Guest elang Posted September 11, 2012 Posted September 11, 2012 A single participant defined contribution plan wishes to make an investment in a rental property. The Plan would hold about a 10% interest in the property. The other 90 % would be held by an LLC or LLP in which the sponsor (and participant) is the sole member. Is this a Prohibited Transaction under IRC 72(t)? Or is it exempt? Could the Plan make the down payment and hold the mortgage in the Plan?
ETA Consulting LLC Posted September 11, 2012 Posted September 11, 2012 A single participant defined contribution plan wishes to make an investment in a rental property. The Plan would hold about a 10% interest in the property. The other 90 % would be held by an LLC or LLP in which the sponsor (and participant) is the sole member. Is this a Prohibited Transaction under IRC 72(t)? Or is it exempt?Could the Plan make the down payment and hold the mortgage in the Plan? I think the prohibited transaction rules are in IRC Section 4975. It appears to be one. 72(t) applies the 10% early withdrawal penalty and the exceptions. Good Luck! CPC, QPA, QKA, TGPC, ERPA
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