IRA investments in FLPs

[Guest jfhopson]

Can an IRA invest in a family limited partnership that purchases a life insurance policy on the life of the IRA owner?

[Steve72]

Maybe, under limited circumstances. Check out DOL Opinion Letter 2000-10A.

[jpod]

The advisory opinion deals with prohibited transaction issues. Implicit in the question is another issue: whether ownership of an interest in a partnership that owns life insurance violates the rule prohibited IRAs from holding life insurance.

I think this product is being marketed, but there is an issue (in my mind, anyway), as to whether or under what circumstances the intervening partnership, llp, llc, whatever, is a legitimate way to avoid the life insurance prohibition.

[Guest jfhopson]

I read 2000-10A but it really does tell me if your can avoid IRC Sec. 408 (a) (3) prohibition on life insurance.

[jpod]

Did you mean to say that the opinion did NOT tell you anything about the 408(a)(3) issue? If so, I agree; it's not a "prohibited transaction" issue and would not even be within the jurisdiction of the Department of Labor.