Prohibited Transactions Disqualified Assets — Video

Prohibited transactions disqualified assets are crucial concepts for those with 401Ks and IRAs. Do you know for sure that all of your transactions are ok?


Transcript:   This is John Park, PGI Self-Directed and contributor to BawldGuy Talking. Today we’re going to talk about the holy trinity of prohibited transactions. You’d be maybe saying, “What the heck are you talking about?” The holy trinity in cooking if I remember correct is green peppers, onions and celery. The holy trinity in prohibited transactions are disqualified assets, disqualified individuals and self-dealing. Today, we’re going to attack the first one. What are disqualified assets for an IRA? Quite honestly, the only thing that the IRS specifically prohibits an IRA plan from investing into is life insurance contracts and collectibles. Thank goodness most of my clients have zero interest in investing in life insurance contracts because it is prohibited. However, collectibles, what are they? Collectibles can be things like antique cars, wine collections, coin collections, stamp collections, artwork, rug work, et cetera. Those are the only two assets that your IRA cannot specifically invest into. What about 401K’s? Same exact thing other than technically speaking of 401K plan can purchase life insurance contracts. It really is just limited to the prohibition with collectibles. At the end of the day, what you want to keep in mind is with your self-administered 401K plan, you can invest in any asset class that you want; including things like hard money loans, deeds of trust, discounted notes, et cetera. You have that power. You have that ability. As it relates to assets only, the only way you are getting in trouble from an asset standpoint is if you invested in collectibles as we just mentioned. With that, I hope this information is helpful to you. I appreciated doing the video post. I look forward to seeing you on the next one. This is John Park with PGI Self-Directed. Bye.

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About BawldGuy

I'm second generation real estate, first licensed in fall of 1969. Having been mentored by several iconic brokers, I'm also CCIM trained, having completed all 200 hours back in 1980. Have successfully executed well over 200 tax deferred exchanges, many of which have been multi-state in nature. Strong points are analysis and the creation and real world application of Purposeful Plans employing several strategies synergistically. The idea is to arrive at retirement with the most after tax income possible, backed by the largest net worth.

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