Opening a Self-Directed IRA (SDIRA) allows you to have complete control over your retirement account. However, the flip side of that freedom is that you are solely responsible for whatever occurs within your IRA. Knowing and abiding by the laws that govern IRAs is your responsibility.
IRS Publication 590 defines a prohibited transaction as any improper use of your IRA by you, your beneficiary, or any disqualified person.
Example: Renting a property owned by your IRA to your child.
Example: Using IRA funds to invest in your spouse’s bakery.
Example: Personally painting the walls of a condo your IRA owns or hiring your son-in-law to do so.
Example: Deposit your IRA-owned rental property income to your personal bank account.
Disclaimer: This chart should not be considered financial advice. Before you make any transaction, be sure to consult with a legal or financial professional
Transacting with a disqualified person can cost your IRA its tax-advantaged status and incur penalties.
Disqualified persons include:
The IRS defines collectibles such as
1 Except for gold, silver, palladium, and platinum bullion of a certain purity.
2 Except for gold and silver coins minted by the US Treasury Department.
3 Certain other tangible personal property.
If you invest in one of these asset classes, the IRA funds in your self-directed IRA will be considered distributed to you as of January 1 of the year you made the investment. You may also be subject to a 10% early distribution penalty if you are under the age of 59 ½.
Now that we’ve established what you can’t invest in, here’s a list of 90 things you can invest in with a Self-Directed IRA. Any investment opportunity that is legally allowed can be held in your SDIRA. If the law allows the investment, your SDIRA can hold it.