Who are disqualified parties?
Many of the prohibited transactions are the result of a very simple equation: • Plan (or plan asset) + Disqualified person = Prohibited Transaction A plan is defined 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 (parents, 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.
Many of the prohibited transactions are the result of a very simple equation: • Plan (or plan asset) + Disqualified person = Prohibited Transaction A plan is defined 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 (parents, 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.
Many of the prohibited transactions are the result of a very simple equation: Plan (or plan asset) + Disqualified person = Prohibited Transaction A plan is defined 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.
Many of the prohibited transactions are the result of a very simple equation: Plan (or plan asset) + Disqualified person = Prohibited Transaction. A plan is defined to include tax-qualified plans, IRAs and other tax favored arrangements. For the complete definition you can reference IRC § 4975(e) (1) & (2).
