Who is a disqualified person for purposes of the prohibited transaction rules?

Posted on: July 15th, 2014

A qualified person is any of the following:

(1) a fiduciary of the plan;

(2) a person providing services to the plan;

(3) an employer, any of whose employees are covered by the plan;

(4) an employee organization, any of whose members are covered by  the plan;

(5) any direct or indirect owner of 50% or more of any of the following:

the combined voting power of all classes of stock entitled to vote, or the total value of shares of all classes of stock of a corporation that is an employer or employee organization described in (3) or (4);

the capital interest or profits interest of a partnership that is an employer or employee organization described in (3) or (4); or

the beneficial interest of a trust or unincorporated enterprise that is an employer or an employee organization described in (3) or (4);

(6) a member of the family of any individual described in (1), (2), (3), or

(4) (i.e., the individual’s spouse, ancestor, lineal descendant, or any

spouse of a lineal descendant);

(7) a corporation, partnership, trust, or estate of which (or in which) any

direct or indirect owner described in (1) through (5) holds 50% or  more of any of the following:

the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of a corporation;

the capital interest or profits interest of a partnership; or the beneficial interest of a trust or estate;

(8) an officer, director (or an individual having powers or responsibilities

similar to those of officers or directors), a 10% or more shareholder,  or highly compensated employee (earning 10% or more of the yearly

wages of an employer) of a person described in (3), (4), (5), or (7);

(9) a 10% or more (in capital or profits) partner or joint venture of a person described in (3), (4), (5), or (7); or

(10) any disqualified person, as described in (1) through (9) above, who

is a disqualified person with respect to any plan to which a   multiemployer plan trust is permitted to make payments under  section 4223 of ERISA.

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