Self-directed IRA accounts allow more control than a typical retirement account; however, the IRS does place limitations on certain investments and the way the money is transacted. Sprout takes pride in its awareness and care for these regulations to protect its clients.
If, for any reason, a client makes a transaction that is prohibited, the self-directed IRA account will lose its tax-protected IRA status. This will trigger tax responsibilities on that money and potentially required penalties.
A general rule to keep in mind is that your self-directed IRA account funds cannot make a transaction that directly benefits you or any other disqualified individuals. This is known as “self-dealing” and is prohibited.