ER Withdrawal Scams

[pfpelican]

Don't be pushed into IRA early-withdrawal schemes - MarketWatch

 

[Leonidas]

Don't be pushed into IRA early-withdrawal schemes - MarketWatch

Using charts, graphs, handouts and other documents at the seminars and meetings, the brokers' sales presentations led the employees to expect that for 30 years they could earn approximately 12% annually on their investments and withdraw approximately 9% annually, regulators said.
And what happened in reality was this: Over 200 BellSouth employees saw the principal in their accounts decline by a total of about $12.2 million.

Ouch!

It's been quite a while since I looked at doing a 72(t) exempt SEPP, but I remember there being a "reasonable interest rate" that was to be applied to the plan. Something based on a rate set out by the IRS.

...federal regulators last month began a "sweep" of broker/dealers that focuses, according to published reports, on clients' retirement accounts and the use of a section of the tax code allowing them to withdraw money before turning 591/2. The Financial Industry Regulatory Authority is focusing on "all seminars and/or other events directed at potential or early retirees, including prospects that are under 59-and-a-half years old."

The Financial Industry Regulatory Authority (FINRA), is the largest non-governmental regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 5,100 brokerage firms, about 173,000 branch offices and more than 665,000 registered securities representatives.

Created in July 2007 through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services.

Interesting.

FINRA Home Page