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What is a prohibited transaction?

A prohibited transaction occurs when your self-directed retirement account engages in a transaction that directly or indirectly benefits the accountholder or another “disqualified person” instead of serving the account exclusively for retirement purposes.

Under Internal Revenue Code Section 4975, prohibited transactions generally involve:

  • Using assets for personal benefit

  • Buying from, selling to, or lending money to yourself or certain family members

  • Paying yourself (or a disqualified person) for managing account-owned property

  • Personally guaranteeing a retirement account loan

Who is a disqualified person?

Disqualified persons include:

  • You (the accountholder)

  • Your spouse

  • Your lineal ascendants and descendants (parents, grandparents, children, grandchildren) and their spouses

  • Certain fiduciaries or advisors

  • Businesses you or other disqualified persons control

Why it matters

Engaging in a prohibited transaction can result in the disqualification of your STRATA account and the loss of its tax-advantaged status, potentially triggering taxes and penalties.

Because prohibited transaction rules can be complex, review IRS guidance carefully and consult a qualified tax or legal professional before entering into a transaction involving your STRATA account.

Please review STRATA's Rules and Regulations page for more information.