Self-directed individual retirement accounts provide a great deal of freedom, flexibility, and choice of potential self-directed investments. However, they are also governed by a set of rules that self-directed investors must be aware of and follow.

Prohibited Transactions

Some types of self-directed transactions violate the basic intent of your IRA, and may subject your account to risks and penalties. Your retirement plan is intended to benefit you when you retire and not before. Transactions that can be interpreted as providing immediate financial gain to the account holder or other disqualified persons holders are not allowed.

For example, an IRA holder may not:

• Borrow money from the IRA
• Sell, exchange or lease property to their IRA
• Receive unreasonable compensation for managing property held by the IRA
• Use their IRA as security for a loan
• Transfer plan income or assets to disqualified persons
• Lend IRA money to disqualified persons
• Extend credit on their IRA to disqualified persons
• Furnish goods, services, or facilities to disqualified persons
• Allow fiduciaries to obtain or use the plan's income or assets for their own interest

Disqualified Person

• The IRA holder and his or her spouse
• The IRA holder's lineal descendants, ascendants and their spouses
• Investment advisers and managers
• Any corporation, partnership, trust, or estate in which the IRA holder has a 50 percent or greater interest
• Anyone providing services to the IRA, such as the trustee or custodian

(See IRS Section 4975 for more information on prohibited transactions)

Prohibited Investments

You may NOT invest your self-directed IRA funds in collectibles, which include works of art, rugs, antiques, metals other than gold, silver and palladium bullion, gems, stamps, coins (except certain U.S.-minted coins), alcoholic beverages, and other tangible personal property as may be defined by the Secretary of the Treasury are prohibited.

However, your IRA may invest in one, one-half, one-quarter, or one-tenth ounce U.S. gold coins, or one-ounce silver coins minted by the Treasury Department. It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bullion.