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Prohibited Transactions in a Self Directed IRA

Self-directed individual retirement accounts provide a great deal of freedom, flexibility, and choice of potential self-directed investments. However, they are also governed by a set of rules that self-directed investors must be aware of and follow.

Prohibited Transactions

Some types of self-directed transactions violate the basic intent of your IRA, and may subject your account to risks and penalties.

Your retirement plan is intended to benefit you when you retire and not before. Transactions that can be interpreted as providing immediate financial gain to the account holder or other disqualified persons holders are not allowed.

For example, an IRA holder may not:

• Borrow money from the IRA
• Sell, exchange or lease property to their IRA
• Receive unreasonable compensation for managing property held by the IRA
• Use their IRA as security for a loan
• Transfer plan income or assets to disqualified persons
  
• Lend IRA money to disqualified persons
  
• Extend credit on their IRA to disqualified persons
  
• Furnish goods, services, or facilities to disqualified persons
  
• Allow fiduciaries to obtain or use the plan's income or assets for their own interest

For IRAs or 401(k)s, a disqualified person is:

• The IRA holder and his or her spouse
• The IRA holder's lineal descendants, ascendants and their spouses
• Investment advisers and managers
• Any corporation, partnership, trust, or estate in which the IRA holder has a 50 percent or greater interest
• Anyone providing services to the IRA, such as the trustee or custodian (See IRS Section 4975 for a complete list of prohibited parties credentials)
  

Prohibited Holdings

In addition, you may NOT self direct investments of your self-directed IRA funds in collectibles, which include works of art, rugs, antiques, metals other than gold, silver and palladium bullion, gems, stamps, coins (except certain U.S.-minted coins), alcoholic beverages, and other tangible personal property as may be defined by the Secretary of the Treasury is prohibited.
 
However, Your IRA may invest in one, one-half, one-quarter, or one-tenth ounce U.S. gold coins, or one-ounce silver coins minted by the Treasury Department. It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bullion.

Please refer to IRS publication 590 for more information.

Click any of the links below to view the large range of self-directed investment options available:

• Real Estate IRA – apartments, single family homes, commercial property or undeveloped land
  
• Limited Liability Companies in a self-directed ira
• Private Limited Partnership in a self-directed ira
• Secured and Unsecured Notes (Mortgages and Deeds of Trust) in a self-directed ira
• Partnerships and joint ventures in a self-directed ira
• Private stock in a self-directed ira
• Publicly traded stocks, bonds and mutual funds
• Other investments in a self-directed ira
• Judgments/Structured Settlements
• Tax Sale Certificates
• Car Paper
• Factoring
• Accounts Receivable
• Commercial Paper
• Equipment Leasing
  

The Entrust Learning Center includes tips, articles, rules, and information to regarding self-directed private entity investments.

If self-direction is for you, why not go with the best. Entrust offers you:

• Local service. Entrust is the only self-directed individual retirement account administrator with a nationwide network of offices across the United States.
• First-hand, expert knowledge. Entrust taps into the wealth of experience of our local experts to bring you information in an easy to understand format.
• Simple processes. Since we do this everyday, we have simplified our processes so that you can quickly and easily take care of your transactions.
  

Getting started is easy. Contact an Entrust professional in one of our local offices to establish a self-directed IRA or open your account today.