There are numerous example of what could be considered to be an IRS “self-dealing” Prohibited Transaction. However, let’s use a few quick examples so you have an idea on “self-dealing” transactions to be aware of:
1) Self-dealing with a blood-line ascendent or descendent such as your self-directed 401(k) plan purchasing real estate from your father.
2) Self-dealing with yourself (remember, you are a disqualified individual to your plan) by having your self-directed 401(k) plan purchase an asset from yourself.
3) Personal use of an asset that your self-directed 401(k) plan already owns. For example, your self-directed 401(k) plan purchases vacation property in Mexico and you and your family use the property to vacation.
4) Receiving personal benefit from the self-directed 401(k) plan directly. For example, your self-directed 401(k) plan owns a property that needs its roof repaired. You execute the work (e.g., sweat equity) needed to repaid the roof and compensate yourself from the plan for the work performed.
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