What transactions are prohibited?
Internal Revenue Code Section 4975 contains rules on prohibited transactions, which generally involve one of the following: 1) Doing business with a ‘disqualified person’ which includes you, your spouse, and some family members. (For example, you can’t sell a property you already own to your IRA, unless you can utilize the Outside Method.) 2) The primary purpose of the IRA investment must be to benefit the IRA account itself, not another person. (For example, you can’t use the property to your benefit by establishing it as your residence, unless you can utilize the Outside Method.) 3) You cannot borrow money from your IRA, nor can you borrow money secured by your IRA. (Unless, again, you can utilize the Outside Method.) 4) You cannot purchase life insurance or collectibles in the IRA; collectibles include works of art, antiques, metals, gems, stamps, or alcoholic beverages. In addition, the following are defined as prohibited transactions when they involve the account holder: – Borrowi
