Prohibited Tx Question

[Guest Retina]

Plan has major investment bank as investment adviser. A separate investment advisor of the plan wants to use same major investment bank to trade futures. My limited understanding of these rules leads me to believe this may be a pr. tx under ERISA 406(a)(1)© for the furnishing of services b/w the plan and party-in-interest. If so, are there any class exemptions for this type of arrangement?

[Ron Snyder]

You might go to the EBSA Website and search for the prohibited transaction exemptions. Yes, such multiple servicee exemptions exist, but they each carry with them certain conditions that must be strictly adhered to under pain of the PT rules.

I would make the financial institution point to the exact language of the DOL ruling they are relying on, rather than your taking on the research (and therefore potential liability if you make a mistake).

[Guest snappy]

Section 408(b)(2) should cover the provision of services by a party in interest otherwise prohibited by 406(a)(1)©. If the investment adviser proposing to use the plan adviser for futures trading is truly independent of the plan adviser, section 406(b) should not be implicated, and section 408(b)(2) should be sufficient.