What is a prohibited transaction?

A prohibited transaction in a self-directed IRA is an improper use of the account by the owner or certain related parties. It occurs when the IRA engages in a transaction that directly or indirectly benefits the account holder or related parties, also known as disqualified persons, rather than the account itself (self-dealing). Examples of prohibited transactions include borrowing funds from the IRA, selling property to it, using IRA-owned assets for personal benefit, or providing services to the IRA for compensation. Prohibited transactions can trigger taxes, penalties and possible disqualification of the IRA. To learn more please visit IRS Prohibited Transactions.