Self-Directed Checkbook IRA – Prohibited Transactions

Self-Directed Checkbook IRA – Prohibited Transactions

With an IRA LLC with checkbook control there is even great freedom to invest in what you want when you want to. However, before investing with a Self-Directed Checkbook IRA it is imperative to understand the rules.

Prohibited Transactions:

Any direct or indirect…

Sale or exchange, or leasing, of any property between IRA LLC and a disqualified person;

Lending of money or other extension of credit between IRA LLC and a disqualified person;

Furnishing of goods, services, or facilities between IRA LLC and a disqualified person

  Examples of this would include:

  • You providing “Sweat Equity” or personally pay expenses benefiting real estate owned by your IRA LLC
  • Salary paid to you by your IRA LLC
  • Salary paid by IRA LLC to a disqualified person
  • Self-dealing with another company that you own

Transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a plan;

Act by a disqualified person who is a fiduciary whereby he deals with the income or assets of a plan in his own interests or for his own account; or

Receipt of any consideration for his own personal account by any disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan

Disqualified People:

A disqualified person is the IRA Participant or anyone who is considered to be the IRA Participant. If you are the IRA Participant, the people/entities listed below are disqualified people/entities:

  • You
  • Your ascendants and descendants (i.e. vertical bloodline, mother/father, daughter/son)
  • Your spouse or the spouse of your “descendants”
  • Fiduciaries to your IRA (i.e. custodian or one who provides services to the IRA)
  • A Corporation, LLC, Partnership, other company, Trust or Estate where 50% or more is owned or controlled by a disqualified person or entity
  • An Officer, Director, 10% shareholder of a prohibited entity (i.e. corporation, LLC or other company)

Your IRA LLC may engage in a transaction with these family members:

  • Your siblings
  • Your Mother/Father In-Law
  • Your uncles/aunts
  • All others not on the list of Disqualified People listed above