Things that Demand Attention!

What Can You Invest In?

The real question is what are you NOT allowed to invest in. The IRS has prohibited investments in the following categories. Some of the prohibited investments are:

Life Insurance Contracts
Collectibles such as:

Artwork
Rugs
Antiques
Metals
Gems
Stamps
Coins
Beverages (wine etc.)
Stock in a S-Corporation
other tangible personal property

See Internal Revenue Code Section 401 (IRC § 408(a) (3)) for full details.

If you set up TheCheckbookIRA through our Turnkey Solution and have a question about an investment, we will do our best to help. In some instances, you may be referred to an associate CPA or Attorney for further research.

Prohibited Transactions

The IRS specifically prevents any of the following “disqualified” persons from engaging in business dealings with your retirement money. When you see the words “you” and “yourself” it means you and all other “disqualified persons.” Here are some examples:

You cannot sell, exchange, lease or basically do anything with assets that belong to or will belong to IRA or LLC. For example: Don’t try to sell your house to the IRA.
The income from the property the IRA owns belongs to the IRA. You cannot pay yourself a property management fee or any kind of fee for that matter when it comes to dealing with the assets of the IRA.
You cannot make loans with IRA funds to yourself. Likewise, you cannot guarantee loans for the IRA or LLC purchases.
While you can manage the business dealings through the LLC, you cannot provide goods, services or facilities to the IRA or LLC. For instance, don’t use your old refrigerator in a rental unit owned by your IRA.
You cannot directly benefit from the IRA-LLC investment. Don’t even think about starting a business and paying yourself a salary.
You cannot use a vacation home your IRA owns for your personal vacations. Likewise if the IRA owns a business, you cannot use the business assets for your own benefit.

Who are Disqualified Persons?

The list is short:

The IRA owner.
The IRA owner’s spouse.
Ancestors (Mom, Dad, Grandparents).
Lineal Descendants (daughters, sons, grandchildren).
Spouses of Lineal Descendants (son or daughter-in-law).
Investment advisors.
Fiduciaries – those providing services to the plan.
Any business entity i.e., LLC, Corp, Trust or Partnership in which any of the disqualified persons mentioned above has a 50% or greater interest.

It is interesting to note that the following are not “disqualified” persons:

Brothers and sisters.
Stepchildren or step grandchildren
Friends