At Provident Trust Group, we know that your retirement nest egg is important to you. We do not want you to put your retirement in jeopardy. You, however, are ultimately responsible for directing what you can or cannot do with your retirement account. Always consult a qualified CPA or tax adviser on any transactions made with your retirement account.
The IRS states that a prohibited transaction is any improper use of your IRA account by you, your beneficiary, or any disqualified person.
Prohibited transactions can include, but are not limited to the following examples:
- A disqualified person’s transfer of plan income or assets to, or use of them by or for his or her benefit.
- A fiduciary’s act by which he or she deals with plan income or assets in his or her own interest.
- A fiduciary’s receipt of consideration for his or her own account in a transaction that involves plan income or assets from any party dealing with the plan.
- Any of the following acts between the plan and a disqualified person:
- Selling, exchanging, or leasing property
- Lending money or extending credit
- Furnishing goods, services or facilities
The following are few examples of prohibited transactions:
- Borrowing money personally from your IRA
- Selling property you already own to your IRA
- Using your IRA as security for a loan
- Buying property for personal use (present or future) with IRA funds
You may be asking yourself what is a Disqualified Person?
A disqualified person includes any member of your immediate family, employers, certain partners and fiduciaries. Your plan can be disqualified for improper use of your account by not only you, but your beneficiaries, or any disqualified person as well.
Now, let’s focus on what types of investments are OFF-LIMITS. In the retirement investing world, Self-Directed plans will expand your investment options beyond the realm of traditional investments, such as stocks and bonds, to include many non-traditional investments. There are a multitude of options available to you.
The IRS does not specify what you can do, however, they do let you know what you can’t do. The IRS considers the following types of investments prohibited:
- Life Insurance for yourself
- Metals (except qualified Gold, Silver & Palladium Bullion)
- Coins (except US Minted Gold or Silver Eagle)
- Alcoholic Beverages
- Sub-Chapter S Corporations
Still have a few questions about Prohibited Transactions?
The IRS has put together a few of the most frequently asked questions, please visit http://www.irs.gov/Retirement-Plans/Retirement-Plan-Investments-FAQs for more information.