Opinion ID: 775358
Heading Depth: 2
Heading Rank: 2

Heading: erisa &#167 406

Text: 16 Sprague lastly urges that UPS and the Fund engaged in a per se prohibited transaction in violation of ERISA &#167 406 (a)(1)(B) or (D) which provide, in relevant part, that a fiduciary shall not knowingly cause the plan to engage in a transaction that constitutes a (B) lending of money or other extension of credit between the plan and a party in interest, or (D) transfer to, or use by or for the benefit of, a party in interest, of any assets of the plan. 1 This argument is easily disposed of, however, because it is viable only if UPS (the party in interest) had an obligation to contribute to the Fund during the abatement period. In that case, if the parties agreed that the Fund would not collect the delinquent contributions, the arrangement may be deemed a prohibited transaction. See Prohibited Transaction Exemption 76-1, 41 Fed. Reg. 12740, 12741 (1976). If no obligation existed, however, then no extension of credit was granted or received, and no transfer of plan assets took place. As discussed above, UPS had no obligation under the governing documents to contribute to the Fund during the abatement period. Therefore, no prohibited transaction occurred under ERISA &#167 406(a)(1).