Glossary
Prohibited transaction
A dealing between a retirement plan and a disqualified person that tax law forbids, which can disqualify the plan.
In a ROBS arrangement the classic trigger is the plan paying more for the employer stock than it is worth. The IRS's 2008 memorandum identified deficient stock valuation as the primary concern, and valuation remains a stated review topic.
The consequence is severe and retroactive: a disqualified plan can make the entire rollover taxable, with penalties, years after the fact.
See also
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