What classifies as a disqualified party?
Many prohibited transactions result from this very simple equation: Plan (or plan asset) + Disqualified person = Prohibited Transaction By definition a plan is to include tax-qualified plans, IRAs and other tax favored arrangements. For the complete definition you can reference IRC § 4975(e) (1). A disqualified person (IRC §4975(e) (2)) is defined as: The IRA owner The IRA owner’s spouse Ancestors (Mom, Dad, Grandparents) Lineal Descendents (daughters, sons, grandchildren) Spouses of Lineal Descendents (son or daughter-in-law) Investment advisors Fiduciaries – those providing services to the plan Any business entity i.e., LLC, Corp, Trust or Partnership in which any of the disqualified persons mentioned above has a 50% or greater interest.
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