Self Directed IRA: Glossary of Terms
The terms below are in alphabetical order. Not intended to be comprehensive, they are the most common terms associated with Self Directed IRA investing.
A type of Self Directed IRA plan that combines a custom designed pension plan and a C Corporation allowing the owner to actively participate in a business and draw a salary.
A type of IRA also referred to as a Self Directed IRA LLC , a Real Estate IRA or Solo401(k). In every instance of the terms being used, a bank account is established for the legal structure. Hence, the use of the term “Checkbook Control IRA”
When a transaction occurs between a retirement plan and a Disqualified Person this generates a prohibited transaction. Such prohibited transaction are a violation of IRS rules, and result in severe tax penalties.
A prohibited transaction occurs when there is any direct or indirect:
- Sale or exchange, or leasing, of any property between a plan and a disqualified person;
- Lending of money or other extension of credit between a plan and a disqualified person;
- Furnishing of goods, services, or facilities between a plan and a disqualified person
- Transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a plan;
- Act by a disqualified person who is a fiduciary whereby he deals with the income or assets of a plan in his own interest or for his own account; or
- Receipt of any consideration for his own personal account by any disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan.