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Trust Examination Manual

Appendix E — Employee Benefit Law
Reference Topic
Interagency Agreement to Refer Violations of ERISA to the Department of Labor

ERISA (Statute)

3 Definitions (Selected)
206  [Excerpt] Pledging by Participant of Vested Interest
401 Coverage 
402 Establishment of Plan
403 Establishment of Trust
404 Fiduciary Duties
405 Co-Fiduciary Liability
406 Prohibited Transactions
407 Investment in Sponsor Securities and Real Estate
408 Statutory Exemptions to Prohibited Transactions
408(b)(1)     Loans to Plan Participants
408(b)(2)      Ancillary Services
408(b)(3)      Loans to ESOPs
408(b)(4)      Deposits With Fiduciary Banks and Thrifts
408(b)(8)      Collective Investment Funds
408(c)(2)      Fiduciary Fees & Expenses
409 Liability for Breach of Fiduciary Duty
410 Exculpatory Provisions
411 Prohibition Against Certain Persons Holding Certain Positions
412 Bonding of Fiduciaries
502 Civil Money Penalties
Cross References Between ERISA and Internal Revenue Code

Summary of ERISA Regulations, Opinions, and Court Decisions

3 Definitions (Selected)
4 Plans Covered
404 Fiduciary Duties
405 Co-Fiduciary Liability
406 Prohibited Transactions
407  Investment in Sponsor Securities and Real Estate
408 Statutory Exemptions to Prohibited Transactions
408(b)(1)      Loans to Plan Participants
408(b)(2)     Ancillary Services
408(b)(3)      Loans to ESOPs
408(b)(4)     Deposits With Fiduciary Banks and Thrifts
408(b)(5)     Insurance Company Fiduciaries
408(b)(7)     Conversion of Securities
408(b)(8)     Collective Investment Funds
408(c)(2)     Fiduciary Fees & Expenses
410 Exculpatory Provisions
412 Bonding of Fiduciaries

Internal Revenue Code

72(p) Loans to Plan Participants Treated as Distributions
72(p)-1 Loans to Plan Participants Treated as Distributions – IRS Guidelines
408(h) Custodial Accounts
408(m) Investment in Collectibles by IRA and Self-Directed Accounts
408(q) Deemed Individual Retirement Accounts
409(e)  Qualifications for Tax Credit ESOPs – Voting Rights
417 Special Rules for Survivor Annuity Requirements
4975 Tax on Prohibited Transactions


54.4975-11 IRS      ESOP Requirements
54.4975-12 IRS      "Qualified Employer Security" Defined
2510.3-101 DOL    Plan Assets (Pension and Welfare Benefits Administration Regulation)
2520.103-5  DOL    CIF Reports to Plan Administrators
2550.404a-1 DOL    Investment Duties (Prudence Regulation)
2550.404b-1 DOL    Indicia of ownership
2550.404c-1 DOL    ERISA Section 404(c) Plans
2550.404c-5 DOL Default Investment Alternatives Under Participant Directed Individual Account Plans (306KB PDF file - PDF Help)

Employer Securities and Real Property

2550.407a-1 DOL    General
2550.407a-2 DOL    Acquisition
2550.407d-5 DOL    "Qualifying" Defined
2550.407d-6  DOL    "Employee Stock Ownership Plan" Defined
2550.408b-1 DOL    Loans to Plan Participants and Beneficiaries
2550.408b-2  DOL    Services or Office Space
2550.408b-3 DOL    Loans to ESOPs
2550.408b-4 DOL    Investment in Own-Bank Interest-Bearing Deposits
2550.408b-6 DOL    Ancillary Services by Banks
2550.408c-2 DOL    Compensation for Services
2550.408e  DOL    Qualifying Employer Securities and Real Estate
2570.30 -.52 DOL    Individual and Class Prohibited Transaction Exemption Requests (Replaces ERISA Procedure 75-1)

IRS Revenue Rulings

59-60 Valuation of Non-Traded Assets
  IRS Rev Bulletin 2003-37
  IRS Revenue Procedure 2003-13 Deemed IRAs
  IRS Revenue Ruling 2004-67-Roth & Deemed IRA Group Trust Participation
  IRS Self Correction Program FAQ Guidance
  IRS Voluntary Compliance Program FAQ Guidance

IRS Interpretive Letter

EP:R:9 IRA Annual Valuations: Partnership Valuations, Inc.

Prohibited Transaction Class Exemptions


Securities Transactions (67KB PDF file - PDF Help)

Also See 86-128

77-3   Investment in Mutual Funds by In-House Employee Benefit Plans
77-4  Investment in Mutual Funds advised by fiduciary bank or affiliated with fiduciary bank (proprietary mutual funds).
80-26   Interest-free loans (including overdrafts) between plans and parties in interest.
80-51 Collective Investment Funds [Replaced by PTE 91-38].
80-83  Investment of plan assets in a securities issue of plan sponsor used to reduce debt at fiduciary bank or its affiliates.
81-6 Securities lending between plans and banks, broker-dealers, and government securities dealers.
81-8   Covers four types of short-term investments: banker's acceptances, commercial paper, repurchase agreements, and certificates of deposit.
82-63  Securities lending: permits payment of compensation to fiduciary providing service.
82-87  Residential Mortgage Loans. First- and second-lien loans and participations on 1-to-4 family homes, townhouses, condominiums, and cooperative apartments.

QPAM: Qualified Professional Asset Managers. Permits certain transactions between independent QPAMs and (1) parties in interest, and (2) employers, subject to conditions.

Amendment to PTE-84-14 (80KB PDF file - PDF Help)

86-128 Securities Transactions With Broker-Dealers: Permits use of affiliated brokers, including for collective investment funds.
91-38 Collective Investment Funds [Formerly PTE 80-51].
91-55   Gold Coins: American Eagle gold coins permitted as IRA investment.
93-33  Receipt of Services by IRA and Self-Retirement Plan Beneficiaries [Formerly PTE 93-2]
94-20 Foreign exchange: use of fiduciary bank, and its affiliates, to invest in foreign exchange and foreign currency options.
96-23 In-House Professional Asset Managers

Relationship Brokerage (25KB PDF file - PDF Help)

Amendment #1 Amendment #2 (28KB and 44KB PDF files - PDF Help)

97-41 Collective Investment Fund Conversions to Mutual Funds
98-54 Foreign Exchange Transactions Executed Pursuant to Standing Instructions
2000-14  Temporary Amendment to PTE 80-26 for Certain Interest Free Loans
2002-12 Cross-Trading of Securities (201KB PDF file - PDF Help)
2002-13 Amendment to Clarify the Term "Plan" (42KB PDF file - PDF Help)

Voluntary Fiduciary Correction Program (58KB PDF file - PDF Help)

Amendment to 2002-51 (66KB PDF file - PDF Help)

2003-39 Release of Claims and Extenstions of Credit in Connection with Litigation (72KB PDF file - PDF Help)
2004-16 Mandatory Distributions (108KB PDF file - PDF Help)
2006-06 Abandoned Individual Account Plans (116KB PDF file - PDF Help)
2006-16 Loans of Securities by Plans (108KB PDF file - PDF Help)

Interpretive Bulletins

75-2 Interpretive Bulletins Relating to the Employee Retirement Income Security Act of 1974

75-3 Interpretive bulletin relating to investments by employee benefit plans in securities of registered investment companies.
75-4 Interpretive bulletin relating to indemnification of fiduciaries
75-6 Guidelines for determining when a party in interest with respect to an employee benefit plan may receive an advance for expenses to be incurred on behalf of the plan without engaging in a transaction prohibited by section 406 of the Employee Retirement Income Security Act of 1974
75-8 Questions and answers relating to fiduciary responsibility under the Employee Retirement Income Security Act of 1974
94-1 ETIs: Economically Targeted Investments (Social Investing)
94-2 Proxy Voting and Investment Policies
94-3 In-Kind Contributions to Plans
95-1 Interpretive bulletin relating to the fiduciary standard under ERISA when selecting an annuity provider
96-1 Participant Investment Education for 404(c) Individual Account Plans

Technical Bulletins

86-1 Soft Dollars and Directed Commissions for Securities Transactions

Advisory Opinions/Individual Exemptions

77-46 Insured/Uninsured Deposits: Indicates diversification requirements do not apply to insured deposits, and that uninsured deposits will not violate diversification requirements if depository bank's assets are "diversified."
79-49 Own-bank plans: Prohibits fee for fiduciary services when bank acts as fiduciary for own-bank plan.
80-OCC Own-bank stock: Prohibits discretionary purchases, sales, and retention of stock of a fiduciary bank. Non-discretionary purchases, sales, retention permitted. Indicates discretionary purchases and retention would be imprudent.
85-36  Loan(s) that primarily generate jobs for union members/employers.
86-FRB Cash sweeps and related fees ("Plotkin Letter").
88-2  Cash sweeps for non-discretionary accounts into non-affiliated mutual funds.
88-9  Own-bank stock: Purchases of stock (including treasury stock) of the fiduciary bank (or its parent holding company) by self-directed IRA accounts.
88-18 Self-directed IRA account loans to a company in which the grantor/customer has a substantial interest.
88-28 Own-bank stock: Purchases of an initial public offering ("IPO") of stock of the fiduciary bank (or its parent holding company) by self-directed IRA accounts by a mutual savings bank converting to a stock institution.
89-03 Self-directed IRA account investments in stock of the customer's employer, including stock purchased directly from the employer company.
92-23 Own-bank stock: Permits non-discretionary purchase and retention of own-bank (or holding company) stock.
93-13 Mutual funds, proprietary: Provides guidance on how PTE 77-4 applies to purchase of affiliated mutual funds.
93-24 Float management involving demand deposit accounts.
93-26 Mutual funds, proprietary: Provides guidance on applicability of PTE 77-4 to use of affiliated mutual funds by IRA and Keogh accounts.
94-41A Escheating
94-OCC Collective investment funds conversions to mutual funds.
96-OCC Investment in derivatives.
97-15A Acceptance of Mutual Fund 12b-1 Fees; Letter to Frost National Bank; Discretionary and Non-Discretionary Accounts.
97-16A Acceptance of Mutual Fund 12b-1 Fees; Letter to Aetna Life Insurance and Annuity Company; Non-Discretionary Accounts.
98-06A Applicability of PTE-97-4 and PTE 77-3 to Investment of In-House Bank Employee Benefit Plans into Proprietary Mutual Funds
1999-03A Purchase of Mortgage-Backed Securities Representing Interests in a Trust Fund for which an Affliate of the Fiduciary Serves as a Sub-Servicer
1999-05A Application of Plan Assets Regulation to Certain Mortgage Pool Certificates Offered by Freddie Mac
1999-13A Treatment of QDROs Believed to be Questionable
2000-10A Whether allowing the owner of an IRA to direct the IRA to invest in a limited partnership, in which relatives and the IRA owner in his individual capacity are partners, will violate section 4975 of the Code
2001-01A The application of Title I of ERISA to the payment by plans of expenses relating to tax-qualification. See hypothetical examples. (www.dol.gov)
2001-10A Application of ERISA Secs. 408(b)(2) and 408(b)(6) to the provision of trustee services by Laurel Trust Company to two defined benefit plans which it sponsors and the payment by the plans of trustee fees in connection with those services
2002-04A Application of Sec. 408(e) of ERISA to certain transactions between a plan and various personal trusts and estates sharing a common trustee with the plan
2002-05A Whether the prohibition in PTE 77-4 (42 FR 18732, April 8, 1977) on sales commission payments would apply to commissions paid by a plan to an independent broker who executes the plan’s purchase or sale of shares of open-end investment companies registered under the Investment Company Act of 1940 through a securities exchange
2002-08A Whether indemnification and limitation of liability provisions in a plan's service provider contract would violate the fiduciary provisions of ERISA
2002-14A Guidance concerning the selection of annuity providers in connection with distributions from defined contribution plans. Specifically, the application of specific requirements of Interpretive Bulletin 95-1
2003-02A Regarding the application of ERISA to the provision of overdraft protection services, including any inherent extension of credit incident to such services, by banks, whether or not the bank exercises investment discretion over plan assets
2003-09A Whether a trust company’s receipt of 12b-1 and subtransfer fees from mutual funds, the investment advisers of which are affiliates of the trust company, for services in connection with investment by employee benefit plans in the mutual funds, would violate ERISA when the decision to invest in such funds is made by an employee benefit plan fiduciary or participant who is independent of the trust company and its affiliates
2003-11A Whether delivery of a Profile (as described in Rule 498 under the Securities Act of 1933) would satisfy the prospectus delivery requirements under ERISA section 404(c) regulations
2003-15A Whether a limited partnership in which employee benefit plans invest would be deemed a party in interest with respect to the plans under section 3(14)(G) of ERISA where the plan trustee would hold more than fifty percent of the interests in the limited partnership on behalf of the plans
2004-02A Time and Order of Issuance of Domestic Relations Orders
2004-05A Whether the execution of a securities transaction between a plan and party in interest through an alternative trading system constitutes a prohibited transaction under ERISA
2004-07A Non-depository, state chartered trust company that is a wholly-owned subsidiary of a bank holding company and is subject to regular examination and supervision by the Federal Reserve System, is exempt from certain bonding requirements in section 412 of ERISA
2004-09A Concerning the application of the prohibited transaction provisions under section 4975(c) of the IRC, to certain contributions to health savings accounts
2005-04A Whether a plan may invest in a mutual fund when one of the plan's trustees is the president, CEO, and significant shareholder of the mutual fund's investment advisor
2005-09A Whether in-kind investments in a bank collective investment fund are covered by ERISA section 408(b)(8), if the stated conditions are met
2006-01A Whether a lease by a company (LLC) 49% owned by an IRA to a company (S) which is a disqualified person with respect to that IRA is a prohibited transaction where the manager of the LLC is an officer of S. Whether 29 CFR 2509.75-2 makes the transaction an indirect prohibited transaction and whether it makes the transaction a violation of the Internal Revenue Code's exclusive benefit rule
2006-06A Whether the prohibition on the payment of sales commissions in PTE 77-3 applies to the payment of 12b-1 Fees by a proprietary mutual fund to an unrelated broker
2006-08A Whether a fiduciary of a defined benefit plan may, consistent with the requirements of section 404 of ERISA, consider the liability obligations of the plan and the risks associated with such liability obligations in determining a prudent investment strategy for the plan
2006-09A This advisory opinion concludes that a self-directed IRA‘s investment in notes of a corporation, a majority of whose stock is owned by the son-in-law of the IRA owner, would be a prohibited transaction under the Internal Revenue Code
2007-01A Whether transactions between a broker-dealer and a separate account managed by a QPAM under a 401(k) plan fail to satisfy section I(a) of PTE 84-14 where plan participants investing in such account receive investment allocation advice from a subsidiary of the broker-dealer
2007-02A Whether the 10% test applicable to pooled investment vehicles under the QPAM class exemption (84-14) does not require consideration of any underlying plan investors in a pooled fund investing in another pooled fund (47KB PDF file - PDF Help)
FAB DOL Field Assistance Bulletins
2002-01 ESOP Refinance Transactions
2002-02 Plan Amendments Made by Multiemployer Trustees
2002-03 Disclosure and Other Obligations Relating to "Float"
2003-01 Participant Loans to Corporate Directors and Officers
2003-02 Application of Participant Contribution Requirements to Multiemployer Defined Contribution Pension Plans
2003-03 Allocation of Expenses in a Defined Contribution Plan
2004-01 Health Savings Accounts
2004-02 Fiduciary Duties and Missing Participants in Terminated Defined Contribution Plans
2004-03 Fiduciary Responsibilities of Directed Trustees
2006-01 The Distribution to Plans of Settlement Proceeds Relating to Late Trading and Market Timing
2006-02 Health Savings Accounts - Q&As
2006-03 Periodic Benefit Statements - Pension Protection Act of 2006
2007-01 Statutory Exemption for Investment Advice
2007-02 ERISA Coverage of IRC§403(b) Tax-Sheltered Annuity Programs
2007-03 Periodic Pension Benefit Statements For Non-Participant Directed Individual Account Plans
2007-04 Supplemental health insurance coverage as excepted benefits under HIPAA and related legislation excepted benefits under sections 732(c)(3) and 733(c)(4) of ERISA?
2008-01 Fiduciary Responsibility for Collection of Delinquent Contributions

DOL Interpretive Letter

Receipt of Fees from Mutual Fund Distributors and Investment Advisors

ERISA Procedures

76-1 Advisory Opinion Requests: Establishes procedures for requesting ERISA opinions from Labor Department.
  Voluntary Correction Programs
  Voluntary Fiduciary Correction Program FAQs
  Participant Notice Voluntary Correction Program
  Prohibited Transaction Class Exemption 2002-51


794 IRS Determination Letters
Example Determination Letter
US Treasury Notice 2004-8 - Abusive Roth IRA Transaction
Miscellaneous Laws
  Pension Protection Act of 2006
  Economic Growth and Tax Relief Reconciliation Act of 2001
  Tax Relief and Health Care Act of 2006
  Medicare Prescription Drug Improvement Act of 2003

Table of Contents

Last Updated 04/02/2008