NY Times: How One Man Lost $740,000 To Scammers Targeting His Retirement Savings And Left Him With A $285,000 Tax Bill

New York Times, How One Man Lost $740,000 to Scammers Targeting His Retirement Savings:

For nearly three months, Barry Heitin, a 76-year-old retired lawyer, thought he was part of a government investigation that felt like something out of the movies. He was actually assisting criminals in stealing hundreds of thousands of dollars — of his own money.

Last fall, he spent just about every weekday doing the legwork and making withdrawals from his bank accounts as part of an intricate scam: He believed he was helping the feds safeguard his money and catch thieves who were after it.

“They kept telling me, ‘This is a big case and we are going to stop a whole ring of people,’” Mr. Heitin said. “It was like a rabbit hole. I was going down the hole with them.”

It cost him almost all of his retirement savings: roughly $740,000.

Americans spend a lot of energy saving for retirement and worrying about losing money to the gyrations of the stock market. But these days, sophisticated criminals — on dating sites, on social media, in messaging apps or using malicious software — present an ever-growing risk to people and their savings. ...

Compounding the pain, there can even be a hefty tax bill waiting for them after they’ve drained their retirement accounts. ... Withdrawals from tax-advantaged retirement accounts like traditional I.R.A.s are taxed as ordinary income, so to the government, it looks like Mr. Heitin lived large last year: He still owes nearly $285,000 in federal and state taxes.

There used to be relief for victims of personal casualties, disasters and theft in the form of a tax deduction, but that was eliminated as part of the Republican-led overhaul of the tax code in 2018.

A bill that was introduced this year would reinstate the deduction, and Mr. Heitin’s lawyer said he planned to seek an individual tax ruling from the I.R.S.

ABA Journal, Lawyer Thought He Was Working With Feds When He Lost Retirement Savings to Scammers

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