Loans as an investment in a IRA

[Guest SPollock]

We have taken over an account where the client has made loans out of his IRA to non-family members. The IRA holds the notes as an asset of the IRA and the repayment of the loans are considered earnings on the investments that are contributed to the IRA. The owner of the IRA is under 59 1/2 (if this matters). Is this a prohibitive transaction?

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