Code Section 4975

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Code section 4975. Internal revenue code 4975. Disqualified person from 26 usc 4975 e 2 lii legal information institute. 555 12th street suite 900 oakland ca 94607.

The exemption under section 4975 d 3 includes within its scope certain transaction in which the potential for self dealing by fiduciaries exists and in which the interests of fiduciaries may conflict with the interests of participants. Section 4975 a imposes a 15 excise tax the first tier excise tax on a prohibited transaction. The term prohibited transaction is described in irc 4975 c 1 a through f.

However 26 cfr 141 4975 13 refers to 26 cfr 53 4941 e 1 for certain terms that appear in both irc 4941 e and irc 4975 f e g descriptions of amount involved and correction. The rate of tax shall be equal to 15 percent of the amount involved with respect to the prohibited transaction for each year or part thereof in the taxable period. The definition of a disqualified person internal revenue code section 4975 e 2 extends into a variety of related party scenarios but generally includes the ira holder any ancestors or lineal descendants of the ira holder and entities in which the ira holder holds a controlling equity or management interest.

Any exemption under section 408 b of the employee retirement income security act of 1974 29 u s c. The standard rule under irc section 4975 a is that if a prohibited transaction occurs there is a penalty tax of 15 of the amount involved in the transaction imposed on any disqualified person engaged in the prohibited transaction. 1108 b and section 4975 d of the internal revenue code of 1986 provided by the amendments made by this section amending this section and section 1108 of title 29 labor shall not in any manner alter existing individual or class exemptions provided by statute or administrative action.

Tax on prohibited transactions on westlaw. And if the prohibited transaction isn t promptly unwound corrected within the current tax year the penalty tax is increased to 100 of the transaction amount.