Since these rules are set by the IRS, it could be considered must-know information for all retirement investors.
Charlotte, NC (PRWEB) April 01, 2017
Investors who consider a Self-Directed IRA often do so because of the freedoms possible through these retirement accounts, including investing in precious metals and real estate. But a new post at American IRA, “Self-Directed IRA Prohibited Transaction Rules,” details the restrictions that come with Self-Direction as well. Since these rules are set by the IRS, it could be considered must-know information for all retirement investors.
Sections 408 and 4975 of the IRS code are relevant here, says Jim Hitt in the post. The interesting thing about these codes is that they specifically mention prohibited transactions so there is no doubt about what investors can use in their retirement accounts through Self-Direction.
On the list of prohibited investments: life insurance, precious metal coins of insufficient or inconsistent purity, art and collectibles like rugs and antiques, alcoholic beverages (including wine), S-corporation stocks, and gemstones and jewelry. Even though some of these investments might seem similar to other allowed investments with a Self-Directed IRA, such as precious metal coins of insufficient value, investors need to know these distinctions.
There are also a number of restrictions based on the concept of disqualified persons, Jim Hitt points out. With an IRA, you cannot buy or sell from you and your spouse, your ascendants/descendants, their respective spouses, fiduciaries like attorneys or financial planners, etc. These prevent conflicts of interest that take unnecessary advantage of the tax protections of the Self-Directed IRA.
“I put this post together because one of the most common questions in the world of Self-Directed IRA is that of restrictions,” says Jim Hitt. “This simple blog post is a great resource for anyone who wants to know what they can’t do in a Self-Directed IRA. What many retirement investors will likely find is that there is a surprising amount of freedom when you play by the rules, and that’s what makes Self-Direction such an enticing prospect to so many people.”
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