Hello,

I was hoping someone might shed some light on a situation that I am hoping to realize a prohibited transaction exemption under self-dealing rules. Here is the situation:

- Plan sponsor and insurance firm are owned by the same family (insurance firm is NOT owned by the sponsor however)

- separate boards of directors and officers for each company

- employees of both companies are covered by the same plan

- product is a group annuity type

- insurance agent receives commisions on the plan at a rate approx 75-80% below typical market rate

I was thinking that PTE 77-9 and/or PTE 84-24 might apply here since the commisions certainly pass the reasonable test and do not represent a significant portion of the insurance agent firm's total commision-based compensation. Thoughts?

This is not an answer, merely a suggestion. First, I think it certainly is a pt, so you need to find an exemption. Second, you have to read through these class exemptions word-by-word and determine if (a) they apply, or could apply, and (b) if there is anything that clearly knocks you out of the exemption. For example, if the exemption says that it does not apply if the insurance broker is, or is an affiliate of, the employer sponsoring the plan, then the exemption is not available.