• You can't invest in any company that belongs to a spouse, parent, or child. Sibling-owned companies are acceptable, however, as long as you can make the case that the sibling is actually in control.

  • You can't take out any profits or benefit at all from the investment before you're 59.5 years old. If, for example, you use the company credit card for a personal expense, the IRS could impose fines and taxes worth 155 percent of the IRA or even more. "Don't even bother buying a Big Mac if you're not structuring this right," says Hubert Bromma, CEO of the Entrust Group.

  • IRS rules related to self-directed IRAs aren't hard and fast, and many decisions are made on a case-by-case basis. For example, generally you can't own 50 percent or more of the business, unless the company has a minority shareholder with complete veto power over all transactions. But even that scenario will not always pass regulatory muster.

  • The best way to deal with the ownership restrictions may be to split up the company. Four siblings, for example, could each own 25 percent of a business and keep it in family hands. Or you could own 49 percent of the company and sell the rest in small chunks. "If you have five investors at 10 percent each, you'll probably win all the arguments but on paper you've fulfilled the 50 percent rule," says Rania Sedhom, an attorney with law firm BDO Seidman.

Correction: This story incorrectly identified BDO Seidman as a law firm. It is a consulting and accounting firm.