CHARLOTTE, NC / ACCESSWIRE / March 18, 2020 / The protections of an IRA are not unlimited. That’s according to a recent post at American IRA-a Self-Directed IRA administration firm-which explained how disqualified persons and prohibited transactions work within an IRA. As the post notes, understanding who a “disqualified person” is in relation to the investor is the key to understanding the types of IRA transactions that are prohibited by the IRS.
In a Self-Directed IRA, an investor has nearly unlimited options for investing-including real estate, precious metals, tax liens, and more. It’s through the Self-Directed IRA that these investors can gain access to tax protections on a wide range of diverse retirement assets. However, these transactions are not unlimited, as the post notes. Not only does the IRS make certain types of investments against the rules-such as owning fine art within an IRA-but, it makes a distinction between the types of people the IRA can do business with.
This is done by establishing who a “disqualified person” is. For example, the post notes, someone holding an IRA could not use the IRA to sell property to someone like a spouse. This is because the spouse would count as a “disqualified person.” The IRS’ goal with these rules is to have investors treat IRAs as retirement investments, and not as tax shielding accounts. Although retirement investments can have tax protections, these protections come with the limits set by the IRS.
Other prohibited transactions include IRA investors using the IRA to make a private loan to someone they know, such as a son or daughter-in other words, a disqualified person.
“People know that there are lots of things you can do with the Self-Directed IRA,” said Jim Hitt, CEO of American IRA. “But it’s just as important that people know what you cannot do. If you break the rules, you face stiff penalties. That’s how investors can quickly wipe away all the good work they have otherwise done in their IRA and in preparing for retirement.”
American IRA, LLC, was established in 2004 by Jim Hitt, CEO in Asheville, NC.
The mission of American IRA is to provide the highest level of customer service in the self-directed retirement industry. Jim Hitt and his team have grown the company to over $400 million in assets under administration by educating the public that their Self-Directed IRA account can invest in a variety of assets such as real estate, private lending, limited liability companies, precious metals and much more.
As a Self-Directed IRA administrator, they are a neutral third party. They do not make any recommendations to any person or entity associated with investments of any type (including financial representatives, investment promoters or companies, or employees, agents, or representatives associated with these firms). They are not responsible for and are not bound by any statements, representations, warranties or agreements made by any such person or entity and do not provide any recommendation on the quality profitability or reputability of any investment, individual or company. The term “they” refers to American IRA, located in Asheville and Charlotte, NC and Atlanta, GA.”
SOURCE: American IRA, LLC
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