--- title: Who is considered a disqualified person? description: Help Center --- [Skip to content](https://support.aetrust.com/who-is-considered-a-disqualified-person#main-content) English Show submenu for translations [More support](https://support.aetrust.com/kb-tickets/new?hsLang=en) [Customer portal](https://cs.aetrust.com/tickets-view?hsLang=en) [![American Estate & Trust](https://support.aetrust.com/hubfs/Website%20Assets/Logo%20Assets/logo-text.svg)](https://support.aetrust.com/?hsLang=en) Open main navigation Close main navigation - English Show submenu for translations - [More support](https://support.aetrust.com/kb-tickets/new) - [Customer portal](https://cs.aetrust.com/tickets-view) - [Contact us](https://aetrust.com/contact) [Contact us](https://aetrust.com/contact) How can we help you? - There are no suggestions because the search field is empty. 1. [Help Center](https://support.aetrust.com/?hsLang=en) 2. [Investor Portal](https://support.aetrust.com/investor-portal?hsLang=en) 3. [Prohibited Transactions and Compliance](https://support.aetrust.com/investor-portal?hsLang=en#prohibited-transactions-and-compliance) # Who is considered a disqualified person? The IRS defines several categories of disqualified persons: ### **1. The IRA Owner (You)** You, as the IRA owner, are **always** a disqualified person. This means you cannot: - Sell or buy assets from your own IRA. - Pay yourself for managing an IRA-owned investment. - Use IRA funds for personal expenses or benefits. ### **2. Your Spouse** Your spouse is also disqualified, meaning they cannot: - Purchase assets from or sell assets to your IRA. - Live in or use property owned by your IRA. - Take a loan from or invest in your IRA. ### **3. Your Lineal Family Members** The following family members are disqualified: - **Parents** (mother, father, step-parents). - **Grandparents**. - **Children** (son, daughter, adopted children, step-children). - **Grandchildren**. - **Spouses of children or grandchildren**. ### **4. Any Entity You or a Disqualified Person Control** If you or a disqualified person **own 50% or more** of a company, trust, partnership, or estate, that entity is also disqualified. This means your IRA **cannot**: - Invest in a business that you or a disqualified person own 50% or more of. - Loan money to a business controlled by a disqualified person. ### **Examples of Disqualified Persons in Real-World Situations** ### **Example 1: Buying Real Estate from a Parent** **❌ Prohibited Transaction:** You find a great investment property that your father owns and want to purchase it using your IRA. This is **not allowed** because your father is a disqualified person. **✅ Allowed Transaction:** You purchase a property from a third party using your IRA. ### **Example 2: Investing in a Family Business** **❌ Prohibited Transaction:** Your IRA buys shares in a business that you and your spouse own 60% of. Since you and your spouse **own more than 50%**, the company is a disqualified entity. **✅ Allowed Transaction:** Your IRA invests in a company owned **entirely by unrelated parties**. ### **Example 3: Loaning Money to Your Child** **❌ Prohibited Transaction:** Your IRA makes a private loan to your son so he can start a business. Since your son is a disqualified person, this is **not allowed**. **✅ Allowed Transaction:** Your IRA makes a loan to an **unrelated third party**.   ### **Example 4: Taking a Distribution Directly from an IRA-Owned LLC** **❌ Prohibited Transaction:** Your IRA owns an LLC that holds investments, and instead of taking a distribution through the IRA custodian, you withdraw funds directly from the LLC to your personal bank account. This is **not allowed** because it bypasses the IRA custodian and is considered an **immediate taxable event**. **✅ Allowed Transaction:** The LLC transfers funds back to the IRA, and then you take a distribution through the custodian. ### **Final Thoughts** Understanding **who is considered a disqualified person** is critical to maintaining the tax-advantaged status of your IRA. Transactions between your IRA and a disqualified person **can result in penalties, taxes, and even disqualification of your entire IRA**. If you’re ever unsure whether a transaction involves a disqualified person, it’s best to consult **AET’s support team or a qualified tax professional** before proceeding. - [Investor Portal](https://support.aetrust.com/investor-portal?hsLang=en#main-content) - [Online Portal](https://support.aetrust.com/investor-portal?hsLang=en#online-portal) - [Transfer-ins and Rollovers](https://support.aetrust.com/investor-portal?hsLang=en#transfer-ins-and-rollovers) - [General Account Questions](https://support.aetrust.com/investor-portal?hsLang=en#general-account-questions) - [Tax Reporting and Compliance](https://support.aetrust.com/investor-portal?hsLang=en#tax-reporting-and-compliance) - [Signing Request](https://support.aetrust.com/investor-portal?hsLang=en#signing-request) - [Bill Pay](https://support.aetrust.com/investor-portal?hsLang=en#bill-pay) - [Prohibited Transactions and Compliance](https://support.aetrust.com/investor-portal?hsLang=en#prohibited-transactions-and-compliance) - [Fees and Payments](https://support.aetrust.com/investor-portal?hsLang=en#fees-and-payments) - [Investment Questions](https://support.aetrust.com/investor-portal?hsLang=en#investment-questions) - [Account Closure and Transfer-out](https://support.aetrust.com/investor-portal?hsLang=en#account-closure-and-transfer-out) - [Assets](https://support.aetrust.com/investor-portal?hsLang=en#assets) - [Business Portal](https://support.aetrust.com/business-portal?hsLang=en#main-content) - [Getting started](https://support.aetrust.com/business-portal?hsLang=en#getting-started) - [FAQ](https://support.aetrust.com/business-portal?hsLang=en#faq) - [Training](https://support.aetrust.com/business-portal?hsLang=en#training) - [Investments](https://support.aetrust.com/business-portal?hsLang=en#investments) [![American Estate & Trust](https://support.aetrust.com/hubfs/Website%20Assets/Logo%20Assets/logo-text.svg "American Estate & Trust")](https://aetrust.com) [mailto:support@aetrust.com](mailto:support@aetrust.com) Copyright © 2025, American Estate & Trust