702(j) retirement plan scam

Now, I'm not anti permanent life insurance. But as a retirement vehicle, it fits only a small percentage of the American population. I recently responded to a question from an 80 year old who was interested in transferring their IRA to a " j. Needless to say, this strategy will get sold to folks who are going to get financially hurt over it. If you can say "yes" to each of these points, you may be a candidate to add permanent life insurance to your retirement funding lineup:.

The question about account is that somehow it is like a secret and there is a chance that you could lose your money at anytime. Did not mention on any insurance of accounts. I agree that the secrecy is not needed.

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But to answer your concerns about safety, money in whole life insurance is actually safer than money in bank accounts, and in most states, also enjoys a higher level of protection by the state insurance guaranty funds. Learn more at:. So what if you really do not have a whole lot to begin with. Is this something that would work for someone with very little to start off with?

Is there a minimum amount that a person would be able to invest and start off with? Your policy will be custom tailored to your unique situation, goals and dreams, and there is no set amount you need to put in to start a policy. The upper limit is determined by your income and assets. The Bank On Yourself Professionals are masters at helping people restructure their finances to free up more seed money to fund a plan that can help you reach your goals and dreams — without the risk or volatility of traditional investments.

I have been reading your information for awhile now, and, I find it very very factual and well worth the time it takes to read it. As an insurance agent and consultant, I will surely provide your name to my clients, because they need to know what you are saying! I will myself be taking advantage of this information, which will aid me in my business as well.

You substantiated that for me by providing that information on your site! Much obliged! Thanks for your vote of confidence, Thomas, and for the good work you are doing for your clients. If you have a strong interest in helping your clients implement this safe wealth building strategy, please be aware that we are currently looking for financial representatives who want to become Bank On Yourself Professionals, and receive the advance training and support provided to those who qualify.

In the mid s he started investing with Peter Dawson, a financial adviser who had grown up near his community of Holbrook, N. Many of Garofalo's Long Island friends and family members also entrusted their money to Dawson -- sometimes remortgaging their homes, at Dawson's suggestion, to raise cash. At first, Garofalo received account statements that appeared to be from well-known mutual fund companies, and he didn't suspect that anything was amiss.

But in aboutthe statements stopped coming and Dawson became more difficult to reach.

702(j) retirement plan scam: Are (j) Programs a

When investors finally contacted regulators and securities lawyers, they accused Dawson of running a Ponzi scheme. Dawson is now in jail awaiting trial, charged with grand larceny and scheming to defraud, but the money appears to be long gone. Never write a check directly to an adviser -- only to the custodial institution, which must send you quarterly statements.

And meet with your adviser at least once a year to review your account. Still, he thought that his mother, then 75, was mentally sharp enough to make her own decisions.

702(j) retirement plan scam: A (j) can potentially be a

When Ken started to investigate, he found that his mother had been duped into buying unsuitable annuity products -- the most common complaint insurance regulators handle. Florida's Department of Financial Services has 51 open investigations involving variable annuities, plus investigations into equity-indexed annuities, a complicated product that ties payoffs to stock-market indexes while guaranteeing a minimum return.

Annuities themselves aren't necessarily bad. In fact, an immediate-payout annuity can provide lifetime income for seniors. But deferred annuities, such as variable and equity-indexed products which are usually used for long-term retirement savingscan cause big problems if they're sold to people who need immediate access to their money. Many of these annuities levy a surrender charge if you try to withdraw your money within the first seven to ten years.

But seniors are tempting targets for the hard sell. To complicate matters, Ken began noticing signs of dementia in his mother. Always impeccable about keeping records, Virginia hadn't balanced her checkbook in months. Mounds of junk mail were heaped on her dining-room table, and she felt obligated to answer it all, sending more than small checks to charities and sweepstakes in On the advice of a reputable financial adviser his mother had consulted in the past, Ken contacted a lawyer.

Working with the insurance company that issued the annuity, American Investors, they got Virginia's money back after providing medical records that proved she was suffering from dementia when she bought the annuity. When Florida's Department of Financial Services investigated, officials discovered that the same salesperson had duped a number of people in their seventies and eighties into buying high-commission equity-indexed annuities with surrender periods that sometimes stretched past age Be skeptical of any claims made at a free-lunch seminar, a common sales tactic to get seniors into a one-on-one meeting.

And don't trust a salesperson just because he or she has a professional designation that focuses on seniors. Such credentials sometimes require little more than paying a fee and passing an easy take-home test. Look up the requirements for professional designations at Finra. Ask specifically about annuity surrender charges and how much money you can withdraw each year.

Also ask about interest guarantees. Permanent life insurance policies are designed to provide coverage for the rest of your life, and also contain a cash value component.

702(j) retirement plan scam: The “scam” term typically pops

Part of your premiums go to this account. Over time, the cash value account builds up, and you can borrow against it. A is sold as a permanent life insurance policy that you overfund by paying higher than normal premiums, more than is necessary to keep it in force. This strategy has many risks. Interest may also be charged on any outstanding loan balances.

And much of the premium you pay into these policies is eaten up by high commissions and fees. People should go into it with their eyes open and compare it to other options. What other options might those be? The aforementioned k and IRA, to start. High net worth individuals — frequently the targets of sales pitches — who have maxed out those accounts can move on to taxable accounts; those who own their own businesses could start a pension plan.

There are no get-rich-quick ways to fund your retirement, other than hard work, careful planning, and early and consistent saving. Monitor journalism changes lives because we open that too-small box that most people think they live in. We believe news can and should expand a sense of identity and possibility beyond narrow conventional expectations.

My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. If you were to come up with a punchline to a joke about the Monitor, that would probably be it.