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⚠️ What Happens If You Break a Self-Directed IRA Rule?
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Q: What happens if I engage in a self-directed IRA prohibited transaction?
A: The consequences are severe: the entire self-directed IRA — not just the asset involved — becomes subject to income tax and, if applicable, a 10% early-distribution penalty in the year the prohibited transaction occurred. If the violation happened in a prior year, tax and penalties apply as of that year rather than requiring amended returns for every year since.
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