[CLBS] Erisa question

[Ford Elsaesser]

With a$ 50 k cap I think-ford

From: William J. O'Connor [mailto:williamoconnorlaw at gmail.com] On Behalf Of William J. O'Connor
Sent: Monday, August 04, 2014 2:13 PM
To: Kathryn R. McKinley
Cc: Ford Elsaesser; <cldlaw at gmail.com>; clbs at admws.idaho.gov
Subject: Re: [CLBS] Erisa question

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<mailto: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<mailto: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<mailto:cldlaw at gmail.com>>
Cc: clbs at admws.idaho.gov<mailto: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<mailto: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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