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Prohibited Transaction


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I want to make sure I'm understanding the Prohibited transaction/disqualified person plan rules correctly. If I have a client where the ownership is as follows:

A - 40%

B - 40%

C - 20%

A & B are siblings and not related to C.  A & B own interest in property (the same property) in their individual 401(k) SDB accounts.  They want to sell the property. Since they aren't related and neither own more than 50% of the company, are they disqualified persons? Assuming not, can they personally buy the property from the plan to remove the investment?

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Never mind. I just answered my own question. 10% ownership kills this transaction!  Good thing it hasn't happened yet!

 

(H) an officer, director (or an individual having powers or responsibilities similar to those of officers or directors), a 10 percent or more shareholder, or a highly compensated employee (earning 10 percent or more of the yearly wages of an employer) of a person described in subparagraph (C), (D), (E), or (G); or
(I) a 10 percent or more (in capital or profits) partner or joint venturer of a person described in subparagraph (C), (D), (E), or (G).
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