Offering Self Directed IRA definitions for prohibited transactions and disqualified persons.

Prohibited Transactions and Disqualified Persons Definitions:

A prohibited transaction is a transaction between a plan and a disqualified person that is prohibited by law.

• a transfer of plan income or assets to, or use of them by or for the benefit of, a disqualified person;
• any act of a fiduciary by which plan income or assets are used for his or her own interest;
• the receipt of consideration by a fiduciary for his or her own account from any party dealing with the plan in a transaction that involves plan income or assets;
• the sale, exchange, or lease of property between a plan and a disqualified person;
• lending money or extending credit between a plan and a disqualified person; and
• furnishing goods, services, or facilities between a plan and a disqualified person.

Certain transactions are exempt from being treated as prohibited transactions. For example, a prohibited transaction does not take place if a disqualified person receives a benefit to which he or she is entitled as a plan participant or beneficiary. However, the benefit must be figured and paid under the same terms as for all other participants and beneficiaries.

The Department of Labor (DOL) has granted class exemptions for certain types of investments under conditions that protect the safety and security of the plan assets. In addition, a plan sponsor may apply to the DOL to obtain an administrative exemption for a particular proposed transaction that would otherwise be a prohibited transaction.

For additional information, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans).



Disqualified Persons


The IRS rules prohibit an IRA from dealing or conducting transactions with certian people and/or entities. These prohibited parties are termed 'Disqualified Persons'.

Disqualified persons to your plan are:
• You
• Your Spouse
• Your Ascendants
• Your Direct Descentants
• Your Direct Descentants' Spouses
• Certain Fiduciaries (CPAs, Attorneys, Financial Planners, etc.)
• Retirement Plans Held by Disqualified Persons
• Entities Owned or Controlled by Diaqualified Persons
A Disqualified Person can NOT:
• Buy an asset from the Plan
• Sell an asset from the plan
• Live in the asset (property)
• Rent the asset
• Use an asset for personal use
• Pay for asset expenses
• Handle money related to asset
• Make improvements to the asset
• Take a commission on the purchase/sale of the asset