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Lane
Lane , JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 9203
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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A new question: Coudl you please provide a bit more information

Customer Question

A new question: Coudl you please provide a bit more information on"disqualified persons and prohibited transactions"?
I am a small business owner in California, my wife works for high tech. We plan to use IRA money (after talking to custidioan) to buy REOS single family for rental.
Submitted: 3 years ago.
Category: Finance
Expert:  Lane replied 3 years ago.

NPVAdvisor :

Sure switched to Q and A after you left, so it should be at the end of the other question, but here ya go ...

NPVAdvisor :

Disqualified persons are …


Member of your family (spouse, ancestor, lineal descendant and any spouse of a lineal descendant)


Any party that exercises discretionary authority or control in managing your IRA or its assets


Any party that charges to provide investment advice on the IRA (or has authority or resp. to charge)


Any party administering your IRA (Bank, Trust Company, Brokerage Firm)


Any entity in which you own at least 50% stake


 

NPVAdvisor :

and prohibited transactions are any of the following done with or by them or you:

NPVAdvisor :

Prohibited transactions:



  1. Borrowing Money from your IRA plan

  2. Selling Property to your IRA plan

  3. Paying unreasonable compensation for Management of your Plan

  4. Using the IRA as a security for a loan

  5. Buying property for personal use

NPVAdvisor :

This is mostly covered by an area of the law called self dealing

NPVAdvisor :

looks like you're typing ... I'm here

Customer:

Great thanks. A quick question. do you think, if someone uses such advanced tools (like Custodian managed IRA for real estate), and already has 3 rentals and small business. IRA is more likely to audit such investor for deductions, etc., or you think, it wouldn't a matter? Just wanted to check if IRA questions more to such advanced investors.

NPVAdvisor :

No, if you use a custodian that does that, you probably lower the risk of an audit...it's all very clean, theier understanding what is and isn't allowed and whhat could be construed as a prohibitd transaction, they just won't do

NPVAdvisor :

You WILL pay a little more for the custodian, that just using a bank or brokerage ... maybe 40/yr ... but they are lowering your risk

Customer:

Perfect. That great, thanks much.

Customer:

Do you know any other custodian other than pensco also? or I can check online.

NPVAdvisor :

They do all the IRS reporting, and continually audit as all the transactions go through them (as all transactions go through all custodians) ... it's just that say, if you have a check written to yourself from the IRS they'd catch that and tell you a better way to handle it, for example (OR be sure that the reporting was done right, so it's not penalized)

NPVAdvisor :

Hang on

NPVAdvisor :

http://www.accuplan.net/

NPVAdvisor :

http://www.trustetc.com/landing/ira-success-kit/success-kit.php?etcls=PPC&gclid=COiK7byKyLQCFQeDnQodXwMACQ

Customer:

thanks much for the great service. will be in touch in future also. Have a great Happy New Year.

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