Problematic Self-Directed Retirement Activities Series - Session 3: Prohibited Transaction Chinese Walls

A Prohibited Transaction Chinese Wall (PTCW) is not a tax planner’s privilege but a retirement plan public policy compliance necessary condition.   Congress enables PTCW creation by and through management risk diversification policy compliance and a properly invoked plan asset rule exception.  Then and only then may Section 4975(c)(1)(A), (B), or (C) self-dealing activities be transformed into incidental benefits.

Lesson 1.

Peek and Ellis

Lesson 2. 

Stephenson and the Plan Asset Rule

Lesson 3.

Prohibited Transaction Chinese Walls

Lesson 4.

PTCW Investment Structures

**Please Note:  If you need credit reported to the IRS for this IRS approved program, please download the IRS CE request form on the Course Materials Tab and submit to leighanne.conroy@acpen.com.

Basic Course Information

*Recognize the Peek Tax Court’s decision substantively requires correctly achieving management risk diversification policy compliance before accessing plan asset rule exception targeted benefits is enabled  

*Recognize the Ellis Tax Court’s decision substantively requires correctly achieving management risk diversification policy compliance before accessing plan asset rule exception targeted benefits is enabled  

*Recognize the Stephenson decision’s substantive holding means a correctly invoked plan asset rule operating company exception denies ascribing its underlying assets as plan assets and creates a Prohibited Transaction Chinese Wall (PTCW)  

*Recognize a PTCW correctly renders specifically proscribed self-dealing activities as generally infeasible on the PTCW’s exogenous side because there are no plan assets there  

*Recognize a PTCW correctly renders specifically proscribed self-dealing activities as generally feasible on the PTCW’s endogenous side because there are yet plan assets there  

*Recognize plan asset rule exceptions correctly include, inter alia, the operating company exception and the de minimis interest exception  

*Recognize whether plan entity investment correctly complies with Section 4975 impounded management risk diversification policy requirements  

*Recognize whether management risk diversification policy compliant plan entity investment properly invokes a plan asset rule exception  

*Recognize whether a Prohibited Transaction Wall has been correctly created between the plan’s entity investment interest and the entity’s underlying assets  

*Recognize whether Section 4975(c)(1)(A), (B), or (C) self-dealing activities have correctly transitioned to incidental benefits  

*Recognize when Section 704(b) transaction structures are correctly formulated they result in lower equity costs of capital while comporting with Congress’s retirement plan and going concern productivity policy objectives  

*Recognize when PTCW transaction structures are correctly formulated they result in transitioning proscribed self-dealing activities into incidental benefits

*The Peek decision’s implications for management risk diversification policy compliance  

*The Ellis decision’s implications for management risk diversification policy compliance  

*The Stephenson decision’s implications for transitioning proscribed self-dealing activities into incidental benefits  

*Properly creating Prohibited Transaction Chinese Walls through management risk diversification policy compliance and properly invoking a plan asset rule exception  

*Direct versus indirect plan asset rule exception requirements