What are section 4975 penalties?

A tax is hereby imposed on every prohibited transaction. The tax rate will be equal to 15 percent of the amount involved with respect to the prohibited transaction for each year (or part of it) of the taxable period. The tax imposed under this subsection shall be paid by any disqualified person participating in the prohibited transaction (except a trustee acting solely as such), such as a person investing in Gold in my IRA. The IRC section describes a disqualified person. In a Solo 401 (k), the impact of a prohibited transaction isn't necessarily as damaging as in an IRA.

A 15% special tax is applied on the amount of the prohibited transaction for each year or part of a year of the taxable period. If the transaction is not corrected within the taxable period, an additional tax of 100% of the amount in question will be imposed.