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Prohibited IRA Transactions

The Internal Revenue Code prohibits certain transactions in any IRA. If you (or your beneficiary) complete any of these transactions, your IRA will lose its tax exemption and its fair market value must be included in your gross income for that year. The amount of a prohibited transaction may be subject to an additional 15% penalty tax.

  • IRA assets may not be invested in life insurance or commingled with any other property except in a common trust fund or mutual fund.
  • Transactions between you (or your beneficiary) and the assets held in the account are not allowed. The specific prohibited transactions include selling or exchanging property with the account, or borrowing from the account.
  • You may not pledge or use your IRA as security for a loan.