Things You Should Know

There are some things you should keep in mind about your Self Directed IRA. If you have any questions please call us to speak with one of our experts. 

Things to Know About Your Self Directed IRA

Prohibited Transactions and Self-Dealing – In additional to the excluded types of investments below, there are certain “prohibited transactions” and “self-dealing” that occur when an IRA owner engages in a transaction with a “prohibited person.” The IRS wants your investment to be a complete arm’s length transaction. The purpose of the investment is not to benefit the IRA owner, but to benefit the IRA only. The IRA owner and no lineal ascendants or descendants can directly benefit from the IRA. This includes grandparents, parents, children, grandchildren, brothers and sisters. These people are what the IRS refers to as “Disqualified Persons.” Prohibited transactions could cause the entire IRA to lose its tax-deferred status. Work with competent professionals to avoid violation of these rules.

Important things you need to remember.

  • Earnest money or deposits must be funded by the IRA. You cannot use personal money for the deposit and then be reimbursed later.
  • The IRA is the owner of the assets, not the IRA holder. Therefore, purchase, maintenance costs and taxes are paid by the IRA and all income (e.g. rent, interest, distributions) goes back to the IRA.
  • All legal documents related to an IRA-owned asset must be in the name of the IRA, not your personal name.
  • For the documents associated with your IRA’s asset acquisition to be complete and legal, they need to be signed by Premier Trust, Inc. (as the custodian for the account).

Avoid self-dealing

This is a legal principle that prevents IRA owners from making investments (or loans) that benefit themselves or certain family members, even indirectly. It also bars mingling of your IRA and nonretirement funds. Run afoul of the self-dealing rules and your entire IRA could be immediately taxed.

Prohibited Investments

  • Collectibles (including works of art, rugs, antiques)
  • Metals other than gold, silver and palladium bullion
  • Gems
  • Stamps
  • Coins (except certain U.S.-minted coins)
  • Alcoholic beverages, and other tangible personal property as may be defined by the Secretary of the Treasury is prohibited.
  • Life Insurance