[CLBS] Erisa question

Fri Aug 1 13:46:01 MDT 2014

Ford is correct. You can loan funds from your IRA to a third party (with some other qualifications), but the LLC may not qualify. The issue here is that although the IRA holder is not borrowing the money directly, the Service may view it as a loan to himself. If he owned 50%+ in the LLC, it would be considered a loan to himself. Perhaps the fact that he owns 45% AND is the managing member creates the risk. The identity of the other members may also be part of the issue. Research prohibited transactions for IRAs.

Kathryn R. McKinley
Of Counsel

717 W. Sprague Ave. Suite 1200
Spokane, WA 99201
(509) 455-6000
kathryn.mckinley at painehamblen.com
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-----Original Message-----
From: CLBS [mailto:clbs-bounces at admws.idaho.gov] On Behalf Of Ford Elsaesser
Sent: Friday, August 01, 2014 12:40 PM
To: <cldlaw at gmail.com>
Cc: clbs at admws.idaho.gov
Subject: Re: [CLBS] Erisa question

You can borrow as an individual from your 401k. Not ira  probably is a distribution  ford

Sent from my iPhone

> On Aug 1, 2014, at 2:36 PM, "Catherine Dullea" <cldlaw at gmail.com> wrote:
> 
> Dear List Mates:
> 
> This isn't exactly a commercial or bankruptcy law question, but 
> someone out there may know the answer or who else might.
> 
> 
> 
> Client owns 45% of an LLC and is also the managing member.  He wants 
> to make a loan to the LLC through his IRA.  The IRA holder says it 
> won't insure that the IRS won't characterize the loan as a 
> distribution under ERISA.  He can't suffer that kind of a tax hit.
> Any golden pearls of wisdom would be appreciated.  They can find 
> another lender.
> 
> 
> 
> --Katie Dullea
> 
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