Disqualified individuals include the IRA owner's trustee and family members (spouse, ancestor, linear descendant, and any spouse of a linear descendant). However, there are IRS rules that govern Solo 401 (k) plans. The IRS has restricted certain transactions between the Solo 401k plan and a “disqualified person.” The basis for these rules was the assumption of Congress that certain transactions between certain parties are inherently suspicious and should be rejected. To determine if a proposed transaction is a prohibited transaction and violates IRC 4975, it is important to examine all parties participating in the proposed transaction and not just the Solo 401k plan participant.
For those looking to compare Gold IRAs, it is important to research and compare different providers to ensure that you are getting the best deal. A Gold IRA comparison can help you make an informed decision when it comes to investing in gold. As a participant in the Solo 401k plan, when making an investment with a Solo 401k plan, it is recommended that you do not make any transactions with a disqualified person. There is plenty of case law that clearly states that a Solo 401k plan cannot make a transaction that directly or indirectly benefits a disqualified person. The direct or indirect sale, exchange or lease of property between a 401 k plan and a “disqualified person” The direct or indirect lending of money or other extension of credit between a 401 k plan and a “disqualified person” The direct or indirect supply of goods, services or facilities between a 401 k plan and a “disqualified person” who is a real estate agent uses the funds of your 401 (k) plan to buying a home and a commission on the sale.
Derrick uses funds from his 401 (k) plan to lend money to a company in which he manages and controls, but in which he has a small stake. At IRA Financial, we'll help you overcome the complexities of people disqualified under IRC Section 4975 (e) (to prevent a prohibited transaction from triggering). As you may already know, activating a prohibited transaction can result in high penalties and disqualification from your plan. If you have any questions or concerns about transactions with a potentially disqualified person, contact a specialist today at 800-472-0646 or complete our form.
Sign up to stay up to date on everything related to self-directed retirement and how your investments are affected by current events and changes in the law. Contact IRA Financial at 1-800-472-0646 or complete the form to learn more about opening a self-managed retirement account. Prohibited transactions are certain transactions between a retirement plan and a disqualified person. If you are a disqualified person participating in a prohibited transaction, you must pay a tax.