CHARLOTTE, NC / ACCESSWIRE / August 3, 2020 / What is a "prohibited" transaction within the context of a Self-Directed IRA? The answer is simple, but the application can be surprisingly complex. That is according to a recent post at the blog of the Self-Directed IRA administration firm American IRA. According to the recent post, prohibited transactions come down to understanding who a "disqualified person" is within an IRA-and avoiding transacting with them using retirement funds, accounts, and properties.
For instance, the post notes, an investor who purchases real estate property under a Self-Directed IRA and then turns around and rents said property to someone like a son or a daughter would be engaging in a prohibited transaction. This would violate the rules of retirement funds, as it would mix personal benefits with accounts designed for retirement protections. To access retirement benefits, investors are expected to keep those retirement investments separate from their personal funds.
One rule of thumb, American IRA suggests, is for an investor to avoid transacting with anyone they know. For example, an investor who uses a Self-Directed IRA to invest in real estate may rent it out to a complete stranger, working through a property manager. This would keep the property an investment property, as the IRA rules intend. It also keeps a clear line between an investor's personal holdings and the holdings with retirement protections.
"The IRS and Congress have made it possible to enjoy plenty of tax protections if you follow the rules," said American IRA CEO Jim Hitt. "The job of the investor is to know the rules of the game. In that way, they can use their retirement protections to build a more substantial retirement portfolio and, ultimately, thrive."
The post details more about prohibited transactions and just who might be described as a "disqualified person" by the official rules. For more about the Self-Directed IRA rules, visit the blog at www.AmericanIRA.com or call 866-7500-IRA.
About:
American IRA, LLC, was established in 2004 by Jim Hitt, CEO in Asheville, NC.
The mission of American IRA is to provide the highest level of customer service in the self-directed retirement industry. Jim Hitt and his team have grown the company to over $400 million in assets under administration by educating the public that their Self-Directed IRA account can invest in a variety of assets such as real estate, private lending, limited liability companies, precious metals and much more.
As a Self-Directed IRA administrator, they are a neutral third party. They do not make any recommendations to any person or entity associated with investments of any type (including financial representatives, investment promoters or companies, or employees, agents, or representatives associated with these firms). They are not responsible for and are not bound by any statements, representations, warranties or agreements made by any such person or entity and do not provide any recommendation on the quality profitability or reputability of any investment, individual or company. The term "they" refers to American IRA, located in Asheville and Charlotte, NC and Atlanta, GA.
SOURCE: American IRA, LLC