Are You Engaging In Prohibited Transaction?

Most investors have heard of prohibited transactions, but many are not sure what they are and what the consequences are of conducting them. I will cover some aspects of the prohibition. This will help you in planning your retirement.

The Prohibited Transactions

- A prohibited transaction is a transaction between your IRA and a disqualified person who is prohibited by law, such as your IRA cannot have any business with or make an investment involving the disqualified persons or you may not provide benefits to any disqualified person. To be more specific, prohibited transactions generally include the following transactions:

- If there is transfer of the plan income or assets to a disqualified person.
- If the plan income or assets are used by or for the benefit of, a disqualified person.
- If a fiduciary uses the plan income or assets for his or her own interest.
- If a fiduciary receives any consideration for his or her own account from any party dealing with the plan in a transaction that involves plan income or assets.
- If any sale, exchange, or lease of property i.e. real estate investment has occurred between a plan and a disqualified person.
- Any money lending or extending of credit between a plan and a disqualified person.
- Any furnishing of goods, services, or facilities between a plan and a disqualified person.

That does not mean that you just can’t use your IRA funds. In fact a prohibited transaction does not take place if a disqualified person receives a benefit to which he or she is entitled as a plan participant or beneficiary. However, the benefit must be figured and paid under the same terms as for all other participants and beneficiaries.

While above points must be taken care of while dealing with IRA funds, there are myriad of ways through which you can earn handsome returns using your IRA funds without attracting the penalty. One of them is real estate investment. Yes there is a rather unknown IRS code that allows IRA funds to be invested in profitable real estate. It is one virtually unknown way in which you can build your retirement planning and retire wealthy. If you plan it right, you can retire with almost a million dollars in your IRA.
Those of you real estate investor types who want to know more about investing IRA funds in real estate would do well to attend the seminar on December 3, 2007 at South San Francisco, CA organized by Wealthy IRA where a powerhouse team of experts would dwell on…

-> The “unknown IRS code” that allows IRA funds to be invested in Real Estate.
-> How you can buy and sell real estate within your IRA, 100% Tax Free!
-> The legal and tax ramifications of investing your IRA in real estate.