IdentityTheftSolutionTips
The Financial Industry Regulatory Authority, or FINRA, warns investors to be wary about e-cigarette stocks.(Photo: AP)
Story Highlights
Consumers should be ready to implement basic account defenses if an entity they deal with has been hacked. These involve better passwords, account monitoring and other practices.
Owners of Individual Retirement Accounts could lose up to 60 percent of their IRA’s assets if they’re not vigilant about a new rule that prevents them from making more than one IRA rollover per year.
Last year was a busy time for computer hackers and data breaches, and that’s not likely to change in 2015. People dealing with retail companies, non-profits, government agencies and other entities could see their names, addresses, credit-card numbers and other personal information spill out.
How to respond to a data breach is one of several general financial tips worth heeding in the new year. Financial analysts also raise issues involving a treacherous new tax rule on Individual Retirement Accounts, along with investor alerts regarding e-cigarettes and precious metals.
Here are some suggestions for the wary:
•Data-breach defenses.
You can’t completely defend against identity theft, but several simple steps can reduce your vulnerability after a data breach. One involves getting into the habit of checking banking, credit-card and other accounts regularly and looking for unauthorized transactions — preferably once a day, suggests Credit.com. While you’re at it, sign up for free alerts that notify you when certain transactions happen. Also, order your free credit reports on a regular basis through annualcreditreport.com, with the emphasis again on spotting unauthorized activity.
More on ID-theft protection
Another smart practice is to change your passwords after a breach and to use strong passwords — lengthy ones involving a mix of letters, numbers and special characters. Sign up for “two-factor authentication” on banking and other accounts, if offered. This involves not just logging in with a password but answering a security question or providing other secret information. “That way, it doesn’t matter (as much) if someone steals your password … because it’s much less likely they’ll be able to log into the account,” according to Credit.com.
If you’re highly concerned, you also might decide to freeze your credit by placing a fraud alert through one or more of the major credit bureaus, Equifax, Experian and TransUnion.
•Rollover risk.
The new year brings a tax-law change of which IRA investors should be wary. I recently wrote about a new danger involving rollovers of IRA funds between financial firms, where an investor takes possession of his or her money for up to 60 days. IRA owners long have had the option to do this without incurring taxes or an early withdrawal penalty, but the new rule allows only one rollover on an annual basis, even for people owning multiple IRAs. Jason Washo, a certified public accountant in Scottsdale, says investors need to be aware of how big a mistake this could be.
As before, investors can take temporary access of their money and roll it into a new IRA with another financial firm within 60 days, without financial consequence. Previously, the IRS treated rollovers for separate IRAs as separate transactions, with each account being allowed one rollover. Now, one rollover is allowed for all accounts combined.
“This means a person who has IRA accounts at multiple banks or brokerages … could inadvertently blow up their IRA,” Washo said. A potential 10 percent early withdrawal penalty, on top of a top tax rate of 39.6 percent, pushes the combined federal levy to 49.6 percent. Arizona income taxes also would apply. So might a 6 percent federal “excess contribution” penalty if the disallowed funds remain in the account. Add it all up, and the total bite could approximate 60 percent of the amount withdrawn, he said.
People sometimes do 60-day rollovers if they need a short-term loan. Some just want to switch financial companies. But the new rule makes it much more treacherous. Movements of money directly between IRA custodial firms, known as transfers, aren’t affected because investors don’t take even temporary possession of their money.
•Stock tips up in smoke.
Financial regulators issued some late-year investor alerts that remain relevant heading into 2015. One caution from the Financial Industry Regulatory Authority, or FINRA, warns investors to be wary about e-cigarette stocks. It followed a move by the Securities and Exchange Commission to suspend trading for two weeks in a Las Vegas-based e-cigarette company, American Heritage International, over “potentially manipulative activity” in its shares.
Regulators are concerned about promoters who hype these stocks, often causing a short but unsustainable jump in the share price that can snare unwary investors. Red flags include spam e-mails or other unsolicited messages touting a stock, recent changes to a company’s name or business, low share prices that can bounce around rapidly and even prior convictions of top company officials.
“The popularity of e-cigarettes has grown rapidly over the last several years, and the e-cigarette and ‘vape’ markets have been the subject of considerable media attention,” said Gerri Walsh, a FINRA senior vice president, in a statement explaining why this has become an issue for investors.
•Lingering metals madness.
Unsavory stock promoters often jump on current news items to lure potential investors, as with e-cigarettes. But another late-2014 FINRA alert cautions investors about buying precious metals including silver, gold and platinum. This alert came despite a year when precious metals stayed largely out of the headlines amid lackluster prices. Gold prices, measured in dollars, lost about 1 percent of their value in 2014.
FINRA warned that customers could face high commissions and fees and might not receive delivery of coins or bullion as promised. The regulatory group suggests that potential buyers investigate a salesperson’s background before investing, remain skeptical of “low risk” claims, inquire about fees and steer clear of risky transactions that involve borrowed money or leverage. FINRA cited an enforcement action against a Florida company, International Monetary Metals, that regulators charged with engaging in illegal, leveraged trades with retail investors.
•Medical-debt ills.
The biggest category of consumer financial complaints involves debt-collection practices, and unpaid medical bills represent the main type of disputed debt. So it helps to review smart strategies for tackling this financial issue.
Among the tips suggested by the Consumer Financial Protection Bureau, one is to carefully review billing statements and request a breakdown of itemized services if not provided. Also, get into the habit of keeping organized records of bills, and quickly act to resolve disputes rather than let them linger. If you delay paying and an unpaid balance winds up in collection, it can damage your credit score.
If you can’t pay immediately, try to negotiate the balance. Some hospitals will do this, and some offer financial assistance through “charity care” plans. Also, make sure your health-insurance information is correct. Small errors on policies can lead to bigger bills for procedures that should have been covered, the protection bureau said.
Reach Wiles at russ.wiles@arizonarepublic.com or 602-444-8616.
Article source: http://www.azcentral.com/story/money/business/consumer/2015/01/02/theft-ira-risks-stock-scams/21211255/
Technorati Tags: identity, theft
A post from: Identity Theft Solution Tips