What are the penalties if I engage in a "prohibited transaction" or a "disqualified transaction"?

Your investment may be disallowed under Internal Revenue Code Section 408 or result in a “Prohibited Transaction” under Internal Revenue Code Section 4975 and could result in the immediate disqualification of your IRA.

Although IRAs are generally not ERISA plans, the Department of Labor has jurisdiction over these plans for purposes of the prohibited transaction rules, including individual requests for exemptions from those rules.   There are two different consequences for incurring a prohibited transaction under the Code:

The prohibited transaction rules are extremely broad. Thus, the IRA owner self directing his investments must be especially cautious in engaging in transactions that could compromise his best judgment or result in indirectly benefiting him.

Please contact one of our Self Directed IRA Experts at 800-472-0646 for more information.

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