Self-Directed IRA Rules – Self-Dealing

SDIRA Rules - Self Dealing

There are many benefits that come with self-directed IRA accounts. Namely tax advantages and the ability to invest in non-traditional investments with your retirement accounts. In order to fully maximize the benefits that come from self-directed retirement accounts, you must follow the self-directed IRA rules and 401k rules. One rule to remember that can be detrimental to your retirement accounts and investing is the rule of self-dealing.

Self-dealing can easily be looked over if you don’t know enough of the rules to investing with your self-directed IRA or 401k. In order to understand what self-dealing is first let’s talk about how a retirement account works. Stripping it down to very basic terms retirement accounts are designed to benefit the owner of the account upon retirement and no other time before then. Understanding that makes it much easier to understand what self-dealing is.

Self-dealing is when an IRA transaction is done that brings personal gain to the account owner. Remember, the account owner cannot receive any personal gain with retirement accounts until retirement. If so, you could be subject to taxes and other penalties.

Examples of Self-Dealing In A Self-Directed IRA

  • Living in the house you purchased with your IRA
  • Allowing family to live in the house you purchased with your IRA
  • Taking out a personal loan from your IRA
  • Paying yourself a salary from your IRA
  • Sweat equity
  • And lastly, buying precious metals from yourself

A similar rule to self-dealing is disqualified persons. Because you cannot do transactions with certain persons with your self-directed IRA or 401k. Who are these disqualified persons? Find out more at Self-Directed IRA & 401k Disqualified Persons

If you need to know more about your self-directed IRA rules specific situation please contact us today. We are here to help you know the rules to investing with your IRA or 401k

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