Following are those considered Disqualified Persons to an IRA or 401(k) retirement plan. Any transaction, co-mingling of funds, extension of credit, or any other direct or indirect provision of benefit between a plan and a disqualified person can result in a Prohibited Transaction and severe tax consequences.
- 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 control. Control is defined as either 50% or greater ownership or an executive day-to-day decision making role.
Reference: IRC 4975