{"id":18868,"date":"2018-05-08T09:00:55","date_gmt":"2018-05-08T13:00:55","guid":{"rendered":"http:\/\/www.escapeartist.com\/?p=18868"},"modified":"2020-09-17T07:57:37","modified_gmt":"2020-09-17T12:57:37","slug":"disqualified-persons-self-directed-ira","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/disqualified-persons-self-directed-ira\/","title":{"rendered":"Disqualified Persons in a Self Directed IRA"},"content":{"rendered":"

If you want to improve the performance of your retirement account, consider investing offshore. Want to get in on the best ICOs or buy a rental property in a a high value international market, you\u2019ll \u00a0need convert your retirement account into a self directed IRA. When you go offshore, you need to watch out for disqualified persons in a self directed IRA. Here\u2019s how to stay within the rules when you\u2019re offshore. <\/span><\/p>\n

When you invest a portion your retirement abroad, or move your entire account offshore, you must follow the same rules as if that account were in the United States. If you\u2019re caught cheating, the penalties will be swift and severe\u2026 and your entire account might be affected (not just the portion you used for the improper investment). <\/span><\/p>\n

Most investors have a US custodian to help them stay within the lines. When you invest using a self directed account, your custodian is always there for advice and support. They will also ask questions and investigate to ensure no rules will be violated by a particular investment. <\/span><\/p>\n

This isn\u2019t the case when you invest using an <\/span>offshore IRA LLC<\/span><\/a>. You\u2019re in total control with an LLC and have no one backing you up. You must understand all of the rules and ensure that each and every transaction is compliant. And, <\/span>considering that the entire account is at risk on every investment, the stakes are high<\/b>. <\/span><\/p>\n

The general idea behind the disqualified persons in self directed IRA rules is that all transactions must be at arm’s length. The best way to ensure that all the investments you make are fair to the account, and in the best interest of the account, is by prohibiting transactions with related parties. <\/span><\/p>\n

That is to say, you may only transact with unrelated 3rd parties. Persons and companies that are not related to you and with whom you\u2019ll (hopefully) strike a fair deal. <\/span><\/p>\n

Note: When you create a self directed IRA or an offshore IRA LLC, you become both the account owner and the fiduciary. Thus, you need to understand all of the applicable rules. <\/span><\/p>\n

The underlying principle of the disqualified person rules for self directed IRAs is that you, the account owner, should treat the account as a professional investment advisor would. You will only make investments that you believe will increase the value of the account or protect the value of the account. You won\u2019t make investments that will benefit you or your relatives. <\/span><\/p>\n

Ok, enough of the preamble. <\/span>Who are disqualified persons in a self directed IRA?<\/b><\/p>\n

Disqualified persons are individuals or entities between whom an IRA is prohibited (absent a special exception) from engaging in any direct or indirect sale or exchange or leasing of any property; lending of money or other extension of credit; furnishing goods, services or facilities; or transferring to or permitting the use of IRA income or assets.<\/span><\/p>\n

The following members of your family are disqualified persons.<\/span><\/p>\n