IRA Prohibited Transactions: Rules You Need To Know

If you have an individual retirement account (IRA), you probably already know that it is a great way to save for when you retire.

Through your IRA, you can invest in stocks, bonds and mutual funds. Your IRA is governed by regulations established by the Internal Revenue Service (IRS). While the IRS does not dictate what you can do, the regulations it has enacted do provide limitations that prohibit certain types of transactions.

Disqualified Persons

The Internal Revenue Code (IRC) Section 4975 defines a “disqualified person” as:

Prohibited Transactions

In general, the IRS prohibits any transaction that occurs between individuals on the “disqualified person” list and the IRA. These types of transactions call into four categories.

Your Custodian Can Help

Tax laws can be complicated and confusing. Hiring reputable professionals like the team at Royal Legal Solutions can help. Contact us today to find out more.