Source: http://www.law.cornell.edu/cfr/text/29/2550.408b-4
Timestamp: 2014-12-20 05:56:24
Document Index: 401708890

Matched Legal Cases: ['art 2550', '§ 2550', '§ 2550', '§ 2550', '§ 401', '§ 1101', '§ 1104', '§ 1107', '§ 1108', '§ 1135', 'art 2550', 'art 2550']

29 CFR 2550.408b-4 - Statutory exemption for investments in deposits of banks or similar financial institutions. | LII / Legal Information Institute
CFR › Title 29 › Subtitle B › Chapter XXV › Subchapter F › Part 2550 › Section 2550.408b-4 29 CFR 2550.408b-4 - Statutory exemption for investments in deposits of banks or similar financial institutions.
§ 2550.408b-4
Statutory exemption for investments in deposits of banks or similar financial institutions.
Section 408(b)(4) of the Employee Retirement Income Security Act of 1974 (the Act) exempts from the prohibitions of section 406 of the Act the investment of all or a part of a plan's assets in deposits bearing a reasonable rate of interest in a bank or similar financial institution supervised by the United States or a State, even though such bank or similar financial insitution is a fiduciary or other party in interest with respect to the plan, if the conditions of either § 2550.408b-4(b)(1) or § 2550.408b-4(b)(2) are met. Section 408(b)(4) provides an exemption from sections 406(b)(1) of the Act (relating to fiduciaries dealing with the assets of plans in their own interest or for their own account) and 406(b)(2) of the Act (relating to fiduciaries in their individual or in any other capacity acting in any transaction involving the plan on behalf of a party (or representing a party) whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries), as well as section 406(a)(1), because section 408(b)(4) contemplates a bank or similar financial institution causing a plan for which it acts as a fiduciary to invest plan assets in its own deposits if the requirements of section 408(b)(4) are met. However, it does not provide an exemption from section 406(b)(3) of the Act (relating to fiduciaries receiving consideration for their own personal account from any party dealing with a plan in connection with a transaction involving the assets of the plan). The receipt of such consideration is a separate transaction not described in the statutory exemption. Section 408(b)(4) does not contain an exemption from other provisions of the Act, such as section 404, or other provisions of law which may impose requirements or restrictions relating to the transactions which are exempt under section 408(b)(4) of the Act. See, for example, section 401 of the Internal Revenue Code of 1954 (Code). The provisions of section 408(b)(4) of the Act are further limited by section 408(d) of the Act (relating to transactions with owner-employees and related persons).
Plan covering own employees.
Such investment may be made if the plan is one which covers only the employees of the bank or similar financial institution, the employees of any of its affiliates, or the employees of both.
Such investment may be made if the investment is expressly authorized by a provision of the plan or trust instrument or if the investment is expressly authorized (or made) by a fiduciary of the plan (other than the bank or similar financial institution or any of its affiliates) who has authority to make such investments, or to instruct the trustee or other fiduciary with respect to investments, and who has no interest in the transaction which may affect the exercise of such authorizing fiduciary's best judgment as a fiduciary so as to cause such authorization to consititute an act described in section 406(b) of the Act. Any authorization to make investments contained in a plan or trust instrument will satisfy the requirement of express authorization for investments made prior to November 1, 1977. Effective November 1, 1977, in the case of a bank or similar financial institution that invests plan assets in deposits in itself or its affiliates under an authorization contained in a plan or trust instrument, such authorization must name such bank or similar financial institution and must state that such bank or similar financial institution may make investments in deposits which bear a reasonable rate of interest in itself (or in an affiliate).
B, a bank, is the trustee of plan P's assets. The trust instruments give the trustees the right to invest plan assets in its discretion. B invests in the certificates of deposit of bank C, which is a fiduciary of the plan by virtue of performing certain custodial and administrative services. The authorization is sufficient for the plan to make such investment under section 408(b)(4). Further, such authorization would suffice to allow B to make investments in deposits in itself prior to November 1, 1977. However, subsequent to October 31, 1977, B may not invest in deposits in itself, unless the plan or trust instrument specifically authorizes it to invest in deposits of B.
The term bank or similar financial institution includes a bank (as defined in section 581 of the Code), a domestic building and loan association (as defined in section 7701(a)(19) of the Code), and a credit union (as defined in section 101(6) of the Federal Credit Union Act).
A person is an affiliate of a bank or similar financial institution if such person and such bank or similar financial institution would be treated as members of the same controlled group of corporations or as members of two or more trades or businesses under common control within the meaning of section 414 (b) or (c) of the Code and the regulations thereunder.
The term deposits includes any account, temporary or otherwise, upon which a reasonable rate of interest is paid, including a certificate of deposit issued by a bank or similar financial institution.
[42 FR 32392, June 24, 1977; 42 FR 36823, July 18, 1977]
This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.United States CodeU.S. Code: Title 26 - INTERNAL REVENUE CODE§ 401 note - Qualified pension, profit-sharing, and stock bonus plans
U.S. Code: Title 29 - LABOR§ 1101 - Coverage§ 1104 - Fiduciary duties§ 1107 - Limitation with respect to acquisition and holding of employer securities and employer real property by certain plans§ 1108 - Exemptions from prohibited transactions§ 1135 - Regulations
Statutes at Large115 Stat. 38115 Stat. 136120 Stat. 780120 Stat. 975
Presidential DocumentsReorganization ... 1978 Plan No. 4 Title 29 published on 2013-07-01The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 29 CFR 2550 after this date.2014-08-21; vol. 79 # 162 - Thursday, August 21, 201479 FR 49469 - Request for Information Regarding Standards for Brokerage Windows in Participant-Directed Individual Account Plans
2014-06-03; vol. 79 # 106 - Tuesday, June 3, 201479 FR 31893 - Target Date Disclosure
typeregulations.gov FR Doc.2014-12667 RIN1210-AB38 DEPARTMENT OF LABOR, Employee Benefits Security Administration Proposed rule; reopening of comment period. Written comments on the proposed regulation published at 75 FR 73987 (Nov. 30, 2010) should be received by the Department of Labor no later than July 3, 2014. 29 CFR Part 2550 SummaryThe Department of Labor&apos;s Employee Benefits Security Administration is reopening the period for public comment on proposed regulatory amendments relating to enhanced disclosure concerning target date or similar investments, originally proposed November 30, 2010, in a previously published document in the Federal Register . In 2013, the Securities and Exchange Commission&apos;s Investor Advisory Committee recommended that the Commission develop a glide path illustration for target date funds that is based on a standardized measure of fund risk as a replacement for, or supplement to, an asset allocation glide path illustration. The Department is reopening the comment period on its 2010 proposal, which contained an asset allocation glide path illustration requirement, to seek public comment on this recommendation.
2014-03-12; vol. 79 # 48 - Wednesday, March 12, 201479 FR 13949 - Amendment Relating to Reasonable Contract or Arrangement Under Section 408(b)(2)—Fee Disclosure
typeregulations.gov FR Doc.2014-04868 RIN1210-AB53 DEPARTMENT OF LABOR, Employee Benefits Security Administration Proposed rule. Written comments on the proposed amendment should be received by the Department on or before June 10, 2014. 29 CFR Part 2550 SummaryThis document contains a proposed amendment to the final regulation under the Employee Retirement Income Security Act of 1974 (ERISA or the Act) requiring that certain service providers to pension plans disclose information about the service providers&apos; compensation and potential conflicts of interest. The amendment would, upon adoption, require covered service providers to furnish a guide to assist plan fiduciaries in reviewing the disclosures required by the final rule if the disclosures are contained in multiple or lengthy documents. This amendment will affect pension plan sponsors and fiduciaries and certain service providers to such plans.