IRA Financial Group Introduces Solution to Protect Retirement Funds from the IRA Prohibited Transaction Penalties

Share Article

New solution will insulate retirement investors from the IRS prohibited transaction penalties involving self-directed IRAs

IRS Prohibited Transactions

Because the IRS penalties for engaging in a prohibited transaction is so extensive, IRA Financial Group’s Prohibited Transaction Protection Services is designed to offer a level of protection to our retirement investors

IRA Financial Group, the leading provider of self directed IRA LLC solutions announces the establishment of its Prohibited Transaction Protection Services. IRA Financial Group’s Prohibited Transaction Protection Services is focused on isolating IRA assets into special purpose limited liability companies (“LLCs”) so that the LLC only includes the IRA assets involved in the transaction in question.

In general, the penalty under Internal Revenue Code Section 4975 generally starts out at 15% for most types of retirement plans; however, the penalty is harsher for self-directed IRAs. “Because the IRS penalties for engaging in an IRA prohibited transaction is so extensive, IRA Financial Group’s Prohibited Transaction Protection Services is designed to offer a level of protection to our retirement investors, “ stated Adam Bergman, a tax attorney with the IRA Financial Group.

In general, if the IRA holder (IRA owner) or IRA beneficiary engages in a transaction that violates the prohibited transaction rules set forth under Internal Revenue Code Section 4975, the individual’s IRA would lose its tax exempt status and the entire fair market value of the IRA would be treated as taxable distribution, subject to ordinary income tax. In addition, the IRA holder or beneficiary would be subject to a 15% penalty as well as a 10% early distribution penalty if the IRA holder or beneficiary is under the age of 591/2.

With IRA Financial Group’s Prohibited Transaction Protection Services, a self-directed IRA investor would establish a special purpose LLC wholly owned by their IRA. The special purpose LLC would then invest certain IRA assets into specific investments. For additional IRA investments, a separate IRA owned LLC would be established to make the additional investments. Because a prohibited transaction results in the disqualification of the entire IRA, segregation of the IRA in a separate LLC to include only the assets involved in the transaction in question will preserve the qualified status of the other assets in the IRA if the transaction is deemed an IRS prohibited transaction. “We are excited to offer our self-directed IRA clients with a strategy to help insulate the IRA assets against a prohibited transaction, “ stated Mr. Bergman.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP.

IRA Financial Group is the market's leading provider of self-directed solo 401(k) plans. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Jaclyn Baily
Visit website