What is a prohibited transaction?
A prohibited transaction occurs when an IRA owner uses IRA assets in a self-serving or self-dealing manner that improperly benefits the IRA owner.
It may be a prohibited transaction anytime an IRA owner or beneficiary has a self-directed IRA account invested in a business in which the account owner also engages outside of the IRA, has unexplained large deposits or balances in the IRA, or funnels business expenses or income through a Roth IRA.