Is This Legal?

It does not surprise us at the IRA Club that the two most common questions we are asked is “How long have Self Directed IRA’s been available?” and “Is this legal?”.

How long have Self Directed IRA’s been available? The answer is since January 1, 1975.

^{_{In 1974, Congress passed the Act allowing IRA’s. The Act (as amended) lists only three prohibited transactions; transactions that may not take place inside an IRA.}}

• No insurance (life or health)
• No collectibles (such as wine, art, stamps etc.)
• No dealings with a disqualified person or party (more detail on this later)
  

If an investment is not on the list that Congress provides us then the investment may be held inside an IRA.

Is this legal?
You may contact the IRS or simply obtain a copy of “IRS Publication 590”. This publication is the basic IRS information statement on the topic of IRA’s. Turn to page 47 (2006 Returns Edition) where you will find the IRS explanation of “Prohibited Transactions”. You may obtain Publication 590 for free at any IRS office or on line at the IRS web site.