I reference an article about prohibited transactions for IRA’s. If you have, or are considering an IRA, this article spells out the type of transactions that can get you into difficulties.
The article is titled: Financial Planning: Watch out for IRA prohibited transactions by Steven Merrell* (published April 3, 2109) in the Monterey Herald.
As Steven Merrell notes in his article: “An increasing number of people are now using their IRAs to buy real estate, hedge funds, precious metals or even closely held businesses.”
However, as the article points out – there are pitfalls to certain of those transactions. I particularly liked Mr. Merrell’s example of purchasing a vacation rental property.
The article is one that I am grateful my researcher found and is one that is important enough to pass on.
In addition, from the irs.gov website:"Generally, a prohibited transaction in an IRA is any improper use of an IRA account or annuity by the IRA owner, his or her beneficiary or any disqualified person.
Disqualified persons include the IRA owner’s fiduciary and members of his or her family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant).
The following are examples of possible prohibited transactions with an IRA. (note use of the term 'possible')
- Borrowing money from it
- Selling property to it
- Using it as security for a loan
- Buying property for personal use (present or future) with IRA funds"
When in doubt, consult a professional about your IRA transaction.
* from the article: Steven C. Merrell is an investment adviser and partner at Monterey Private Wealth Inc., in Monterey. Send questions concerning investing, taxes, retirement or estate planning to Steve Merrell, 2340 Garden Road Suite 202, Monterey 93940 or [email protected].
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