ROBS Prohibited-Transaction Screener

Start with documents, not conclusions. Select proposed or completed, transaction category, asset lane, parties, Title I coverage, plan involvement, benefit or conflict, employer-security records, and any exemption claim. Unknown answers are expected when attribution, family status, controlled entities, plan assets, or exemption conditions have not been reviewed.

Use the output as a worklist. Each reason code shows triggered facts, missing facts, why the fact matters, questions or evidence, exact authority IDs, and the responsible next action. Completed transactions add a correction, filing, and excise-tax consultation prompt without prescribing a correction.

The model checks contradictions first, then evaluates fiduciary self-dealing, plan transactions with parties in interest or disqualified persons, employer-security conditions, exemption claims, compensation or reimbursement caveats, completed-transaction consultation, and finally corporate-only documentation. Reason-code order is stable and tier precedence prevents false reassurance when a claimed exemption appears with a stronger stop condition.

ERISA section 406(a) categories and IRC section 4975(c)(1) categories overlap, but the status labels are not identical. ERISA uses party in interest for Title I plans; IRC section 4975 uses disqualified person and may apply even when Title I coverage is documented no or unknown. [4] [7]

Party in interest is an ERISA Title I term. ERISA section 3(14) includes fiduciaries, plan service providers, covered employers, certain 50 percent owners, statutory relatives, controlled entities, officers, directors, employees, 10 percent shareholders, partners, and joint venturers. The statutory relative definition is spouse, ancestor, lineal descendant, or spouse of a lineal descendant; siblings are not listed unless attribution or entity facts create another relationship. [1] [2]

Disqualified person is the IRC section 4975 status term. Fiduciary status depends on functions performed, including discretionary plan or asset control, paid investment advice, or discretionary plan administration. The screener does not decide either status. [3] [7]

Plan assets and corporate assets are separated. A ROBS plan may own employer stock, and the corporation may own business assets. The tool does not automatically treat every corporate asset as a plan asset; it flags mixed or unclear lanes for documentation and professional review. [8]

The input set covers common ROBS questions without private facts or account values. Test branches include: Owner/company loan; Owner-owned property lease with corporate-boundary review; Personal-expense transfer or use; Provider services and fees; Reasonable compensation with plan-asset caveat; Initial employer-stock purchase; Later stock redemption or sale; Family or controlled-entity transaction under statutory definitions; Plan paying a corporate expense; Unrelated corporate transaction with no plan asset, related party, benefit, or plan involvement.

This is legal/compliance triage, not a prohibited-transaction determination, exemption opinion, correction calculator, excise-tax calculation, fiduciary opinion, tax advice, or legal advice. It does not determine plan-asset status, fiduciary status, party status, disqualified-person status, exemption availability, correction amount, taxable period, Form 5330 obligation, excise tax, liability, or whether a transaction can be unwound.

Ask who owns the asset, who is on each side, whether the plan or participant account is affected, who exercised discretion, which Title I and IRC statuses are documented, whether family attribution or controlled-entity facts are unresolved, whether employer-security conditions are documented, and which exact statutory, class, or individual exemption is claimed. Keep the source memo beside the transaction file rather than relying on provider marketing or a generic checklist.

1. [1] ERISA section 3(14), 29 U.S.C. 1002(14)

   Defines party in interest, including fiduciaries, service providers, covered employers, certain 50 percent owners, statutory relatives, controlled entities, officers, directors, employees, 10 percent shareholders, partners, and joint venturers.

2. [2] ERISA section 3(15), 29 U.S.C. 1002(15)

   Defines relative for Title I party-in-interest purposes as spouse, ancestor, lineal descendant, or spouse of a lineal descendant.

3. [3] ERISA section 3(21), 29 U.S.C. 1002(21)

   Defines fiduciary status by discretionary control over plan management or assets, investment advice for a fee, or discretionary plan administration.

4. [4] ERISA section 406, 29 U.S.C. 1106

   Prohibits specified plan-party-in-interest transactions and fiduciary self-dealing for Title I plans unless an exemption applies.

5. [5] ERISA section 407, 29 U.S.C. 1107

   Limits acquisition and holding of employer securities and employer real property; includes qualifying employer security concepts.

6. [6] ERISA section 408, 29 U.S.C. 1108

   Contains statutory exemptions and DOL exemption procedure; exemptions are conditional and do not relieve other fiduciary duties.

7. [7] IRC section 4975, 26 U.S.C. 4975

   Defines disqualified-person prohibited transactions, exemptions, correction, taxable period, amount involved, and excise taxes.

8. [8] IRS Rollovers as Business Start-Ups Compliance Project

   Describes ROBS mechanics and observed issues including prohibited transactions, valuation, discrimination, promoter fees, missing filings, unsuccessful businesses, and determination-letter limits.

9. [9] DOL prohibited transaction exemptions

   DOL materials explain individual, class, and statutory prohibited-transaction exemption materials and exemption procedures.

10. [10] IRS correcting plan errors

    IRS correction materials direct plan sponsors to applicable correction programs; this screener does not calculate correction amounts or deadlines.

Use these pages to gather the separate valuation, filing, administration, and transaction records that the screener asks about.