Section 4975(a) imposes a 15% excise tax (the first tier excise tax) on a. prohibited transaction. In addition, § 4975(b) imposes a 100% excise tax (the. second tier excise tax) on a prohibited transaction if that prohibited transaction is. not corrected during the taxable period.
What is a per se prohibited transaction?
1. Per Se Prohibited Transaction. Occurs when an IRA engages in a transaction with a disqualified person. Occurs when a disqualified person (e.g., IRA owner) personally benefits from the IRA’s investments.
Is a son in law a disqualified person?
Any ascendant or descendent of you and your spouse are considered disqualified. Children and their spouses, grandchildren and their spouses, parents and grandparents are prohibited. Family members such as siblings, nieces/nephews, aunts/uncles and cousins are allowed.
What are the prohibited transactions in IRC section 4975?
IRC Section 4975 (c) (1) (D) prohibits any direct or indirect transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a plan. IRC Section 4975 (c) (1) (E) prohibits a fiduciary from dealing with the income or assets of a plan in his own interest or for his own account. 6.
Who is a disqualified person under section 4975?
In essence, under Code Section 4975, a “Disqualified Person” means: A fiduciary (e.g., the Solo 401(k) Plan Participant, or person having authority over making Solo 401(k) Plan investments), A person providing services to the Solo 401(k) Plan (e.g., the trustee or custodian),
Which is the division designated to determine tax due under IRC 4975?
To achieve this objective, this IRM discusses the provisions of IRC 4975 and related Code and regulations sections, and the applicable Department of Labor (DOL) provisions. EP Examination is the division designated to determine tax due under IRC 4975.
What is the purpose of IRM 4.72.11 prohibited transactions?
Purpose: IRM 4.72.11, Employee Plans Technical Guidance, Prohibited Transactions, provides guidance for Employee Plans (EP) agents to use in order to properly identify and develop prohibited transactions (PTs) encountered during qualified pension or profit-sharing plan examinations.
