[CLBS] Erisa question

[William J. O'Connor]

If he wants to loan money to himself, he should consider rolling the IRA into a self-directed 401k.  A person can borrow up to 50% of a 401k’s value, with the remaining balance serving as security.  If you need a reference to a company that conducts 401k rollovers, let me know.  I do not know of any companies that set up Solo 401k’s for a reasonable price in Idaho.  The out-of-state company that did mine was pretty good.

> William J. O'Connor
> O'Connor Law, PLLC
> 355 West Myrtle Street 
> Suite 100
> Boise, ID 83702
> 
> Office:  208-344-5095
> Fax: 208-424-3100





On Aug 1, 2014, at 1:46 PM, Kathryn R. McKinley <Kathryn.McKinley at PAINEHAMBLEN.COM> wrote:

> 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
> This message is private or privileged. If you are not the person for whom this message is intended, please delete it and notify me immediately, and please do not copy or send this message to anyone else. 
> 
> 
> -----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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