Source: https://codes.findlaw.com/us/title-29-labor/29-usc-sect-1108.html
Timestamp: 2019-11-19 04:43:33
Document Index: 201283296

Matched Legal Cases: ['§ 1108', '§ 1108', '§ 1108', '§ 1108', 'art 1', '§ 1108', '§ 1108']

29 U.S.C. § 1108 - U.S. Code Title 29. Labor § 1108 | FindLaw
29 U.S.C. § 1108 - U.S. Code - Unannotated Title 29. Labor § 1108. Exemptions from prohibited transactions
The Secretary shall establish an exemption procedure for purposes of this subsection. Pursuant to such procedure, he may grant a conditional or unconditional exemption of any fiduciary or transaction, or class of fiduciaries or transactions, from all or part of the restrictions imposed by sections 1106 and 1107(a) of this title. Action under this subsection may be taken only after consultation and coordination with the Secretary of the Treasury. An exemption granted under this section shall not relieve a fiduciary from any other applicable provision of this chapter. The Secretary may not grant an exemption under this subsection unless he finds that such exemption is--
(b) section 1106
(1) Any loans made by the plan to parties in interest who are participants or beneficiaries of the plan if such loans (A) are available to all such participants and beneficiaries on a reasonably equivalent basis, (B) are not made available to highly compensated employees (within the meaning of section 414(q) of Title 26 ) in an amount greater than the amount made available to other employees, (C) are made in accordance with specific provisions regarding such loans set forth in the plan, (D) bear a reasonable rate of interest, and (E) are adequately secured. A loan made by a plan shall not fail to meet the requirements of the preceding sentence by reason of a loan repayment suspension described under section 414(u)(4) of Title 26 .
(3) A loan to an employee stock ownership plan (as defined in section 1107(d)(6) of this title), if--
(4) The investment of all or part of a plan's assets in deposits which bear a reasonable interest rate in a bank or similar financial institution supervised by the United States or a State, if such bank or other institution is a fiduciary of such plan and if--
(5) Any contract for life insurance, health insurance, or annuities with one or more insurers which are qualified to do business in a State, if the plan pays no more than adequate consideration, and if each such insurer or insurers is--
(6) The providing of any ancillary service by a bank or similar financial institution supervised by the United States or a State, if such bank or other institution is a fiduciary of such plan, and if--
(8) Any transaction between a plan and (i) a common or collective trust fund or pooled investment fund maintained by a party in interest which is a bank or trust company supervised by a State or Federal agency or (ii) a pooled investment fund of an insurance company qualified to do business in a State, if--
(C) such transaction is expressly permitted by the instrument under which the plan is maintained, or by a fiduciary (other than the bank, trust company, or insurance company or an affiliate thereof) who has authority to manage and control the assets of the plan.
(10) Any transaction required or permitted under part 1 of subtitle E of subchapter III of this chapter.
(12) The sale by a plan to a party in interest on or after December 18, 1987, of any stock, if--
(A) the requirements of paragraphs (1) and (2) of subsection (e) of this section are met with respect to such stock,
(14) Any transaction in connection with the provision of investment advice described in section 1002(21)(A)(ii) of this title to a participant or beneficiary of an individual account plan that permits such participant or beneficiary to direct the investment of assets in their individual account, if--
(A) the transaction is--
(B) the requirements of subsection (g) of this section are met.
(15)(A) Any transaction involving the purchase or sale of securities, or other property (as determined by the Secretary), between a plan and a party in interest (other than a fiduciary described in section 1002(21)(A) of this title) with respect to a plan if--
(iii) the terms of the transaction, including the price, are at least as favorable to the plan as an arm's length transaction, and
(iv) the compensation associated with the purchase and sale is not greater than the compensation associated with an arm's length transaction with an unrelated party.
(B) For purposes of this paragraph, the term “block trade” means any trade of at least 10,000 shares or with a market value of at least $200,000 which will be allocated across two or more unrelated client accounts of a fiduciary.
(16) Any transaction involving the purchase or sale of securities, or other property (as determined by the Secretary), between a plan and a party in interest if--
(A) the transaction is executed through an electronic communication network, alternative trading system, or similar execution system or trading venue subject to regulation and oversight by--
(C) the price and compensation associated with the purchase and sale are not greater than the price and compensation associated with an arm's length transaction with an unrelated party,
(17)(A) Transactions described in subparagraphs (A) , (B) , and (D) of section 1106(a)(1) of this title between a plan and a person that is a party in interest other than a fiduciary (or an affiliate) who has or exercises any discretionary authority or control with respect to the investment of the plan assets involved in the transaction or renders investment advice (within the meaning of section 1002(21)(A)(ii) of this title) with respect to those assets, solely by reason of providing services to the plan or solely by reason of a relationship to such a service provider described in subparagraph (F) , (G) , (H) , or (I) of section 1002(14) of this title, or both, but only if in connection with such transaction the plan receives no less, nor pays no more, than adequate consideration.
(B) For purposes of this paragraph, the term “adequate consideration” means--
(i) in the case of a security for which there is a generally recognized market--
(I) the price of the security prevailing on a national securities exchange which is registered under section 78f of Title 15 , taking into account factors such as the size of the transaction and marketability of the security, or
(18) Foreign exchange transactions
Any foreign exchange transactions, between a bank or broker-dealer (or any affiliate of either), and a plan (as defined in section 1002(3) of this title) with respect to which such bank or broker-dealer (or affiliate) is a trustee, custodian, fiduciary, or other party in interest, if--
(B) at the time the foreign exchange transaction is entered into, the terms of the transaction are not less favorable to the plan than the terms generally available in comparable arm's length 1 foreign exchange transactions between unrelated parties, or the terms afforded by the bank or broker-dealer (or any affiliate of either) in comparable arm's-length foreign exchange transactions involving unrelated parties,
(19) Cross trading
Any transaction described in sections 1106(a)(1)(A) and 1106(b)(2) of this title involving the purchase and sale of a security between a plan and any other account managed by the same investment manager, if--
(B) the transaction is effected at the independent current market price of the security (within the meaning of section 270.17a-7(b) of title 17, Code of Federal Regulations ),
(F) the investment manager provides to the plan fiduciary who authorized cross trading under subparagraph (D) a quarterly report detailing all cross trades executed by the investment manager in which the plan participated during such quarter, including the following information, as applicable: (i) the identity of each security bought or sold; (ii) the number of shares or units traded; (iii) the parties involved in the cross- trade; and (iv) trade price and the method used to establish the trade price,
(D) For purposes of this paragraph, the term “correction period” means, in connection with a fiduciary or party in interest (or other person knowingly participating in the transaction), the 14-day period beginning on the date on which such fiduciary or party in interest (or other person) discovers, or reasonably should have discovered, that the transaction would (without regard to this paragraph) constitute a violation of section 1106(a) of this title.
(E) For purposes of this paragraph--
(i) The term “security” has the meaning given such term by section 475(c)(2) of Title 26 (without regard to subparagraph (F)(iii) and the last sentence thereof).
(ii) The term “commodity” has the meaning given such term by section 475(e)(2) of Title 26 (without regard to subparagraph (D)(iii) thereof).
(iii) The term “correct” means, with respect to a transaction--
(c) section 1106
Nothing in section 1106 of this title shall be construed to prohibit any fiduciary from--
(1) Section 1107(b) of this title and subsections (b), (c), and (e) of this section shall not apply to a transaction in which a plan directly or indirectly--
any person who is with respect to the plan an owner-employee (as defined in section 401(c)(3) of Title 26 ), a member of the family (as defined in section 267(c)(4) of such title) of any such owner-employee, or any corporation in which any such owner-employee owns, directly or indirectly, 50 percent or more of the total combined voting power of all classes of stock entitled to vote or 50 percent or more of the total value of shares of all classes of stock of the corporation.
(ii) A participant or beneficiary of an individual retirement plan (as defined in section 7701(a)(37) of Title 26 ).
(3) For purposes of paragraph (2), the term “shareholder-employee” means an employee or officer of an S corporation (as defined in section 1361(a)(1) of Title 26 ) who owns (or is considered as owning within the meaning of section 318(a)(1) of Title 26 ) more than 5 percent of the outstanding stock of the corporation on any day during the taxable year of such corporation.
Sections 1106 and 1107 of this title shall not apply to the acquisition or sale by a plan of qualifying employer securities (as defined in section 1107(d)(5) of this title) or acquisition, sale or lease by a plan of qualifying employer real property (as defined in section 1107(d)(4) of this title)--
Section 1106(b)(2) of this title shall not apply to any merger or transfer described in subsection (b)(11) of this section.
For purposes of this subsection, the term “eligible investment advice arrangement” means an arrangement--
(A) which either--
The requirements of this subparagraph are met if the investment advice provided under the investment advice program is provided pursuant to a computer model that--
The term “eligible investment expert” means any person--
The requirements of this subparagraph are met with respect to any investment advice program if--
(ii) any transaction described in subsection (b)(14)(A)(ii) of this section occurs solely at the direction of the participant or beneficiary.
The requirements of this paragraph are met if an independent auditor, who has appropriate technical training or experience and proficiency and so represents in writing--
The requirements of this paragraph are met if--
(A) the fiduciary adviser provides to a participant or a beneficiary before the initial provision of the investment advice with regard to any security or other property offered as an investment option, a written notification (which may consist of notification by means of electronic communication)--
(v) 2the manner, and under what circumstances, any participant or beneficiary information provided under the arrangement will be used or disclosed,
(B) at all times during the provision of advisory services to the participant or beneficiary, the fiduciary adviser--
(D) the terms of the sale, acquisition, or holding of the security or other property are at least as favorable to the plan as an arm's length 3 transaction would be.
The requirements of this paragraph are met if a fiduciary adviser who has provided advice referred to in paragraph (1) maintains, for a period of not less than 6 years after the provision of the advice, any records necessary for determining whether the requirements of the preceding provisions of this subsection and of subsection (b)(14) of this section have been met. A transaction prohibited under section 1106 of this title shall not be considered to have occurred solely because the records are lost or destroyed prior to the end of the 6-year period due to circumstances beyond the control of the fiduciary adviser.
Subject to subparagraph (B), a plan sponsor or other person who is a fiduciary (other than a fiduciary adviser) shall not be treated as failing to meet the requirements of this part solely by reason of the provision of investment advice referred to in section 1002(21)(A)(ii) of this title (or solely by reason of contracting for or otherwise arranging for the provision of the advice), if--
For purposes of this subsection and subsection (b)(14) of this section--
The term “fiduciary adviser” means, with respect to a plan, a person who is a fiduciary of the plan by reason of the provision of investment advice referred to in section 1002(21)(A)(ii) of this title by the person to a participant or beneficiary of the plan and who is--
(i) registered as an investment adviser under the Investment Advisers Act of 1940 ( 15 U.S.C. 80b-1 et seq. ) or under the laws of the State in which the fiduciary maintains its principal office and place of business,
(ii) a bank or similar financial institution referred to in subsection (b)(4) or a savings association (as defined in section 1813(b)(1) of Title 12 ), but only if the advice is provided through a trust department of the bank or similar financial institution or savings association which is subject to periodic examination and review by Federal or State banking authorities,
(iv) a person registered as a broker or dealer under the Securities Exchange Act of 1934 ( 15 U.S.C. 78a et seq. ),
For purposes of this part, a person who develops the computer model described in paragraph (3)(B) or markets the investment advice program or computer model shall be treated as a person who is a fiduciary of the plan by reason of the provision of investment advice referred to in section 1002(21)(A)(ii) of this title to a participant or beneficiary and shall be treated as a fiduciary adviser for purposes of this subsection and subsection (b)(14) of this section, except that the Secretary may prescribe rules under which only 1 fiduciary adviser may elect to be treated as a fiduciary with respect to the plan.
The term “affiliate” of another entity means an affiliated person of the entity (as defined in section 80a-2(a)(3) of Title 15 ).
The term “registered representative” of another entity means a person described in section 3(a)(18) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78c(a)(18) ) (substituting the entity for the broker or dealer referred to in such section) or a person described in section 202(a)(17) of the Investment Advisers Act of 1940 ( 15 U.S.C. 80b-2(a)(17) ) (substituting the entity for the investment adviser referred to in such section).
1 So in original. Probably should be ‘‘arm’s-length’’.
2 So in original. The word ‘‘of’’ probably should appear.
3 So in original. Probably should be ‘‘arm’s-length’’.
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