Who is a disqualified person under erisa?

Disqualified individuals include the IRA owner's trustee and family members (spouse, ancestor, linear descendant, and any spouse of a linear descendant). Sale, exchange, or lease of a property between a plan and a disqualified person. The IRA of Berry (49%), the IRA of Robert Payne (the controller of the S Corp.) (31%) and George personally (20%). Although the LLC (and not the IRA) officially paid the taxpayer's salary, the Tax Court concluded that, since the IRA was the sole owner of the LLC and that the LLC was the sole investment in the IRA, the taxpayer (a disqualified person) was essentially paying their IRA.

The broker conditioned the opening of the IRA on the owner of the IRA committing the assets in his personal brokerage account to the broker to cover the indebtedness that the IRA could generate. Adler was a person disqualified because of his roles as an IRA trustee and general partner of the Association, which held the IRA's “plan assets”. When making a transaction with funds from an IRA that in any way directly or indirectly involves a disqualified person, in this case Panther Mountain, who was the personal property of the Kellermans, the owner of the IRA must demonstrate that the transaction does not violate any of the rules on transactions prohibited by self-negotiation or conflict of interest under section 4975 of the IRC, a burden that, as demonstrated by this case, could be difficult to comply with. The requested granting of a security right on the assets of the IRA owner's personal accounts to the broker to cover IRA debts with the broker is similar to a guarantee of such debts by the owner of the IRA, and from the legislative history of ERISA and previous DOL guidelines it is clear that the guarantee of a plan's indebtedness by a disqualified person is an extension of credit to the plan in violation of (c) (B).

The bonds were fiat and therefore disqualified people from their IRAs because of their authority, under IRAs, to direct investments. Fleck and Peek were trustees of their respective IRAs because they retained authority and control over those IRAs and were therefore disqualified under Code Sec. In this case, the owner of an IRA had a personal brokerage account in the broker and wanted to open a self-directed IRA (i.e., the owner of an IRA, who had the ability to self-direct investments in an IRA, was clearly a trustee and a person disqualified from IRA). But what if the loan wasn't granted directly to the IRA, but instead was granted to an entity owned by the IRA? Is the owner's personal guarantee of such a loan by the holder of an IRA a prohibited transaction? That was the subject of the Peek case.

Similar rules apply to transactions between an IRA and its owner or beneficiary or between an IRA and a disqualified person. In the opinion of the DOL, the granting of a security right in the personal accounts of the owner of the IRA to cover the indebtedness of the IRA or derivative of it constitutes an extension of credit of this type excluded by (c) (B).