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I've recently been reading up on Roth IRA to Self-Directed IRA plans. And I've seen a few places that mention their use as a seed-fund to start your own business.. Where can I find the parts of the tax code that regulate self-directed IRAs, and the self-dealing statutes? Are there any additional gotchas that I should know?

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  • Related: money.stackexchange.com/questions/150/… .. except it doesn't ask about specific parts of the tax code and self-dealing statutes.
    – Chris W. Rea
    Apr 28, 2011 at 10:42
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    That question was answered on the lines of withdrawl, I'm looking to go self-directed to avoid withdrawal w/ penalty and to maintain tax-exempt growth of my retirement. This is owning the business through the Roth, a totally different solution.
    – Evan Carroll
    Apr 28, 2011 at 16:50
  • Agreed, different. Why I said "Related", not "Duplicate" ;-)
    – Chris W. Rea
    Apr 29, 2011 at 21:05

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Read the Forbes article titled IRA Adventures. While it's not the detailed regulations you certainly need, the article gives some great detail and caution. You may be able to do what you wish, but it must be structured to adhere to specific rules to avoid self dealing. Those rules would be known by the custodians who would help you set up the right structure, it's well buried within IRS regs, I'm sure. Last, in general, using IRA funds to invest in the non-traditional assets adds that other layer of risk, that the investment will be deemed non-allowed and/or self-dealing. So, even if you have the best business idea going, be sure you get proper council on this.

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