NU Online News Service, Sept. 3, 7:15 p.m. – The Pension Welfare Benefits Administration says employee benefit plans can sell individual life insurance policies and annuity contracts to trusts established for the sake of the participants and the participants’ relatives.
The amendment, which is effective Feb. 12, 1992, expands on earlier amendments that let plans sell life policies and annuities to participants and other parties.
Ivan Strasfeld, a PWBA official, describes the retroactive change Tuesday in the Federal Register, in an amendment to Prohibited Transaction Exemption 92-6.
Normally, Strasfeld writes, Section 406(a) of the Employee Retirement Income Security Act of 1974 prohibits benefit plans from selling property to a “party in interest.”
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In most cases,” Strasfeld writes, “the participant will be a party in interest with respect to the plan.”
In 1977 and 1992, federal regulators granted exemptions to plans that sell life policies and annuities to plan participants, the participants’ beneficiaries, employers and other employee benefit plans.