Self-Directed IRA Investing

On March 25th through the 27th, the Retirement Industry Trust Association (RITA) held its annual Washington, D.C., conference at the Mayflower Hotel.  The theme of the conference was “Best Practices”, and speakers included representatives from the Treasury Department, Department of Labor, IRS, SEC (Enforcement and Risk/Fin), the North American Securities Administrators Association (NASAA), American Bankers Association, AARP, the Senate Finance Committee, and the Health, Education, Labor and Pension (HELP) Committee from Congress, among others.

As a result, attendees were hearing directly from Government regulatory and legislative groups about the latest directions on retirement issues.  Among the highlights were:

-Continued interest in passing an Automatic IRA vehicle for those employees whose companies don’t sponsor a pension plan (to encourage more savings)

-Interest in creating a GIAP or Guaranteed Income Annuity Product that would provide a minimum amount of guarantee income for people at age 80, and which could be funded by up to 15% of the individuals pension plan (e.g., 401(k))

-Potential concern over the possibility that Roth IRA tax-free features might be tweaked to help address the Federal deficit

-Potential concern that the contribution limits for IRAs and 401(k)s might be lowered to reduce the deductible amount or that the amount of deduction will be lowered to help with the deficit

-Concern that 30% of Americans over age 30 have no savings and that the majority of all Americans have insufficent savings for retirement

-Regulatory concern over fraud associated with real estate schemes, prommisory notes, viaticals and life settlements, affinity fraud, oil and gas investments, precious metal and gold investments, free lunch promotions, and offers with exaggerated returns and bogus credentials

In addition, RITA members were able to interract with regulators during a panel aimed at addressing fraud in the financial markets, and to learn about the latest techniques and issues related to fraud prevention and detection

Finally, RITA members offered several ideas to the various governmental groups for consideration, including:

-The possibility of creating a non-punitive loan feature for IRAs much like what exists for 401(k)s to help people effected by the current economic downturn

-The possibility of permitting an allocation (not to exceed 25%) of a 401(k)s portfolio, for investment in alternative assets, as a hedge against a falling stock market

-More definitive guidance on the ROBS (Rollover for Business Startups) investment structure as to what approaches are acceptable and which are not (thereby avoiding prohibited transactions)

Finally, RITA reaffirmed its commitment to continue to work proactively and cooperatively with all the regulatory agencies in our collective efforts to prevent, detect, mitigate and prosecute fraud.

In case you missed it, self-directed IRAs with alternative assets were discussed on the Today Show on March 8, 2012. Here is the link to the tape http://video.today.msnbc.msn.com/today/46666490#46666490 .  This will do much to build the identity and credibility of our industry and the members of RITA ( www.ritaus.org ) who serve it.

A recent study by Cerulli Associates, Inc. indicates that more than $1.1 trillion of investment money moved to the self-directed market between 2008 and 2010. According to Arthur Steinmetz, of Oppenheimer Funds, Inc., “the decade-long slump in equity prices boosted interest in alternative assets.” He went on to say that even when the market “and stock prices rebound investors should continue to hold alternative assets.”

“What we all know is for the last decade, stocks have stunk and that has meant that there’s been increasing focus on anything that doesn’t go down the way stocks go down. That gives rise to a bit of a faddish element around searching for non-stock-like assets. Alternatives have always been a good idea. We used to call it diversification,” according to Steinmetz.

He goes on to say that investors have turned to so-called alternative assets in search of protection and higher returns in a volatile market with increased correlations. Alternative investments, which can range from derivatives to real estate holdings, have rivaled traditional funds, spurring withdrawals of about $470 billion from the U.S. equity mutual funds over the past five years.”

The new research by Cerulli indicates that after the recent financial crisis, investors are increasingly willing to go on their own. “The mainstream investor is increasingly self-directed in their decision-making,” said Sophie Schmidt, and analyst with Aite Group LLC.

Read more about self-directed IRAs in the Wall Street Journal: http://online.wsj.com/article/SB10001424052970204571404577253411744719228.html?KEYWORDS=IRAs+get+sexier

Join me and RITA (Retirement Industry Trust Assn) in Washington, DC on March 27-29, 2012 to learn:
Best Practices and the Latest Updates on Legislation and Regulation. Designed for trust companies, IRA administrators, financial advisors, CPAs, and ERISA attorneys. You’ll hear firsthand from the lawmakers on important matters including:

• What Are the Most Pressing Challenges Facing Retirement Plans, Tim Keehan, American Bankers Association
• IRS Updates on Fees, Excise Taxes, ROBS, and Valuations
• New Rules from the Department of Labor
• How to Stop Fraud in Self-directed IRAs, SEC & NASAA representatives
  

Learn More and Register:
Non-members, click here

RITA Members: click here

Get direct access to industry experts and key decision makers at the Retirement Industry Trust Association spring conference, March 27-29th, 2012.
Click here to view the RITA 2012 | DC Conference Agenda