Prohibited Transactions and Disqualified Persons

What are some examples of prohibited transactions?

Someone bought stock in their IRA in their son's company, of which he owns 75%.

  • A disqualified family member owns over 50% of this company.

My IRA loaned money to my daughter for her student loans.

  • Your IRA is unable to transact directly with your daughter, a disqualified person.

My IRA bought a great vacation property, which we rent out for 75% of the year. My family enjoys a few vacation months when the property is free.

  • You are not allowed to directly benefit or live in property that is owned by your IRA.

I bought a property through my IRA. I leased it to my spouse's rental management company, of which she owns 70% and other investors own the remaining 30%.

  • If other investors owned 70% and your family owned 30%, you would be in the clear, but be careful of engaging in a self-dealing transaction related to how you and your wife manage the property.