Ezel / IRS Rulings / 1108034
Chief Counsel Advice 1108034 Released February 25, 2011 Advice

Personal guarantees of a plan loan can be prohibited transactions

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This page covers one taxpayer's ruling from 2011, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2011
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advised that a fiduciary or other disqualified person who personally guarantees a plan's indebtedness generally extends credit to the plan. The advice states that this is a prohibited transaction under IRC § 4975(c)(1)(B), unless a special employee stock ownership plan exemption applies. The email also refers to an ERISA Conference Report and two Department of Labor advisory opinions.

Ruling snapshot

  • Question: Does a personal guarantee of a plan loan by a fiduciary or other disqualified person violate the prohibited-transaction rules?
  • Outcome: Advice given.
  • Key authorities: IRC § 4975(c)(1)(B); H.R. Rep. No. 1280, 93d Cong., 2d Sess., at 308 (1974); DOL Advisory Opinions 90-33A and 2009-03A.

Full text (IRS public release)

ID: CCA_2011012709442650 Number: 201108034
Release Date: 2/25/2011
Office: -------------------------
UILC: 4975.03-02

From: --------------------
Sent: Thursday, January 27, 2011 9:44:30 AM
To: -------------------------
Cc:
Subject: Guaranteeing a Loan

  This is in response to your voice message.

 With respect to the issue concerning signing personally as guarantors of a note, Congress

stated in the ERISA Conference Report that, “…a prohibited transaction generally will occur if a
loan to a plan is guaranteed by a party-in-interest [disqualified person], unless it comes within
the special exemption for employee stock ownership plans.” H.R. Rep. No. 1280, 93d Cong., 2d
Sess., at 308 (1974). Consequently, a guarantee of a plan’s indebtedness by a fiduciary or other
disqualified person is an extension of credit to the plan in violation of section 4975(c)(1)(B) of
the Code. See the attached DOL Advisory Opinion 90-33A (July 3, 1990) and DOL Advisory
Opinion 2009-03A (October 27, 2009).

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