Business owner is also agent on own 401(k) Plan

[Guest ubpMR]

Is it a prohibited tranaction and violation of the "exclusive benefit" rule if the owner of a business is also the trustee of the plan and is also the registered representitive (broker) on his company's 401(k) plan?

What if the owner/trustee/broker makes commissions? And what if he/she does not?

[mbozek]

The prohibited transaction rules of IRC 4975 prohibit a fiduciary from dealing with plan assets for his own account. Therefore collecting a commisson for transactions on behalf of the plan is subject to the 15% pt tax. If no comm are paid it may be permissible if there is no other benefit granted to broker, eg., discount for other clients trades on account of vol trades for plan account. Client should consult counsel before making trade at no cost to plan.