What restrictions are there on using a self-directed IRA?

When self-directing your retirement account, you must be aware of the prohibited transaction rules found in IRC 4975. These rules don’t restrict what you can invest in, but rather with whom the account can participate in transactions. The prohibited transaction rules restrict your retirement account from transactions with someone who is a disqualified. Disqualified persons include: The account owner, their spouse, children, parents, and certain business partners. On the other hand, your retirement account could buy a rental property from your cousin, friend, sister, or a random third-party.