Prohibited Transaction and Disqualified Persons Checklist (IRC Rules)

Summary

This checklist provides a list of five steps that a practitioner or plan fiduciary may follow to assist in the identification of prohibited transactions and disqualified persons as defined in I.R.C. § 4975 (Section 4975). Section 4975 imposes an excise tax on an I.R.C. § 4975(e)(2) disqualified person who engages in a prohibited transaction with a plan subject to the excise tax. I.R.C. § 4975(e)(1). Excise taxes due under Section 4975 are paid with IRS Form 5330 by the disqualified person liable for the tax (often the employer). Disqualified persons are generally individuals or entities, including fiduciaries and others, who may be in a position to exercise improper influence over the plan.