CHARLOTTE, NC / ACCESSWIRE / March 28, 2020 / When is it appropriate to make loans to family members? Not when using a Self-Directed IRA, according to a recent post at American IRA. The Self-Directed IRA administration firm-based in Asheville, NC-tackled the topic from multiple angles, first addressing the issue of what it means to loan family members money, and then the potential for using IRA funds for personal transactions.
In short, don’t do it, according to the post. The IRS limits transactions with “disqualified persons,” and in fact prohibits them. That means that anyone using a Self-Directed IRA for the benefit of family members may face stiff penalties.
Investors who use a Self-Directed IRA are used to a great amount of freedom for many reasons. For starters, the Self-Directed IRA opens up the possibility of an investor choosing their own investments. Holding nontraditional assets such as private notes or real estate within a Self-Directed IRA allows investors to use tax protections on a wide variety of retirement assets.
But it’s the distinction between retirement and personal assets that gets to the core of what makes it impossible to use IRA funds for the benefit of personal relations. Because the IRS restricts the use of IRA funds for “disqualified persons,” the tax protections of an IRA are only available to investors who use these protections for strictly retirement-based assets and investments. That means that anyone using funds for a personal loan would be expected to only use personal-and taxable-funds.
“People are often interested in what they can do with an IRA, and the answer is quite a lot,” said Jim Hitt, CEO of American IRA. “But it’s also important to point out where the limits and the boundaries are. Here’s one case where transacting with a disqualified person can lead to hardships for the investor.”
For more information on private notes and loans within a Self-Directed IRA, visit the post by clicking to www.AmericanIRA.com. Interested parties may also contact the Self-Directed IRA administration firm by calling 866-7500-IRA.
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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