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Trust Examination Manual
29 CFR 2509.75-4 - Interpretive bulletin relating
to indemnification of fiduciaries.
Section Number: 2509.75-4
Section Name: Interpretive bulletin relating to indemnification
of fiduciaries.
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On June 4, 1975, the Department of Labor issued an interpretive bulletin, ERISA
IB 75-4, announcing the Department's interpretation of
section 410(a) of the Employee Retirement Income Security
Act of 1974, insofar as that section relates to indemnification of fiduciaries.
Section 410(a) states, in relevant part, that ``any provision
in an agreement or instrument which purports to relieve
a fiduciary from responsibility or liability for any
responsibility, obligation, or duty under this part shall
be void as against public policy.'' The Department of
Labor interprets this section to permit indemnification
agreements which do not relieve a fiduciary of responsibility
or liability under part 4 of title I. Indemnification
provisions which leave the fiduciary fully responsible and liable, but
merely permit another party to satisfy any liability incurred by the fiduciary
in the same manner as insurance purchased under section 410(b)(3), are therefore
not void under section 410(a).
Examples of such indemnification provisions are:
(1) Indemnification of a plan fiduciary by (a) an employer,
any of whose employees are covered by the plan, or
an affiliate (as defined in section 407(d)(7) of the
Act) of such employer, or (b) an employee
organization, any of whose members are covered by the
plan; and (2) Indemnification by a plan fiduciary of the
fiduciary's employees who actually perform the fiduciary
services.
The Department of Labor interprets section 410(a)
as rendering void any arrangement for indemnification
of a fiduciary of an employee benefit plan by the plan.
Such an arrangement would have the same result as an
exculpatory clause, in that it would, in effect, relieve
the fiduciary of responsibility and liability to the
plan by abrogating the plan's right to recovery from
the fiduciary for
breaches of fiduciary obligations. While indemnification
arrangements do not contravene the provisions
of section 410(a), parties entering into an indemnification
agreement should consider whether the agreement
complies with the other provisions of part 4 of title
I of the Act and with other applicable laws.
[40 FR 31599, July 28, 1975. Redesignated at 41
FR 1906, Jan. 13, 1976]
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