. And there’s Investopedia, saying rather blatantly, “This is the first bitcoin IRA approved by the IRS.”
Not good if you’re Investopedia. The IRS says that what they’re saying is fraudulent, even though the author of the article Adam Hayes, is a Cornell-educated CFA charterholder and former floor trader at the Chicago Mercantile Exchange. I guess having all of the conventional credentials doesn’t mean you’re actually right, does it?
Next Up: The company known as Bitcoin IRA. Right there on their home page, right below the “start investing” button are these words: “IRS-approved.”
Hmmm… These guys really ought to know better. Really, what they’re doing, is that they’re relying on that article in Investopedia for plausible deniability. They’re also, according to their COO Chris Kline, who I interviewed about this, suggesting that since Bitcoin isn’t explicitly prohibited by the IRS, that it is therefore approved.
Well… not so much. Not at all, in fact.
So here’s the thing, folks. The IRS is doing you a favor by reminding you that they don’t approve investments. They don’t approve my investments, your investments or anybody else’ investments.
The way the IRS works is that they issue guidance about what is NOT allowed, but not so much what IS allowed. We can say conclusively, for example, that the IRS does NOT approve the purchase of stamps or life insurance or art or antiques in your IRA because all of that is explicitly stated by the IRS as being prohibited.
But nowhere will you find the IRS explicitly saying: “Yes, you can buy LLC’s in your IRA” or “Yes, you can buy Bitcoin or real estate or tax liens in your IRA”… even though there’s overwhelming evidence that those types of investments do not conflict with the IRS’ prohibitions.
So what’s the lesson to learn here?
The lesson is that you should think twice about doing business with anybody who claims to have the IRS’ blessing for whatever investment they’re offering you. Because they’re lying to you… and if they’re lying to you about that, what else are they lying about?
Hey, what do you think about this? I, for example, don’t think that the people over at Bitcoin IRA are charlatans or anything like that… I think they’re a brand new company who hasn’t received good legal advice about their marketing.
But I’d love to know what you think. Will it give you pause next time you see somebody claiming to offer an IRS-approved investment? Have you seen this claim before? From whom? Let us know in the discussion area over at SelfDirected.org/277… we’d all LOVE to hear from you!
My friends… invest wisely today, and live well forever!
Links & Resources
- This is Episode #277 of Self-Directed Investor Talk
- IRS Notice: The IRS Does Not Approve IRA Investments
- Investopedia Article that is, per the IRS, fraudulent
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