The U.S Department of Labor’s Employee Benefits Security Administration has unveiled a final amendment to a prohibited transaction exemption that broadens the transactions allowed for employee benefit plans whose assets are managed by in-house asset managers.
PTE 96-23, a class exemption under the Employee Retirement Income Security Act, also imposes conditions to protect plans and their assets. The exemption allows in-house managers of large employee benefit plans to engage in a wide range of transactions with related parties.
The final amendment to PTE 96-23 includes four parts:
–The general exemption that allows the portion of a plan that is managed by an INHAM to engage in transactions with virtually all party in interest service providers except the INHAM or a person related to the INHAM.
–Limited relief for certain transactions involving employers and their affiliates who cannot qualify for the general exemption, including relief for the lease of office or commercial space between the plan and the sponsoring employer.
–Definition of certain terms used in the exemption.
–The effective date of the changes adopted under the amendment.
The final amendment expands the general exemption to include relief for joint venturers in a company that is majority owned by the employer. The amendment also expands relief for the leasing of office or commercial space to an employer.