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Cases involving self-directed IRAs are often cited in ROBS discussions because both contexts can involve retirement assets, closely held companies, and disqualified persons. The structures are not identical. The cases below did not decide whether the Nexus qualified-plan ROBS structure is permissible, and their IRA-specific consequences should not be presented as automatic outcomes for a 401(k) plan.

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Ellis v. Commissioner

In Ellis v. Commissioner, the Eighth Circuit upheld prohibited-transaction findings involving a self-directed IRA owner who controlled an IRA-owned company and received compensation from it. The decision is a warning that formal separation between a retirement account and a controlled company does not prevent an indirect self-dealing analysis. Practical lesson: compensation and other insider transactions require fact-specific review, reasonable terms, and sound governance. The case does not create a universal rule that all founder compensation is prohibited or that a particular board structure cures the issue.

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Peek v. Commissioner

In Peek v. Commissioner, the Tax Court addressed personal guarantees connected to a business acquisition involving self-directed IRAs. The court treated the guarantees as prohibited extensions of credit and applied IRA-specific consequences. Practical lesson: personal guarantees and insider credit support present serious prohibited-transaction risk. The case does not justify stating that every guarantee in every qualified-plan ROBS structure automatically produces the same IRA-disqualification result.

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Using cases responsibly

  • Distinguish an IRA from an ERISA-qualified 401(k) plan
  • Distinguish the court’s holding from a broader compliance policy or analogy
  • Do not convert a fact-specific decision into a universal operational rule
  • Seek qualified ERISA counsel before acting on compensation, credit, leases, or other related-party arrangements
For the government’s ROBS-specific posture, start with the IRS ROBS compliance project and its linked examination memorandum.

Prohibited transactions

Review the statutory categories and common risk areas.