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Moving retirement savings from a workplace plan into an IRA can affect fees, investment choices, protections, and long-term retirement security. That decision deserves more than a confident recommendation or a one-sided comparison. Investors may be harmed when an advisor makes false statements, leaves out important risks, or fails to disclose a financial incentive connected to the rollover.
IRA rollover misrepresentation occurs when a financial advisor misstates the benefits or costs of moving retirement assets. Omits material information, or conceals a conflict of interest that could influence the recommendation. Unsuitable investments, excessive trading, and undisclosed compensation can deepen the resulting losses.
FINRA guidance recognizes that an advisor may receive compensation from an IRA recommendation even though keeping assets in an employer plan may generate no comparable payment. Understanding how those incentives shape rollover advice is the first step in identifying whether a recommendation was mishandled.
IRA rollover misrepresentation often begins with a recommendation that appears to be about convenience, investment choice, or retirement planning. The underlying issue may be a conflict that is not fully explained. When an advisor encourages an investor to move money from an employer-sponsored 401(k) or similar plan into an IRA. The advisor should clearly compare the costs, services, investment options, protections, and long-term consequences of each choice.
FINRA Regulatory Notice 13-45 identifies an important structural concern. A broker may receive a commission or other compensation when an investor rolls retirement assets into an IRA. By contrast, the broker may receive no compensation if the investor leaves those assets in the employer plan. That difference can create an incentive to recommend a rollover even when keeping the money in the plan may be a reasonable alternative. The incentive itself does not prove misconduct. But failing to disclose it or allowing it to influence advice can leave an investor without the information needed to make an informed decision.
The conflict can become more difficult to detect when compensation is described as a general benefit of the advisory relationship rather than as a payment tied to the rollover. Investors may also be shown only the prospective advantages of an IRA, such as broader investment access. While receiving little explanation of employer-plan features, lower-cost options, or the fees that will apply after the transfer. A recommendation that omits material information can be misleading even when individual statements are technically accurate.
A 2025 SEC enforcement order illustrates how these incentives can operate in practice. In Investment Advisers Act Release No. 6826, issued in January 2025, the SEC found that Transamerica Retirement Advisors paid incentive compensation to advisors for rolling employer-plan participants’ retirement assets into advisory accounts. The payments covered recommendations made from 2017 through 2022, and the SEC stated that the compensation was not adequately disclosed.
The SEC also addressed misleading comparisons in Investment Advisers Act Release No. 6732, issued in September 2024. Federal Prep Advisors advised more than 300 clients to move more than $80 million from Thrift Savings Plan accounts to IRAs after presenting false fee comparisons and failing to understand or accurately represent TSP costs. This type of conduct can make an IRA appear less expensive than it is and can obscure the financial reasons behind the recommendation.
Investors who suspect that a rollover recommendation concealed compensation, misstated fees. Or omitted important alternatives may have grounds to investigate whether the advice was suitable and whether the broker or advisor breached obligations to the investor. Depending on the circumstances, a claim may proceed through FINRA arbitration.
IRA rollover advice can become misleading when a recommendation emphasizes the advisor’s compensation instead of the investor’s objectives, costs, and available alternatives. Common forms of misconduct include inaccurate fee comparisons, hidden conflicts, one-sided marketing, and excessive trading after the rollover. Each may affect whether the recommendation met the suitability requirements under FINRA Rule 2111.
| Type | How it may appear | Why it matters |
|---|---|---|
| False fee comparisons | An advisor inflates the fees charged by a 401(k) or Thrift Savings Plan, understates IRA costs, or leaves out expenses that affect the comparison. | The investor may be persuaded to move assets based on inaccurate information. In SEC Administrative Proceeding IA-6732, the SEC addressed allegations that Federal Prep Advisors told clients TSP fees were 0.50% even though the actual fees were much lower. |
| Undisclosed conflicts of interest | A broker receives a commission, advisory fee, or other compensation if assets move into an IRA. While receiving no comparable compensation if the assets remain in the employer plan. | That incentive can influence the recommendation. FINRA Regulatory Notice 13-45 identifies this compensation difference as a potential conflict that should be addressed. |
| Misleading marketing | Materials or sales presentations imply that rolling an employer-plan account into an IRA is the “only sound choice,” without fairly comparing leaving the assets in the plan or considering other options. | Investors need balanced information about fees, services, investment choices, protections, and account features. FINRA Rule 2210 restricts communications that are misleading or omit material information. |
| Churning an IRA | After the rollover, the broker recommends excessive purchases and sales that do not serve the investor’s objectives but generate additional commissions or fees. | Frequent trading can increase costs and risk while eroding retirement assets. The trading activity, account objectives, and recommendation history should be reviewed together when assessing suitability. |
These problems can overlap. For example, an inaccurate fee comparison may lead to the rollover. An undisclosed compensation conflict may explain why it was recommended, and excessive trading may create additional losses afterward. Investors who believe an advisor failed to disclose material information or put compensation ahead of suitable advice can review potential breach of fiduciary duty in rollover advice and fiduciary duty violations with a securities attorney.
Financial advisors who misrepresent an IRA rollover can face serious regulatory consequences. The SEC has pursued enforcement actions involving false fee comparisons, undisclosed compensation, and recommendations that failed to account for the costs of leaving an employer-sponsored retirement plan.
In September 2024, the SEC settled charges against Federal Prep Advisors in connection with misleading advice involving Thrift Savings Plan rollovers. The firm was ordered to pay a $200,000 civil penalty. Its principal, Michael Kerper, was fined $80,000 and barred from serving in compliance roles. The proceeding, identified as IA-6732, underscores that responsibility can extend beyond the advisory firm to individuals involved in the conduct.
In January 2025, the SEC issued a cease-and-desist order against Transamerica Retirement Advisors for failing to disclose incentive compensation paid to advisors for rollover recommendations made between 2017 and 2022. The firm was ordered to pay a $2.9 million penalty and to distribute funds to affected clients, demonstrating that nondisclosure of compensation can carry significant financial consequences. Investors evaluating potential unsuitable retirement account recommendations should preserve disclosures, fee illustrations, emails, and notes from advisor meetings.
FINRA identifies IRA rollover reviews as an examination priority. Firms are expected to maintain policies reasonably designed to address rollover suitability and fair marketing. FINRA Rule 2210 also prohibits communications with the public that are false or misleading. An advisor who presents an IRA as automatically cheaper, safer, or more appropriate without a balanced explanation may create evidence of a regulatory violation.
The SEC’s Thrift Savings Plan Initiative adds further scrutiny to practices affecting government employees and their retirement accounts. Regulatory action does not automatically compensate every investor, but it may provide important evidence in a private claim. A securities attorney can assess whether the conduct supports FINRA arbitration for rollover disputes or another available remedy.
Investors who suspect they received misleading or unsuitable rollover advice should preserve evidence and act methodically. A rollover dispute may involve false statements, omitted risks, hidden compensation, or recommendations that did not fit the investor’s circumstances. The following steps can help clarify what happened and identify an appropriate path to recovery.
A rollover recommendation deserves careful review before retirement assets leave a current employer plan. Pressure, incomplete fee information, and promises that sound too good to be true can signal that the recommendation is driven by compensation rather than the investor’s needs. FINRA Regulatory Notice 13-45 addresses rollover communications and warns against suggesting that moving assets to an IRA is the “only sound choice.” Investors should be given a fair opportunity to compare alternatives. Including leaving funds in the existing plan.
Before signing rollover paperwork, request clear answers to these questions in writing:
Keep the disclosures, account statements, emails, and notes from conversations. If an advisor misrepresented fees, concealed conflicts, or recommended an unsuitable rollover, the resulting IRA investment losses may warrant review. Learn more about IRA investment losses and potential options for pursuing relief through FINRA arbitration.
IRA rollover misrepresentation occurs when an advisor makes a false statement, leaves out a material fact. Or presents a conflicted recommendation as if it were solely for the investor’s benefit. Examples include understating fees, overstating potential benefits, or failing to explain what may be lost by leaving assets in an employer plan.
Consider whether the advisor compared the IRA with keeping the money in the employer plan. Explained all fees and investment risks, and asked about your objectives, age, liquidity needs, and financial circumstances. A recommendation may warrant review when it moved retirement assets into costly or high-risk products without a customer-specific suitability analysis.
Keep account statements from before and after the rollover, recommendation letters, emails, text messages, fee disclosures, investment records, and notes identifying what the advisor said. Also record when the conversation occurred and who participated. These materials can help establish what was represented, what was omitted, and how the recommendation affected the account.
Potentially. Investors may pursue a claim through FINRA arbitration when a broker or brokerage firm provided unsuitable advice, misrepresented risks, or concealed a conflict of interest. The available options depend on the facts, the firms involved, the investments purchased, and applicable filing deadlines.
The IRS may waive the 60-day rollover requirement in certain circumstances, including when fraud prevents timely completion. Investors should preserve records of the fraud and obtain tax guidance promptly. Because the tax treatment and legal issues may require separate analysis under Internal Revenue Code Section 408(d)(3).
Misleading rollover advice can raise difficult questions about whether your retirement assets were handled appropriately. A review of the recommendations, disclosures, and account records may help clarify your options. To discuss potential IRA rollover losses, contact The Frankowski Firm for a free consultation. The firm can listen to what happened and explain whether FINRA arbitration or another form of recourse may be available.