- Rocket Dollar Knowledge Base
- Self-Directing Retirement Compliance and Self Care
- Prohibited Transactions and Disqualified Persons
Pricing, Products, and Refund Policy
FAQs and the Benefits of Self-Directing Retirement Accounts
Investing and Alternative Asset Classes
Self-Directed IRA (Traditional, Roth, or Beneficiary)
Self-Directed Solo 401(k) (Traditional or Roth)
- Self-Directed Solo 401(k) FAQs
- Opening a Rocket Dollar Self-Directed Solo 401(k) Account
- Structure of a Rocket Dollar Solo 401(k) Account
- Contributions and Contribution Limits
- IRS-Related Questions
- Rolling Over/Transferring Old Accounts
- Solo 401(k) Traditional Contributions
- Solo 401(k) Roth Contributions
- Solo 401(k) Loans
- Uncommon Questions
Self-Directing Retirement Compliance and Self Care
Partnering with Rocket Dollar
Fundraising with Rocket Dollar
Specific State Rules
Privacy, Security, Identity, and Fraud
What are the penalties or fines for a prohibited transaction in my Self-Directed IRA or Self-Directed Solo 401(k)
Penalties for an IRA can be a distribution of the entire Self-Directed IRA. Penalties for a Solo 401(k) can be up to 15%
For Self-Directed IRAs
Unfortunately, the penalties for making a prohibited transaction in your Self-Directed IRA can be quite stiff. This can be a total distribution of your IRA if you do not comply, which for a Traditional IRA, can mean increasing your taxable income by the entire value of the IRA.
If you are below 59 1/2, this could mean paying an early distribution 10% penalty as well.
This applies only to the IRA in question. If you commit a prohibited transaction in one IRA, the others will be safe from distribution.
For Self-Directed 401(k)s
For Self-Directed 401(k)s the penalty of 15% can be applied to your plan for a prohibited transaction. Failure to comply or fix a mistake could mean the distribution of your entire plan.