A prohibited transaction is any improper use of your IRA by you, your beneficiary, or a disqualified person. Disqualified persons include your fiduciary and members of your family, including spouse, ancestor, lineal ascendants, and lineal descendants and their spouses.
Many prohibited transactions stem from the involvement of a disqualified person. The following people are considered disqualified persons for the purposes of your self-directed IRA:
(See IRS Section 4975 for a complete list of prohibited parties credentials)
(For more information see IRS Publication 590.)
A Self-Directed IRA allows you more investment options and flexibility than many other retirement accounts but it is of the utmost importance to avoid prohibited transactions in order to adhere to self-directed IRA rules. Failure to comply may lead to costly and serious consequences.