| Very interesting. The Retirement Industry Trust has a long page: https://ritaus.org/how-to-avoid-prohibited-transactions/ It's also confusing. In their "do's": > Don’t provide more than ministerial services (e.g., decision-making) to your IRA or IRA owned entity (e.g., no “sweat equity”); But in the "Don'ts": "Do consider using an IRA when you, a relative or friend starts a new business." Here's another writeup around that provision by a CFP: https://www.kitces.com/blog/self-directed-ira-prohibited-tra... Key quote: > "However, if someone establishes a self-directed IRA with the aim to invest IRA dollars into a small private held business that they control or own – such that the business entity, and/or their role in the business, can cause it to be a disqualified person – there is a risk that allocating IRA dollars to own that business can cause the IRA itself to become disqualified (and treated as fully distributed as a taxable event). After all, if the IRA puts money into the business, and the business then uses that money to pay a salary to the IRA owner (as an officer of the business), the IRA owner has effectively used the assets of the IRA to enrich themselves." That addresses the self-dealing part of a transaction like this that would be a common-sense red flag. This is all clear as mud; I'm definitely confused enough that I'll be asking my CPA for a recommendation. |