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Prohibited Transaction

   Also found in: Acronyms 0.01 sec.
Prohibited Transaction
A transaction that would cause a tax deferred structure under ERISA to lose its deferred status. A prohibited transaction is any transaction involving a retirement account and a disqualified person.


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An investor has the same opportunity to commit a prohibited transaction with a custodian as they would if they were on their own.
Here's where it gets troublesome for insurance companies: if a policy is deemed to facilitate a prohibited transaction, it can also violate the sanctions requirements.
Topics include current Code Section 403(b) regulations, coverage of maximum contribution and other discrimination rules, multiple funding alternatives, reporting and other Internal Revenue Service and Department of Labor requirements, and prohibited transactions and exemptions.
 
 
 
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