Son as Fiduciary of Dad's IRA: Prohibited Transaction?

[Guest reg_h2b]

If a son has the limited power of attorney (to control the asset allocation) on his father's IRA is it a prohibited transaction (PT) if:

a. son receives no compensation for his investment advice.

b. son receives compensation from non-IRA assets

c. son receives compensation from IRA assets

Assume that:

1. Son only has the power to direct an independent custodian (mutual fund, brokerage house etc) as to the IRA's asset allocation.

2. Son has no other interest in the IRA except that he is one of the bene's on the IRA.

3. Compensation was reasonable.(And then we could talk about what reasonable means)

I received a non-binding research opinion from the Service that said that (a) and (B) were not PT's but that © was a PT. The logic the IRS rep. used was that a PT can only occur between a "plan and the disqualified person". Since in (B) the fee was paid from non-plan assets that makes it OK. Since © came from the "plan" it would be considered "self-dealing" in this case.

I'd be curious as to the thoughts/analysis of the group. I have some concerns that even (B) could be a PT given the scope of IRC 4975©(1)(F) even with the "reasonable compensation for services rendered" exemption in 4975(d)(10).

Thanks.

[Guest reg_h2b]

Anyone have any thoughts about the issues raised in the above message?

Thanks.