The individual retirement account market, which now accounts for over $7 trillion in assets, is undergoing some significant changes. There are now a number of IRA custodians that permit investments in private placements, real estate and other non-publicly traded assets, and the Department of Labor recently finalized rules regulating IRA advisors. So it would behoove advisors to familiarize themselves with the nuances of these accounts, especially IRA-prohibited transaction rules. Recognizing possible missteps is key to avoiding significant tax consequences.A prohibited transaction is any of several actions listed in Internal Revenue Code Section 4975(c)(1) that involves an IRA and a “disqualified person.”Disqualified PersonsUnder the prohibited transaction rules, disqualified persons include:
Source: An Advisor’s Guide to IRA Prohibited Transactions
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David R. Duringer, JD, LL.M, is a concealed firearm instructor and tax lawyer specializing in business and estate planning; licensed to practice law in the states of California and Washington. He is managing shareholder at Protective Law Corporation, serving Southern California from its Laguna Hills (Orange County) headquarters and satellite offices in San Diego County (Coronado and Carlsbad).
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