The Employee Benefits Security Administration (EBSA), a division of the U.S. Department of Labor, is authorized to grant individual exemptions from the “prohibited transaction” rules of the tax code and retirement laws.
As you are likely aware, certain transactions by an IRA or other retirement plan are prohibited. Typically these are transactions that would give the investor a dual benefit, e.g., as a retirement investment and providing a personal benefit. Generally, retirement plan investments must be “arms length” with solely a retirement investment purpose. Thus, buying a vacation property with an IRA that is periodically used by the IRA owner or his children is prohibited, regardless of its investment merit. However, the prohibited transaction rules disallow a wide range of retirement plan transactions, even many with a pure investment purpose or which are a superior retirement investment. It is these latter transactions that may be suitable for an exemption.
The exemption process is relatively little used, not well understood, nuanced, sometimes lengthy and often complicated. Let our knowledge and experience as attorneys improve your likelihood of success. We may even be able to guide your application toward an expedited process. Please call us for an evaluation of your transaction.
IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.