What are prohibited transactions?

A prohibited transaction is any improper use of an IRA account or annuity by the IRA owner, his or her beneficiary, or any disqualified person.

  1. An IRA cannot invest in life insurance or collectibles.
  2. An IRA cannot invest in S-corporation stock.
  3. An IRA owner cannot buy property for personal use with IRA funds.
  4. An IRA owner cannot borrow money from their IRA.
  5. An IRA owner cannot use IRA assets as collateral for a loan.
  6. An IRA owner cannot execute a direct or indirect sale, exchange, purchase, or lease of property between the IRA and a disqualified person (yourself, spouse, parents, grandparents, children and their spouse, grandchildren and their spouse).
  7. An IRA owner cannot (directly or indirectly) furnish goods, services, or facilities between the IRA and a disqualified person.
  8. An IRA owner cannot invest in something where they personally benefit from the investment either monetarily or non monetarily. An example would be receiving compensation as a real estate agent or being given free perks or privileges because of an IRA’s investment.
  9. An IRA owner or disqualified party cannot put any sweat equity into an investment (such as cutting grass or fixing the roof on a real estate investment).