The information contained on our IRA resources page is for informational purposes only and is not intended to substitute competent legal, tax or investment advice. Much of the information herein merely quotes relevant IRA code, law, authoritative opinions and public information. This information is subject to change at any time and you are encouraged to check back frequently for updates.
IRA LLC Law
DOL Advisory Opinions
Under Presidential Reorganization Plan No. 4 of 1978, the authority of the Secretary of the Treasury (IRS) to issue interpretations regarding section 4975 of the Code (Prohibited Transactions) has been transferred to the Secretary of Labor (DOL) and the Secretary of the Treasury (IRS) is bound by the interpretations of the Secretary of Labor (DOL).
For your reference we have gathered IRA LLC relevant advisory opinions directly from the Secretary of Labor (DOL).
Advisory Opinion 2000-10A – Opinion where the DOL takes the position that an individual acting in the capacity of a general partner (similar to manager) in an entity that is owned by his IRA and the IRAs of other family members (similar to the IRA LLC) would not violate section 4975 as long as the individual did not receive a salary or fiduciary conflicting benefits.
Advisory Opinions 97-23A and 2005-03A – show us that the DOL has taken the position that an entity owned 100% by a plan (IRA) is a plan asset and any dealings the plan has with this asset is considered the same as if the plan were dealing with itself rather than a party of interest (disqualified party).
Case law is basically a set of prior rulings which have made interpretations of law and, therefore, can be cited as precedent. For your reference we have gathered cases that can be relied upon as IRA LLC law.
Swanson v. Commissioner – is a landmark case for the IRA LLC strategy. This is a tax court case where an individual (Swanson) formed an IRA owned entity (owned by his IRA and the IRAs of his 3 children) and controlled the entity in the capacity of director. The IRS initially challenged Swanson on the arrangement but when it was escalated to the tax court Swanson was awarded for legal expenses.
“We find that it was unreasonable for