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Top 10 Self Directed IRA/401k Mistakes – #7 IRA owner uses personal assets or “Sweat Equity” for the benefit of the IRA

A self directed IRA owner is clearly allowed to guide and manage the investments of the self directed IRA. The management can be relatively involved and substantial. As an example, the self directed IRA owner (or even the self directed IRA LLC manager – the account owner), could potentially expend considerable effort in finding the […]

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Top 10 Self Directed IRA/401k Mistakes – #6 Two or more IRA owners agree to “loan” each other money to avoid prohibited transactions

Interacting with your IRA is considered a prohibited transaction. So, unrelated, self directed IRA owners will attempt to enter into a reciprocal agreement to loan each others self directed IRA money so that the IRA owners can indirectly tap their funds for personal use. This is a flawed design and approach. Even though the parties […]

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Top 10 Self Directed IRA/401k Mistakes – #3 – Active Business Investment Is Not Subject To UBTI

Unrelated Business Taxable Income (UBTI) is generated when an Self Directed IRA engages in active business.  A business activity would be one in which the business is buying and/or selling goods and services. A good example would be if you purchased interest in a restaurant , oil and gas exploration, or even a apartment complex. […]

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Top 10 Self Directed IRA/401k Mistakes – #2 – Making Contribution To The IRA LLC

The Self Directed IRA owner makes their annual contribution directly into the bank account of the LLC rather than with the custodian of the  Self Directed IRA. In this case, you are personally interacting with your ICO (IRA-LLC).  That is considered a prohibited transaction. Additionally, an IRA contribution is only considered valid when it has […]

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Top 10 Self Directed IRA/401k Mistakes – #1 – Making A Personal Guarantee

The IRA account owner is considered a “disqualified person” and cannot provide a personal guarantee of a loan for the IRA. Therefore, when setting up an IRA or IRA-LLC (ICO), you cannot guarantee a loan to purchase property, nor could you open a margin account at a brokerage firm in which you personally guarantee to […]

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