The administrative exemption that plan sponsors of proprietary funds rely upon is prohibited transaction class exemption
(PTE) 77-3, which permits employers to offer their own proprietary funds to employees.
Fred Reish, partner and chair of the Financial Services ERISA Team at Drinker Biddle & Reath in Los Angeles, predicts that DOL will extend the exemptions of Prohibited Transaction Class Exemption
86-128 to virtually all advice given to the owners of IRAs.
ERISA requires that the fees paid to plan service providers be reasonable with respect to the services performed and Labor, in its implementation of prohibited transaction exemption (PTE) 2006-16, its prohibited transaction class exemption
for securities lending, specifically requires that compensation received by the parties involved in the securities lending transaction should be reasonable.
1) The DOL has proposed a Prohibited Transaction Class Exemption
that would relieve certain transactions from these excise taxes under specified conditions.
Along with revising VFC, the DOL also revised Prohibited Transaction Class Exemption
2002-51 to add two of the new covered transactions involving illiquid assets and the impermissible payment of certain expenses from the plan.
Currently, fiduciaries look to Prohibited Transaction Class Exemption
77-4 to release them from liability for such transactions that arise in connection with mutual funds advised by an affiliate, and to the statutory exemptions under ERISA Section 408(b)(4) and IRC Section 4975(d)(4) for bank deposits at affiliated and unaffiliated banks.
The prohibited transaction class exemption
relating to qualified professional asset managers (QPAMs--see Q 448) does not extend exemptive relief to transactions involving the assets of plans managed by in-house asset managers (INHAMs).
The DOL cited an earlier letter, Prohibited Transaction Class Exemption
79-41,(63) for the proposition that significant independent business (usually, at least 50% of premiums) is required before the DOL will provide relief from the prohibited transaction rules of Employee Retirement Income Security Act of 1974 Section 406.
Until the effective date of the final prohibited transaction class exemption
, the IRS's nonenforcement policy, as described in Ann.
The package of materials included within the proposal is sizable, including not only the proposed regulation but also two new prohibited transaction class exemptions
, plus amendments to several existing prohibited transaction class exemptions
Given the broad nature of prohibited transactions on the part of fiduciaries of pension and other employee benefit plans provided for by the Employee Retirement Income Security Act of 1974 (ERISA), Congress also provided an administrative exemption procedure which has since been utilized by the Department of Labor (and, early on, the Internal Revenue Service) to grant prohibited transaction class exemptions