Solo 401kCommon Prohibited Transactions

Categories of Prohibited Transactions

In general, the type of transactions that could fall under the prohibited transaction rules pursuant to Code Section 4975 can be viewed in the context of three unofficial categories:

Direct Prohibited Transactions

4975(c)(1)(A): The direct or indirect Sale, exchange, or leasing of property between a Solo 401(k) Plan and a “disqualified person”

4975(c)(1)(B): The direct or indirect lending of money or other extension of credit between a Solo 401k Plan and a “disqualified person”

4975(c)(1)(C): The direct or indirect furnishing of goods, services, or facilities between a Solo 401k Plan and a “disqualified person”

4975(c)(1)(D): The direct or indirect transfer to a “disqualified person” of income or assets of a Solo 401k Plan

Self-Dealing Prohibited Transactions

4975(c)(1)(E): The direct or indirect act by a “Disqualified Person” who is a fiduciary whereby he/she deals with income or assets of the Solo 401k Plan in his/her own interest or for his/her own account

Conflict of Interest Prohibited Transactions

Subject to the exemptions under Internal Revenue Code Section 4975(d), a “Conflict of Interest Prohibited Transaction” generally involves one of the following:

4975(c)(i)(F): Receipt of any consideration by a “Disqualified Person” who is a fiduciary for his/her own account from any party dealing with the Solo 401k Plan in connection with a transaction involving income or assets of the Solo 401k Plan

For more information on prohibited transactions, please contact a Solo 401K Expert at 800-472-0646.

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