Provision of goods, services, or facilities between an IRA and a disqualified person. Therefore, the rules on prohibited transactions place the greatest restriction on the use of self-directed IRA funds and investors in self-directed IRAs must understand them. These rules are found in IRC 4975 and state that a prohibited transaction occurs when an IRA makes a transaction (for example, buying or selling) with a disqualified person. The question that immediately arises is: who is a person who is disqualified from my IRA? Basically, there are four categories of people who are disqualified from their IRA and they are the following.
When it comes to unrelated individuals (unrelated such as family members or business partners), there is no need to analyze the rules of prohibited transactions, but once family members or business partners participate in any part of the transaction, the owner of the IRA must ensure that the rules of prohibited transactions are not violated. Join today and be the first to get the latest offers on self-managed IRAs, 401 (k), taxes, legal planning, and more. Every self-directed IRA comes with a list of people and entities that aren't allowed to interact with it in certain ways. These parties are called disqualified individuals, and if they make prohibited transactions with your IRA, your IRA could lose your preferred tax status.
Any interaction with your IRA must be an equal transaction in which you personally do not benefit from IRA actions. In addition, any transaction between your IRA and a disqualified person (including IRA beneficiaries) is considered a prohibited transaction.