Unlocking the process
Guide to ERISA individual
prohibited transaction exemptions
PURCHASE AGREEMENT
Guide to ERISA individual prohibited
transaction exemptions
One of the distinctive features of ERISA is its prohibition, in
ERISA section 406 as a matter of positive law and Internal
Revenue Code section 4975 through an excise tax regime,
of (i) a wide range of specified transactions between a
covered ERISA plan or IRA and a far-reaching group of
ostensible “insiders” to those arrangements (“parties in
interest” or “disqualified persons” in the language of
ERISA and the Code, respectively), and on (ii) “fiduciaries”
for those arrangements acting with a self-interest,
conflicted interest or in receipt of third-party compensation.
Even as it enacted these purposefully overbroad prohibited
transaction rules, however, Congress recognized that “some
transactions between a plan and a party-in-interest may
provide substantial independent safeguards of the plan
participants and beneficiaries” and “some transactions
which are prohibited … nevertheless should be allowed in
order not to disrupt the established business practices of
financial institutions … consistent with adequate safeguards
to protect employee benefit plans.”
Congress allowed some of these necessary and safe
transactions through statutory exemptions to the
prohibited transaction rules. In addition, it granted the
authority to the Department of Labor (DOL) and Treasury
Department, which authority was consolidated in what is
now DOL’s Employee Benefits Security Administration
(EBSA) in 1978, to grant individual or class prohibited
transaction exemptions (PTE) on a finding that, with
respect to a given transaction or practice, an exemption is
“(1) administratively feasible, (2) in the interest of the plan
and its participants and beneficiaries, and (3) protective of
the rights of participants and beneficiaries of such plan.”
That is, unlike other bodies of fiduciary law where the party
to whom a fiduciary duty is owed generally can approve
otherwise impermissible activity, ERISA requires approval
by the government.
From 1996-2020, the US Department of Labor granted more than
1,200 individual exemptons from the ERISA prohibited transaction
rules.
This guide summarizes and collects individual prohibited transaction
exemption practice during that period.
Unlocking the process
Guide to ERISA individual prohibited transaction exemptions
1996-2020
Contents
The Individual PTE Process
Background
Prohibited Transaction Regime
Statutory Basis for Exemptions
Responsible Agency
Procedures
Retroactive Exemptions
Individual Exemption Statistics
Historical data
Most frequent categories of exemptions
Explanation of Tables
Transactions Involving Plan Sponsors or Related
Persons
Assignment of Rights, Claims and Causes of Action
Captive Reinsurance
Contributions
Corrective or Restorative Transactions
ESOPs
In-House Plans of Retirement/Investment Providers,
including INHAMs
Lease of Real Property from the Plan
Lease of Real Property to the Plan
Loan or Extension of Credit by the Plan
Loan or Extension of Credit to the Plan
Auction rate securities
Confederation Life/Executive Life/Mutual Benefit
Life contracts
Multi-Employer Plans
Other Variances on ERISA §407
Purchase of Assets by the Plan
Purchase of Assets from the Plan
Auction rate securities
Confederation Life/Executive Life/Mutual Benefit
Life insurance products
Other assets with marketability constraints
Other assets without marketability constraints
Real estate/mortgages/real estate vehicles
Stock Rights or Warrants Offerings
Transactions Involving Plan Product or Service
Providers
Asset Allocation/Investment Advice Services
TRAK program
Asset-Backed Securities “Underwriter Exemptions”
Omnibus amendments
Combination/Conversion of Plan Asset Vehicles
Corporate Transactions Involving Providers
Consolidation among providers
Demutualizations
Credit Facility Arrangements
Fee Structure
Investment/Insurance Transactions with Provider or
Affiliate
Debt securities
Index and model-driven funds
Syndicates/affiliated underwriters
Umbrella exemptions
Joint Investments
Lease of Real Property from the Plan
Loan or Extension of Credit to the Plan
Auction rate securities
Unitization services
Purchase of Assets from the Plan/Plan Asset Vehicle
Auction rate securities
Other assets with marketability constraints
Other assets without marketability constraints
QPAM/INHAM Conditions
Criminal convictions
Relationships other than Affiliates
Securities Lending
Primary securities lending agent arrangements
Exclusive borrowing arrangements
Relief for both arrangements
Securities Transactions with Foreign Banks/Broker-Dealers
Exemptions including securities lending
Portfolio restructuring or liquidation
Services to Plan/Plan Asset Vehicle
Sweeps/Similar Arrangements
Transactions Involving Plan Participants
Auction rate securities
Transactions Involving Other Plans/Plan Asset
Vehicles
Transactions Between Plans
Transactions Between Plan Asset Vehicles/Accounts
Transactions with Other Third-Parties
Unlocking the process
Guide to ERISA individual prohibited transaction exemptions
1996-2020
