Self-directed IRAs (SDIRAs) offer unique investment opportunities and complex regulations. Proper knowledge of these ensures your compliance with IRS rules, helps avoid costly penalties, and allows your clients to maximize their retirement savings by leveraging the diverse investment options available with SDIRAs.
Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.
Q: Can an SDIRA own a bed and breakfast inn if the IRA owners live in the B&B?
A: No, the B&B cannot be in an SDIRA if the owners live there, as that would be a prohibited transaction.
Q: Is the account owner a disqualified person?
A: Yes, the account owner is considered a disqualified person and is prohibited from participating in certain transactions between themselves and the IRA for their own benefit. For example, if the IRA holds real estate, the owner cannot use it as their residence or vacation home.
Q: Will dividends be treated as contributions or income?
A: Dividends are considered income generated from the investments in the SDIRA, not contributions to the IRA.
Q: Can annual contributions continuously be made to the SDIRA, or is it just a one-time transfer from a regular IRA to an SDIRA?
A: Yes, if you qualify to make contributions to a traditional or Roth IRA, you can also make continuous contributions to the SDIRA.
To learn more about the tax treatment of self-directed IRAs, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our free 30-day trial.
About National Association of Tax ProfessionalsThe National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.
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Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing.