If you’re looking to invest in alternative assets with your self-directed IRA, then it may help to brush up on prohibited transactions rules. Prohibited transactions take place when an IRA is improperly used, or acts outside of the laws set by the Internal Revenue Service. Prohibited transactions typically occur when a disqualified person is involved in an IRA transaction. An IRA may not conduct any transactions with a disqualified person, which includes: lending, selling, exchanging goods or extending credit.
Who Is A Disqualified Person?
- IRA account owner
- Children and their spouses
- Grandchildren and their spouses
- IRA account owners parents and grandparents
- Companies, partnerships or trusts where the IRA owner, family members, or business partners own or control 50% or more shares of voting power, capital interests, or beneficial interests
- Officer, director, highly compensated employees, or <10% shareholders who own or control 50% or more of the company
The IRS has written extensively on the topic of prohibited transactions, which you can find here.