29 Usc 1104 - 1132

Page 477

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TITLE 29—LABOR

paragraph). If a plan remains in funding restoration status for 2 or more years, such funding restoration plan shall be updated each
year after the 1st such year within 180 days of
receipt by the plan sponsor of a certification
from the plan actuary that the plan remains
in funding restoration status for the plan year.
(4) Annual certification by plan actuary
Not later than the 90th day of each plan year
of a CSEC plan, the plan actuary shall certify
to the plan sponsor whether or not the plan is
in funding restoration status for the plan year,
based on the plan’s funded percentage as of the
beginning of the plan year. For this purpose,
the actuary may conclusively rely on an estimate of—
(A) the plan’s funding liability, based on
the funding liability of the plan for the preceding plan year and on reasonable actuarial
estimates, assumptions, and methods, and
(B) the amount of any contributions reasonably anticipated to be made for the preceding plan year.
Contributions described in subparagraph (B)
shall be taken into account in determining the
plan’s funded percentage as of the beginning of
the plan year.
(5) Definitions
For purposes of this subsection—
(A) Funding restoration status
A CSEC plan shall be treated as in funding
restoration status for a plan year if the
plan’s funded percentage as of the beginning
of such plan year is less than 80 percent.
(B) Funded percentage
The term ‘‘funded percentage’’ means the
ratio (expressed as a percentage) which—
(i) the value of plan assets (as determined under subsection (c)(2)), bears to
(ii) the plan’s funding liability.
(C) Funding liability
The term ‘‘funding liability’’ for a plan
year means the present value of all benefits
accrued or earned under the plan as of the
beginning of the plan year, based on the assumptions used by the plan pursuant to this
section, including the interest rate described
in subsection (b)(5)(A) (without regard to
subsection (b)(5)(B)).
(D) Spread gain funding method
The term ‘‘spread gain funding method’’
has the meaning given such term under rules
and forms issued by the Secretary of the
Treasury.
(Pub. L. 93–406, title I, § 306, as added Pub. L.
113–97, title I, § 102(a), Apr. 7, 2014, 128 Stat. 1102.)
REFERENCES IN TEXT
Section 104 of the Pension Protection Act of 2006, referred to in subsec. (b)(6), is section 104 of Pub. L.
109–280, which is set out as a note under section 401 of
Title 26, Internal Revenue Code.
The Social Security Act, referred to in subsecs.
(c)(4)(A) and (h)(3)(C)(ii), is act Aug. 14, 1935, ch. 531, 49
Stat. 620, which is classified generally to chapter 7 (§ 301
et seq.) of Title 42, The Public Health and Welfare.
Title II of the Act is classified generally to subchapter

II (§ 401 et seq.) of chapter 7 of Title 42. For complete
classification of this Act to the Code, see section 1305
of Title 42 and Tables.
This chapter, referred to in subsec. (d), was in the
original ‘‘this Act’’, meaning Pub. L. 93–406, known as
the Employee Retirement Income Security Act of 1974.
Titles I, III, and IV of such Act are classified principally to this chapter. For complete classification of
this Act to the Code, see Short Title note set out under
section 1001 of this title and Tables.
PRIOR PROVISIONS
A prior section 1085a, Pub. L. 93–406, title I, § 306, as
added Pub. L. 99–272, title XI, § 11015(a)(1)(A)(ii), Apr. 7,
1986, 100 Stat. 264; amended Pub. L. 100–203, title IX,
§ 9306(e)(2), Dec. 22, 1987, 101 Stat. 1330–355; Pub. L.
101–239, title VII, § 7891(a)(1), Dec. 19, 1989, 103 Stat. 2445,
related to security for waivers of minimum funding
standard and extensions of amortization period, prior
to repeal by Pub. L. 109–280, title I, § 101(a), Aug. 17,
2006, 120 Stat. 784.
EFFECTIVE DATE
Section applicable to years beginning after Dec. 31,
2013, see section 3 of Pub. L. 113–97, set out as an Effective Date of 2014 Amendment note under section 401 of
Title 26, Internal Revenue Code.

§§ 1085b, 1086. Repealed. Pub. L. 109–280, title I,
§ 101(a), Aug. 17, 2006, 120 Stat. 784
Section 1085b, Pub. L. 93–406, title I, § 307, as added
Pub. L. 100–203, title IX, § 9341(b)(2), Dec. 22, 1987, 101
Stat. 1330–370; amended Pub. L. 101–239, title VII,
§ 7881(i)(1)(B)–(3)(A), (4)(B), Dec. 19, 1989, 103 Stat. 2442,
related to security required upon adoption of plan
amendment resulting in significant underfunding.
Section 1086, Pub. L. 93–406, title I, § 308, formerly
§ 306, Sept. 2, 1974, 88 Stat. 874, renumbered § 307, Pub. L.
99–272, title XI, § 11015(a)(1)(A)(i), Apr. 7, 1986, 100 Stat.
264; renumbered § 308, Pub. L. 100–203, title IX,
§ 9341(b)(1), Dec. 22, 1987, 101 Stat. 1330–370; amended
Pub. L. 101–239, title VII, § 7894(h)(3), Dec. 19, 1989, 103
Stat. 2451, related to effective dates of part.
EFFECTIVE DATE OF REPEAL
Repeal applicable to plan years beginning after 2007,
see section 101(d) of Pub. L. 109–280, set out as an Effective Date note under section 1082 of this title.
APPLICABILITY OF AMENDMENTS BY SUBTITLES A AND B
OF TITLE I OF PUB. L. 109–280
For special rules on applicability of amendments by
subtitles A (§§ 101–108) and B (§§ 111–116) of title I of Pub.
L. 109–280 to certain eligible cooperative plans, PBGC
settlement plans, and eligible government contractor
plans, see sections 104, 105, and 106 of Pub. L. 109–280,
set out as notes under section 401 of Title 26, Internal
Revenue Code.
PART 4—FIDUCIARY RESPONSIBILITY

§ 1101. Coverage
(a) Scope of coverage
This part shall apply to any employee benefit
plan described in section 1003(a) of this title (and
not exempted under section 1003(b) of this title),
other than—
(1) a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees; or
(2) any agreement described in section 736 of
title 26, which provides payments to a retired
partner or deceased partner or a deceased
partner’s successor in interest.

§ 1101

TITLE 29—LABOR

(b) Securities or policies deemed to be included
in plan assets
For purposes of this part:
(1) In the case of a plan which invests in any
security issued by an investment company
registered under the Investment Company Act
of 1940 [15 U.S.C. 80a–1 et seq.], the assets of
such plan shall be deemed to include such security but shall not, solely by reason of such
investment, be deemed to include any assets of
such investment company.
(2) In the case of a plan to which a guaranteed benefit policy is issued by an insurer, the
assets of such plan shall be deemed to include
such policy, but shall not, solely by reason of
the issuance of such policy, be deemed to include any assets of such insurer. For purposes
of this paragraph:
(A) The term ‘‘insurer’’ means an insurance company, insurance service, or insurance organization, qualified to do business
in a State.
(B) The term ‘‘guaranteed benefit policy’’
means an insurance policy or contract to the
extent that such policy or contract provides
for benefits the amount of which is guaranteed by the insurer. Such term includes any
surplus in a separate account, but excludes
any other portion of a separate account.
(c) Clarification of application of ERISA to insurance company general accounts
(1)(A) Not later than June 30, 1997, the Secretary shall issue proposed regulations to provide guidance for the purpose of determining, in
cases where an insurer issues 1 or more policies
to or for the benefit of an employee benefit plan
(and such policies are supported by assets of
such insurer’s general account), which assets
held by the insurer (other than plan assets held
in its separate accounts) constitute assets of the
plan for purposes of this part and section 4975 of
title 26 and to provide guidance with respect to
the application of this subchapter to the general
account assets of insurers.
(B) The proposed regulations under subparagraph (A) shall be subject to public notice and
comment until September 30, 1997.
(C) The Secretary shall issue final regulations
providing the guidance described in subparagraph (A) not later than December 31, 1997.
(D) Such regulations shall only apply with respect to policies which are issued by an insurer
on or before December 31, 1998, to or for the benefit of an employee benefit plan which is supported by assets of such insurer’s general account. With respect to policies issued on or before December 31, 1998, such regulations shall
take effect at the end of the 18-month period following the date on which such regulations become final.
(2) The Secretary shall ensure that the regulations issued under paragraph (1)—
(A) are administratively feasible, and
(B) protect the interests and rights of the
plan and of its participants and beneficiaries
(including meeting the requirements of paragraph (3)).
(3) The regulations prescribed by the Secretary pursuant to paragraph (1) shall require,
in connection with any policy issued by an in-

Page 478

surer to or for the benefit of an employee benefit
plan to the extent that the policy is not a guaranteed benefit policy (as defined in subsection
(b)(2)(B))—
(A) that a plan fiduciary totally independent
of the insurer authorize the purchase of such
policy (unless such purchase is a transaction
exempt under section 1108(b)(5) of this title),
(B) that the insurer describe (in such form
and manner as shall be prescribed in such regulations), in annual reports and in policies issued to the policyholder after the date on
which such regulations are issued in final form
pursuant to paragraph (1)(C)—
(i) a description of the method by which
any income and expenses of the insurer’s
general account are allocated to the policy
during the term of the policy and upon the
termination of the policy, and
(ii) for each report, the actual return to
the plan under the policy and such other financial information as the Secretary may
deem appropriate for the period covered by
each such annual report,
(C) that the insurer disclose to the plan fiduciary the extent to which alternative arrangements supported by assets of separate accounts of the insurer (which generally hold
plan assets) are available, whether there is a
right under the policy to transfer funds to a
separate account and the terms governing any
such right, and the extent to which support by
assets of the insurer’s general account and
support by assets of separate accounts of the
insurer might pose differing risks to the plan,
and
(D) that the insurer manage those assets of
the insurer which are assets of such insurer’s
general account (irrespective of whether any
such assets are plan assets) with the care,
skill, prudence, and diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar
with such matters would use in the conduct of
an enterprise of a like character and with like
aims, taking into account all obligations supported by such enterprise.
(4) Compliance by the insurer with all requirements of the regulations issued by the Secretary
pursuant to paragraph (1) shall be deemed compliance by such insurer with sections 1104, 1106,
and 1107 of this title with respect to those assets
of the insurer’s general account which support a
policy described in paragraph (3).
(5)(A) Subject to subparagraph (B), any regulations issued under paragraph (1) shall not take
effect before the date on which such regulations
become final.
(B) No person shall be subject to liability
under this part or section 4975 of title 26 for conduct which occurred before the date which is 18
months following the date described in subparagraph (A) on the basis of a claim that the assets
of an insurer (other than plan assets held in a
separate account) constitute assets of the plan,
except—
(i) as otherwise provided by the Secretary in
regulations intended to prevent avoidance of
the regulations issued under paragraph (1), or
(ii) as provided in an action brought by the
Secretary pursuant to paragraph (2) or (5) of

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TITLE 29—LABOR

section 1132(a) of this title for a breach of fiduciary responsibilities which would also constitute a violation of Federal or State criminal law.
The Secretary shall bring a cause of action described in clause (ii) if a participant, beneficiary, or fiduciary demonstrates to the satisfaction of the Secretary that a breach described
in clause (ii) has occurred.
(6) Nothing in this subsection shall preclude
the application of any Federal criminal law.
(7) For purposes of this subsection, the term
‘‘policy’’ includes a contract.
(Pub. L. 93–406, title I, § 401, Sept. 2, 1974, 88 Stat.
874; Pub. L. 101–239, title VII, § 7891(a)(1), Dec. 19,
1989, 103 Stat. 2445; Pub. L. 104–188, title I,
§ 1460(a), Aug. 20, 1996, 110 Stat. 1820.)
REFERENCES IN TEXT
The Investment Company Act of 1940, referred to in
subsec. (b)(1), is title I of act Aug. 22, 1940, ch. 686, 54
Stat. 789, as amended, which is classified generally to
subchapter I (§ 80a–1 et seq.) of chapter 2D of Title 15,
Commerce and Trade. For complete classification of
this Act to the Code, see section 80a–51 of Title 15 and
Tables.
AMENDMENTS
1996—Subsec. (c). Pub. L. 104–188 added subsec. (c).
1989—Subsec. (a)(2). Pub. L. 101–239 substituted ‘‘Internal Revenue Code of 1986’’ for ‘‘Internal Revenue
Code of 1954’’, which for purposes of codification was
translated as ‘‘title 26’’ thus requiring no change in
text.
EFFECTIVE DATE OF 1996 AMENDMENT
Pub. L. 104–188, title I, § 1460(b), Aug. 20, 1996, 110 Stat.
1822, provided that:
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
the amendment made by this section [amending this
section] shall take effect on January 1, 1975.
‘‘(2) CIVIL ACTIONS.—The amendment made by this
section shall not apply to any civil action commenced
before November 7, 1995.’’
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101–239 effective, except as
otherwise provided, as if included in the provision of
the Tax Reform Act of 1986, Pub. L. 99–514, to which
such amendment relates, see section 7891(f) of Pub. L.
101–239, set out as a note under section 1002 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL
JANUARY 1, 1998
For provisions directing that if any amendments
made by subtitle D [§§ 1401–1465] of title I of Pub. L.
104–188 require an amendment to any plan or annuity
contract, such amendment shall not be required to be
made before the first day of the first plan year beginning on or after Jan. 1, 1998, see section 1465 of Pub. L.
104–188, set out as a note under section 401 of Title 26,
Internal Revenue Code.

§ 1102. Establishment of plan
(a) Named fiduciaries
(1) Every employee benefit plan shall be established and maintained pursuant to a written instrument. Such instrument shall provide for one
or more named fiduciaries who jointly or severally shall have authority to control and manage
the operation and administration of the plan.
(2) For purposes of this subchapter, the term
‘‘named fiduciary’’ means a fiduciary who is

§ 1103

named in the plan instrument, or who, pursuant
to a procedure specified in the plan, is identified
as a fiduciary (A) by a person who is an employer or employee organization with respect to
the plan or (B) by such an employer and such an
employee organization acting jointly.
(b) Requisite features of plan
Every employee benefit plan shall—
(1) provide a procedure for establishing and
carrying out a funding policy and method consistent with the objectives of the plan and the
requirements of this subchapter,
(2) describe any procedure under the plan for
the allocation of responsibilities for the operation and administration of the plan (including any procedure described in section
1105(c)(1) of this title),
(3) provide a procedure for amending such
plan, and for identifying the persons who have
authority to amend the plan, and
(4) specify the basis on which payments are
made to and from the plan.
(c) Optional features of plan
Any employee benefit plan may provide—
(1) that any person or group of persons may
serve in more than one fiduciary capacity with
respect to the plan (including service both as
trustee and administrator);
(2) that a named fiduciary, or a fiduciary
designated by a named fiduciary pursuant to a
plan procedure described in section 1105(c)(1)
of this title, may employ one or more persons
to render advice with regard to any responsibility such fiduciary has under the plan; or
(3) that a person who is a named fiduciary
with respect to control or management of the
assets of the plan may appoint an investment
manager or managers to manage (including
the power to acquire and dispose of) any assets
of a plan.
(Pub. L. 93–406, title I, § 402, Sept. 2, 1974, 88 Stat.
875.)
§ 1103. Establishment of trust
(a) Benefit plan assets to be held in trust; authority of trustees
Except as provided in subsection (b), all assets
of an employee benefit plan shall be held in
trust by one or more trustees. Such trustee or
trustees shall be either named in the trust instrument or in the plan instrument described in
section 1102(a) of this title or appointed by a
person who is a named fiduciary, and upon acceptance of being named or appointed, the trustee or trustees shall have exclusive authority and
discretion to manage and control the assets of
the plan, except to the extent that—
(1) the plan expressly provides that the
trustee or trustees are subject to the direction
of a named fiduciary who is not a trustee, in
which case the trustees shall be subject to
proper directions of such fiduciary which are
made in accordance with the terms of the plan
and which are not contrary to this chapter, or
(2) authority to manage, acquire, or dispose
of assets of the plan is delegated to one or
more investment managers pursuant to section 1102(c)(3) of this title.

§ 1103

TITLE 29—LABOR

(b) Exceptions
The requirements of subsection (a) of this section shall not apply—
(1) to any assets of a plan which consist of
insurance contracts or policies issued by an
insurance company qualified to do business in
a State;
(2) to any assets of such an insurance company or any assets of a plan which are held by
such an insurance company;
(3) to a plan—
(A) some or all of the participants of which
are employees described in section 401(c)(1)
of title 26; or
(B) which consists of one or more individual retirement accounts described in section
408 of title 26;
to the extent that such plan’s assets are held
in one or more custodial accounts which qualify under section 401(f) or 408(h) of title 26,
whichever is applicable.
(4) to a plan which the Secretary exempts
from the requirement of subsection (a) and
which is not subject to any of the following
provisions of this chapter—
(A) part 2 of this subtitle,
(B) part 3 of this subtitle, or
(C) subchapter III of this chapter; or
(5) to a contract established and maintained
under section 403(b) of title 26 to the extent
that the assets of the contract are held in one
or more custodial accounts pursuant to section 403(b)(7) of title 26.
(6) Any plan, fund or program under which
an employer, all of whose stock is directly or
indirectly owned by employees, former employees or their beneficiaries, proposes
through an unfunded arrangement to compensate retired employees for benefits which
were forfeited by such employees under a pension plan maintained by a former employer
prior to the date such pension plan became
subject to this chapter.
(c) Assets of plan not to inure to benefit of employer; allowable purposes of holding plan
assets
(1) Except as provided in paragraph (2), (3), or
(4) or subsection (d), or under sections 1342 and
1344 of this title (relating to termination of insured plans), or under section 420 of title 26 (as
in effect on July 31, 2015), the assets of a plan
shall never inure to the benefit of any employer
and shall be held for the exclusive purposes of
providing benefits to participants in the plan
and their beneficiaries and defraying reasonable
expenses of administering the plan.
(2)(A) In the case of a contribution, or a payment of withdrawal liability under part 1 of subtitle E of subchapter III—
(i) if such contribution or payment is made
by an employer to a plan (other than a multiemployer plan) by a mistake of fact, paragraph (1) shall not prohibit the return of such
contribution to the employer within one year
after the payment of the contribution, and
(ii) if such contribution or payment is made
by an employer to a multiemployer plan by a
mistake of fact or law (other than a mistake
relating to whether the plan is described in

Page 480

section 401(a) of title 26 or the trust which is
part of such plan is exempt from taxation
under section 501(a) of title 26), paragraph (1)
shall not prohibit the return of such contribution or payment to the employer within 6
months after the plan administrator determines that the contribution was made by such
a mistake.
(B) If a contribution is conditioned on initial
qualification of the plan under section 401 or
403(a) of title 26, and if the plan receives an adverse determination with respect to its initial
qualification, then paragraph (1) shall not prohibit the return of such contribution to the employer within one year after such determination, but only if the application for the determination is made by the time prescribed by law
for filing the employer’s return for the taxable
year in which such plan was adopted, or such
later date as the Secretary of the Treasury may
prescribe.
(C) If a contribution is conditioned upon the
deductibility of the contribution under section
404 of title 26, then, to the extent the deduction
is disallowed, paragraph (1) shall not prohibit
the return to the employer of such contribution
(to the extent disallowed) within one year after
the disallowance of the deduction.
(3) In the case of a withdrawal liability payment which has been determined to be an overpayment, paragraph (1) shall not prohibit the return of such payment to the employer within 6
months after the date of such determination.
(d) Termination of plan
(1) Upon termination of a pension plan to
which section 1321 of this title does not apply at
the time of termination and to which this part
applies (other than a plan to which no employer
contributions have been made) the assets of the
plan shall be allocated in accordance with the
provisions of section 1344 of this title, except as
otherwise provided in regulations of the Secretary.
(2) The assets of a welfare plan which terminates shall be distributed in accordance with the
terms of the plan, except as otherwise provided
in regulations of the Secretary.
(Pub. L. 93–406, title I, § 403, Sept. 2, 1974, 88 Stat.
876; Pub. L. 96–364, title III, § 310, title IV,
§§ 402(b)(2), 410(a), 411(c), Sept. 26, 1980, 94 Stat.
1296, 1299, 1308; Pub. L. 100–203, title IX, § 9343(c),
Dec. 22, 1987, 101 Stat. 1330–372; Pub. L. 101–239,
title VII, §§ 7881(k), 7891(a)(1), 7894(e)(1)(A), (3),
Dec. 19, 1989, 103 Stat. 2443, 2445, 2450; Pub. L.
101–508, title XII, § 12012(a), Nov. 5, 1990, 104 Stat.
1388–571; Pub. L. 103–465, title VII, § 731(c)(4)(B),
Dec. 8, 1994, 108 Stat. 5004; Pub. L. 106–170, title
V, § 535(a)(2)(B), Dec. 17, 1999, 113 Stat. 1934; Pub.
L. 108–218, title II, § 204(b)(2), Apr. 10, 2004, 118
Stat. 609; Pub. L. 108–357, title VII, § 709(a)(2),
Oct. 22, 2004, 118 Stat. 1551; Pub. L. 109–280, title
I, § 108(a)(11), formerly § 107(a)(11), Aug. 17, 2006,
120 Stat. 819, renumbered Pub. L. 111–192, title II,
§ 202(a), June 25, 2010, 124 Stat. 1297; Pub. L.
112–141, div. D, title II, § 40241(b)(1), July 6, 2012,
126 Stat. 859; Pub. L. 114–41, title II, § 2007(b)(1),
July 31, 2015, 129 Stat. 459.)
REFERENCES IN TEXT
This chapter, referred to in subsecs. (a)(1) and (b)(4),
(6), was in the original ‘‘this Act’’, meaning Pub. L.

Page 481

§ 1104

TITLE 29—LABOR

93–406, known as the Employee Retirement Income Security Act of 1974. Titles I, III, and IV of such Act are
classified principally to this chapter. For complete
classification of this Act to the Code, see Short Title
note set out under section 1001 of this title and Tables.

provisions relating to contributions made by an employer by a mistake of fact.
Subsec. (c)(4). Pub. L. 96–364, § 310(2), added par. (4).

AMENDMENTS

Amendment by Pub. L. 109–280 applicable to plan
years beginning after 2007, see section 108(e) of Pub. L.
109–280, set out as a note under section 1021 of this title.

2015—Subsec. (c)(1). Pub. L. 114–41 substituted ‘‘July
31, 2015’’ for ‘‘July 6, 2012’’. Amendment was executed to
reflect the probable intent of Congress notwithstanding
an extra closing quotation mark in the directory language.
2012—Subsec. (c)(1). Pub. L. 112–141 substituted ‘‘July
6, 2012’’ for ‘‘August 17, 2006’’.
2006—Subsec. (c)(1). Pub. L. 109–280 substituted ‘‘August 17, 2006’’ for ‘‘October 22, 2004’’.
2004—Subsec. (c)(1). Pub. L. 108–357 substituted ‘‘October 22, 2004’’ for ‘‘April 10, 2004’’.
Pub. L. 108–218 substituted ‘‘April 10, 2004’’ for ‘‘December 17, 1999’’.
1999—Subsec. (c)(1). Pub. L. 106–170 substituted ‘‘December 17, 1999’’ for ‘‘January 1, 1995’’.
1994—Subsec. (c)(1). Pub. L. 103–465 substituted ‘‘1995’’
for ‘‘1991’’.
1990—Subsec. (c)(1). Pub. L. 101–508 inserted ‘‘, or
under section 420 of title 26 (as in effect on January 1,
1991)’’ after ‘‘insured plans’’.
1989—Subsecs. (b)(3), (5), (c)(2)(A)(ii), (C). Pub. L.
101–239, § 7891(a)(1), substituted ‘‘Internal Revenue Code
of 1986’’ for ‘‘Internal Revenue Code of 1954’’, which for
purposes of codification was translated as ‘‘title 26’’
thus requiring no change in text.
Subsec. (b)(3). Pub. L. 101–239, § 7894(e)(3), redesignated cls. (i) and (ii) as subpars. (A) and (B), respectively, struck out ‘‘, to the extent that such plan’s assets are held in one or more custodial accounts which
qualify under section 401(f) or 408(h) of title 26, whichever is applicable’’ before the semicolon in subpar. (B),
and inserted concluding provision ‘‘to the extent that
such plan’s assets are held in one or more custodial accounts which qualify under section 401(f) or 408(h) of
title 26, whichever is applicable.’’
Subsec. (c)(2)(A). Pub. L. 101–239, § 7894(e)(1)(A), in introductory provisions, made technical amendment to
reference to part 1 of subtitle E of subchapter III of this
chapter to correct reference to corresponding part of
original Act, requiring no change in text, and in cls. (i)
and (ii), inserted ‘‘if such contribution or payment is’’
before ‘‘made by an employer’’.
Subsec. (c)(3), (4). Pub. L. 101–239, § 7881(k), redesignated par. (4) as (3) and struck out former par. (3) which
read as follows: ‘‘In the case of a contribution which
would otherwise be an excess contribution (as defined
in section 4979(c) of title 26) paragraph (1) shall not prohibit a correcting distribution with respect to such
contribution from the plan to the employer to the extent permitted in such section to avoid payment of an
excise tax on excess contributions under such section.’’
1987—Subsec. (c)(2)(B). Pub. L. 100–203, § 9343(c)(1),
amended subpar. (B) generally. Prior to amendment,
subpar. (B) read as follows: ‘‘If a contribution is conditioned on qualification of the plan under section 401,
403(a), or 405(a) of title 26, and if the plan does not qualify, then paragraph (1) shall not prohibit the return of
such contributions to the employer within one year
after the date of denial of qualification of the plan.’’
Subsec. (c)(3). Pub. L. 100–203, § 9343(c)(2), substituted
‘‘section 4979(c) of title 26’’ for ‘‘section 4972(b) of title
26’’.
1980—Subsec. (a)(1). Pub. L. 96–364, § 402(b)(2), substituted ‘‘chapter’’ for ‘‘subchapter’’.
Subsec. (b)(6). Pub. L. 96–364, § 411(c), added par. (6).
Subsec. (c)(1). Pub. L. 96–364, § 310(1), inserted reference to par. (4).
Subsec. (c)(2)(A). Pub. L. 96–364, § 410(a), substituted
provisions relating to contributions or payments of
withdrawal liability under part 1 of subtitle E of subchapter III of this chapter made by an employer to a
plan by a mistake of fact, and by an employer to a
multiemployer plan by a mistake of fact or law, for

EFFECTIVE DATE OF 2006 AMENDMENT

EFFECTIVE DATE OF 1999 AMENDMENT
Amendment by Pub. L. 106–170 applicable to qualified
transfers occurring after Dec. 17, 1999, see section
535(c)(1) of Pub. L. 106–170, set out as a note under section 420 of Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101–508 applicable to qualified
transfers under section 420 of title 26 made after Nov.
5, 1990, see section 12012(e) of Pub. L. 101–508, set out as
a note under section 1021 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by section 7881(k) of Pub. L. 101–239 effective, except as otherwise provided, as if included in the
provision of the Pension Protection Act, Pub. L.
100–203, §§ 9302–9346, to which such amendment relates,
see section 7882 of Pub. L. 101–239, set out as a note
under section 401 of Title 26, Internal Revenue Code.
Amendment by section 7891(a)(1) of Pub. L. 101–239 effective, except as otherwise provided, as if included in
the provision of the Tax Reform Act of 1986, Pub. L.
99–514, to which such amendment relates, see section
7891(f) of Pub. L. 101–239, set out as a note under section
1002 of this title.
Section 7894(e)(1)(B) of Pub. L. 101–239 provided that:
‘‘The amendments made by subparagraph (A) [amending this section] shall take effect as if included in section 410 of the Multiemployer Pension Plan Amendments Act of 1980 [Pub. L. 96–364].’’
Amendment by section 7894(e)(3) of Pub. L. 101–239 effective, except as otherwise provided, as if originally
included in the provision of the Employee Retirement
Income Security Act of 1974, Pub. L. 93–406, to which
such amendment relates, see section 7894(i) of Pub. L.
101–239, set out as a note under section 1002 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96–364 effective Sept. 26, 1980,
except as specifically provided, see section 1461(e) of
this title.
Amendment by section 410(a) of Pub. L. 96–364 effective Jan. 1, 1975, except with respect to contributions
received by a collectively bargained plan maintained
by more than one employer before Sept. 26, 1980, see
section 410(c) of Pub. L. 96–364, set out as a note under
section 401 of Title 26, Internal Revenue Code.
REGULATIONS
Secretary authorized, effective Sept. 2, 1974, to promulgate regulations wherever provisions of this part
call for the promulgation of regulations, see sections
1031 and 1114 of this title.
APPLICABILITY OF AMENDMENTS BY SUBTITLES A AND B
OF TITLE I OF PUB. L. 109–280
For special rules on applicability of amendments by
subtitles A (§§ 101–108) and B (§§ 111–116) of title I of Pub.
L. 109–280 to certain eligible cooperative plans, PBGC
settlement plans, and eligible government contractor
plans, see sections 104, 105, and 106 of Pub. L. 109–280,
set out as notes under section 401 of Title 26, Internal
Revenue Code.

§ 1104. Fiduciary duties
(a) Prudent man standard of care
(1) Subject to sections 1103(c) and (d), 1342, and
1344 of this title, a fiduciary shall discharge his

§ 1104

TITLE 29—LABOR

duties with respect to a plan solely in the interest of the participants and beneficiaries and—
(A) for the exclusive purpose of:
(i) providing benefits to participants and
their beneficiaries; and
(ii) defraying reasonable expenses of administering the plan;
(B) with the care, skill, prudence, and diligence under the circumstances then prevailing
that a prudent man acting in a like capacity
and familiar with such matters would use in
the conduct of an enterprise of a like character and with like aims;
(C) by diversifying the investments of the
plan so as to minimize the risk of large losses,
unless under the circumstances it is clearly
prudent not to do so; and
(D) in accordance with the documents and
instruments governing the plan insofar as
such documents and instruments are consistent with the provisions of this subchapter and
subchapter III.
(2) In the case of an eligible individual account
plan (as defined in section 1107(d)(3) of this
title), the diversification requirement of paragraph (1)(C) and the prudence requirement (only
to the extent that it requires diversification) of
paragraph (1)(B) is not violated by acquisition or
holding of qualifying employer real property or
qualifying employer securities (as defined in
section 1107(d)(4) and (5) of this title).
(b) Indicia of ownership of assets outside jurisdiction of district courts
Except as authorized by the Secretary by regulations, no fiduciary may maintain the indicia
of ownership of any assets of a plan outside the
jurisdiction of the district courts of the United
States.
(c) Control over assets by participant or beneficiary
(1)(A) In the case of a pension plan which provides for individual accounts and permits a participant or beneficiary to exercise control over
the assets in his account, if a participant or beneficiary exercises control over the assets in his
account (as determined under regulations of the
Secretary)—
(i) such participant or beneficiary shall not
be deemed to be a fiduciary by reason of such
exercise, and
(ii) no person who is otherwise a fiduciary
shall be liable under this part for any loss, or
by reason of any breach, which results from
such participant’s or beneficiary’s exercise of
control, except that this clause shall not apply
in connection with such participant or beneficiary for any blackout period during which
the ability of such participant or beneficiary
to direct the investment of the assets in his or
her account is suspended by a plan sponsor or
fiduciary.
(B) If a person referred to in subparagraph
(A)(ii) meets the requirements of this subchapter in connection with authorizing and implementing the blackout period, any person who
is otherwise a fiduciary shall not be liable under
this subchapter for any loss occurring during
such period.

Page 482

(C) For purposes of this paragraph, the term
‘‘blackout period’’ has the meaning given such
term by section 1021(i)(7) of this title.
(2) In the case of a simple retirement account
established pursuant to a qualified salary reduction arrangement under section 408(p) of title 26,
a participant or beneficiary shall, for purposes
of paragraph (1), be treated as exercising control
over the assets in the account upon the earliest
of—
(A) an affirmative election among investment options with respect to the initial investment of any contribution,
(B) a rollover to any other simple retirement
account or individual retirement plan, or
(C) one year after the simple retirement account is established.
No reports, other than those required under section 1021(g) of this title, shall be required with
respect to a simple retirement account established pursuant to such a qualified salary reduction arrangement.
(3) In the case of a pension plan which makes
a transfer to an individual retirement account
or annuity of a designated trustee or issuer
under section 401(a)(31)(B) of title 26, the participant or beneficiary shall, for purposes of paragraph (1), be treated as exercising control over
the assets in the account or annuity upon—
(A) the earlier of—
(i) a rollover of all or a portion of the
amount to another individual retirement account or annuity; or
(ii) one year after the transfer is made; or
(B) a transfer that is made in a manner consistent with guidance provided by the Secretary.
(4)(A) In any case in which a qualified change
in investment options occurs in connection with
an individual account plan, a participant or beneficiary shall not be treated for purposes of
paragraph (1) as not exercising control over the
assets in his account in connection with such
change if the requirements of subparagraph (C)
are met in connection with such change.
(B) For purposes of subparagraph (A), the term
‘‘qualified change in investment options’’
means, in connection with an individual account
plan, a change in the investment options offered
to the participant or beneficiary under the
terms of the plan, under which—
(i) the account of the participant or beneficiary is reallocated among one or more remaining or new investment options which are
offered in lieu of one or more investment options offered immediately prior to the effective date of the change, and
(ii) the stated characteristics of the remaining or new investment options provided under
clause (i), including characteristics relating to
risk and rate of return, are, as of immediately
after the change, reasonably similar to those
of the existing investment options as of immediately before the change.
(C) The requirements of this subparagraph are
met in connection with a qualified change in investment options if—
(i) at least 30 days and no more than 60 days
prior to the effective date of the change, the

Page 483

§ 1104

TITLE 29—LABOR

plan administrator furnishes written notice of
the change to the participants and beneficiaries, including information comparing the
existing and new investment options and an
explanation that, in the absence of affirmative
investment instructions from the participant
or beneficiary to the contrary, the account of
the participant or beneficiary will be invested
in the manner described in subparagraph (B),
(ii) the participant or beneficiary has not
provided to the plan administrator, in advance
of the effective date of the change, affirmative
investment instructions contrary to the
change, and
(iii) the investments under the plan of the
participant or beneficiary as in effect immediately prior to the effective date of the
change were the product of the exercise by
such participant or beneficiary of control over
the assets of the account within the meaning
of paragraph (1).
(5) DEFAULT INVESTMENT ARRANGEMENTS.—
(A) IN GENERAL.—For purposes of paragraph
(1), a participant or beneficiary in an individual account plan meeting the notice requirements of subparagraph (B) shall be treated as
exercising control over the assets in the account with respect to the amount of contributions and earnings which, in the absence of an
investment election by the participant or beneficiary, are invested by the plan in accordance with regulations prescribed by the Secretary. The regulations under this subparagraph shall provide guidance on the appropriateness of designating default investments
that include a mix of asset classes consistent
with capital preservation or long-term capital
appreciation, or a blend of both.
(B) NOTICE REQUIREMENTS.—
(i) IN GENERAL.—The requirements of this
subparagraph are met if each participant or
beneficiary—
(I) receives, within a reasonable period of
time before each plan year, a notice explaining the employee’s right under the
plan to designate how contributions and
earnings will be invested and explaining
how, in the absence of any investment
election by the participant or beneficiary,
such contributions and earnings will be invested, and
(II) has a reasonable period of time after
receipt of such notice and before the beginning of the plan year to make such designation.
(ii) FORM OF NOTICE.—The requirements of
clauses (i) and (ii) of section 401(k)(12)(D) of
title 26 shall apply with respect to the notices described in this subparagraph.
(d) Plan terminations
(1) If, in connection with the termination of a
pension plan which is a single-employer plan,
there is an election to establish or maintain a
qualified replacement plan, or to increase benefits, as provided under section 4980(d) of title 26,
a fiduciary shall discharge the fiduciary’s duties
under this subchapter and subchapter III in accordance with the following requirements:
(A) In the case of a fiduciary of the terminated plan, any requirement—

(i) under section 4980(d)(2)(B) of title 26
with respect to the transfer of assets from
the terminated plan to a qualified replacement plan, and
(ii) under section 4980(d)(2)(B)(ii) or
4980(d)(3) of title 26 with respect to any increase in benefits under the terminated plan.
(B) In the case of a fiduciary of a qualified
replacement plan, any requirement—
(i) under section 4980(d)(2)(A) of title 26
with respect to participation in the qualified
replacement plan of active participants in
the terminated plan,
(ii) under section 4980(d)(2)(B) of title 26
with respect to the receipt of assets from the
terminated plan, and
(iii) under section 4980(d)(2)(C) of title 26
with respect to the allocation of assets to
participants of the qualified replacement
plan.
(2) For purposes of this subsection—
(A) any term used in this subsection which is
also used in section 4980(d) of title 26 shall
have the same meaning as when used in such
section, and
(B) any reference in this subsection to title
26 shall be a reference to title 26 as in effect
immediately after the enactment of the Omnibus Budget Reconciliation Act of 1990.
(Pub. L. 93–406, title I, § 404, Sept. 2, 1974, 88 Stat.
877; Pub. L. 96–364, title III, § 309, Sept. 26, 1980,
94 Stat. 1296; Pub. L. 101–508, title XII,
§ 12002(b)(1), (2)(A), Nov. 5, 1990, 104 Stat. 1388–565,
1388–566; Pub. L. 104–188, title I, § 1421(d)(2), Aug.
20, 1996, 110 Stat. 1799; Pub. L. 107–16, title VI,
§ 657(c)(1), June 7, 2001, 115 Stat. 136; Pub. L.
107–147, title IV, § 411(t), Mar. 9, 2002, 116 Stat. 51;
Pub. L. 109–280, title VI, §§ 621(a), 624(a), Aug. 17,
2006, 120 Stat. 978, 980; Pub. L. 110–458, title I,
§ 106(d), Dec. 23, 2008, 122 Stat. 5107.)
REFERENCES IN TEXT
The enactment of the Omnibus Budget Reconciliation
Act of 1990, referred to in subsec. (d)(2)(B), is the enactment of Pub. L. 101–508, which was approved Nov. 5,
1990.
AMENDMENTS
2008—Subsec. (c)(5). Pub. L. 110–458 substituted ‘‘participant or beneficiary’’ for ‘‘participant’’ wherever appearing.
2006—Subsec. (c)(1). Pub. L. 109–280, § 621(a)(1), designated existing provisions as subpar. (A), redesignated
former subpars. (A) and (B) as cls. (i) and (ii), respectively, of subpar. (A), in cl. (ii), inserted ‘‘, except that
this clause shall not apply in connection with such participant or beneficiary for any blackout period during
which the ability of such participant or beneficiary to
direct the investment of the assets in his or her account is suspended by a plan sponsor or fiduciary’’ before period at end, and added subpars. (B) and (C).
Subsec. (c)(4). Pub. L. 109–280, § 621(a)(2), added par.
(4).
Subsec. (c)(5). Pub. L. 109–280, § 624(a), added par. (5).
2002—Subsec. (c)(3)(A). Pub. L. 107–147, § 411(t)(1),
struck out ‘‘the earlier of’’ after ‘‘the earlier of’’ in introductory provisions.
Subsec. (c)(3)(B). Pub. L. 107–147, § 411(t)(2), substituted ‘‘a transfer that’’ for ‘‘if the transfer’’.
2001—Subsec. (c)(3). Pub. L. 107–16 added par. (3).
1996—Subsec. (c). Pub. L. 104–188 designated existing
provisions as par. (1), redesignated former pars. (1) and
(2) as subpars. (A) and (B), respectively, and added par.
(2).

§ 1105

TITLE 29—LABOR

1990—Subsec. (a)(1)(D). Pub. L. 101–508, § 12002(b)(2)(A),
substituted ‘‘and subchapter III’’ for ‘‘or subchapter
III’’.
Subsec. (d). Pub. L. 101–508, § 12002(b)(1), added subsec.
(d).
1980—Subsec. (a)(1)(D). Pub. L. 96–364 inserted reference to subchapter III of this chapter.
EFFECTIVE DATE OF 2008 AMENDMENT
Amendment by Pub. L. 110–458 effective as if included
in the provisions of Pub. L. 109–280 to which the amendment relates, except as otherwise provided, see section
112 of Pub. L. 110–458, set out as a note under section 72
of Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 2006 AMENDMENT
Pub. L. 109–280, title VI, § 621(b), Aug. 17, 2006, 120
Stat. 979, provided that:
‘‘(1) IN GENERAL.—The amendments made by this section [amending this section] shall apply to plan years
beginning after December 31, 2007.
‘‘(2) SPECIAL RULE FOR COLLECTIVELY BARGAINED
AGREEMENTS.—In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified on or before the date of the enactment of
this Act [Aug. 17, 2006], paragraph (1) shall be applied to
benefits pursuant to, and individuals covered by, any
such agreement by substituting for ‘December 31, 2007’
the earlier of—
‘‘(A) the later of—
‘‘(i) December 31, 2008, or
‘‘(ii) the date on which the last of such collective
bargaining agreements terminates (determined
without regard to any extension thereof after such
date of enactment), or
‘‘(B) December 31, 2009.’’
Pub. L. 109–280, title VI, § 624(b), Aug. 17, 2006, 120
Stat. 980, provided that:
‘‘(1) IN GENERAL.—The amendments made by this section [amending this section] shall apply to plan years
beginning after December 31, 2006.
‘‘(2) REGULATIONS.—Final regulations under section
404(c)(5)(A) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1104(c)(5)(A)] (as added by this
section) shall be issued no later than 6 months after the
date of the enactment of this Act [Aug. 17, 2006].’’
EFFECTIVE DATE OF 2002 AMENDMENT
Amendment by Pub. L. 107–147 effective as if included
in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107–16, to which
such amendment relates, see section 411(x) of Pub. L.
107–147, set out as a note under section 25B of Title 26,
Internal Revenue Code.
EFFECTIVE DATE OF 2001 AMENDMENT
Amendment by Pub. L. 107–16 applicable to distributions made after Mar. 28, 2005, see section 657(d) of Pub.
L. 107–16, set out as a note under section 401 of Title 26,
Internal Revenue Code.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104–188 applicable to taxable
years beginning after Dec. 31, 1996, see section 1421(e) of
Pub. L. 104–188, set out as a note under section 72 of
Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101–508 applicable to reversions occurring after Sept. 30, 1990, but not applicable
to any reversion after Sept. 30, 1990, if (1) in the case of
plans subject to subchapter III of this chapter, notice of
intent to terminate under such subchapter was provided to participants (or if no participants, to Pension
Benefit Guaranty Corporation) before Oct. 1, 1990, (2) in
the case of plans subject to subchapter I of this chapter
(and not subchapter III), notice of intent to reduce fu-

Page 484

ture accruals under section 1054(h) of this title was provided to participants in connection with termination
before Oct. 1, 1990, (3) in the case of plans not subject
to subchapter I or III of this chapter, a request for a determination letter with respect to termination was
filed with Secretary of the Treasury or Secretary’s
delegate before Oct. 1, 1990, or (4) in the case of plans
not subject to subchapter I or III of this chapter and
having only one participant, a resolution terminating
the plan was adopted by employer before Oct. 1, 1990,
see section 12003 of Pub. L. 101–508, set out as a note
under section 4980 of Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96–364 effective Sept. 26, 1980,
except as specifically provided, see section 1461(e) of
this title.
REGULATIONS
Pub. L. 109–280, title VI, § 625, Aug. 17, 2006, 120 Stat.
980, provided that:
‘‘(a) IN GENERAL.—Not later than 1 year after the
date of the enactment of this Act [Aug. 17, 2006], the
Secretary of Labor shall issue final regulations clarifying that the selection of an annuity contract as an optional form of distribution from an individual account
plan to a participant or beneficiary—
‘‘(1) is not subject to the safest available annuity
standard under Interpretive Bulletin 95–1 (29 CFR
2509.95–1), and
‘‘(2) is subject to all otherwise applicable fiduciary
standards.
‘‘(b) EFFECTIVE DATE.—This section shall take effect
on the date of enactment of this Act [Aug. 17, 2006].’’
Secretary authorized, effective Sept. 2, 1974, to promulgate regulations wherever provisions of this part
call for the promulgation of regulations, see sections
1031 and 1114 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL
JANUARY 1, 1998
For provisions directing that if any amendments
made by subtitle D [§§ 1401–1465] of title I of Pub. L.
104–188 require an amendment to any plan or annuity
contract, such amendment shall not be required to be
made before the first day of the first plan year beginning on or after Jan. 1, 1998, see section 1465 of Pub. L.
104–188, set out as a note under section 401 of Title 26,
Internal Revenue Code.

§ 1105. Liability for breach of co-fiduciary
(a) Circumstances giving rise to liability
In addition to any liability which he may have
under any other provisions of this part, a fiduciary with respect to a plan shall be liable for a
breach of fiduciary responsibility of another fiduciary with respect to the same plan in the following circumstances:
(1) if he participates knowingly in, or knowingly undertakes to conceal, an act or omission of such other fiduciary, knowing such act
or omission is a breach;
(2) if, by his failure to comply with section
1104(a)(1) of this title in the administration of
his specific responsibilities which give rise to
his status as a fiduciary, he has enabled such
other fiduciary to commit a breach; or
(3) if he has knowledge of a breach by such
other fiduciary, unless he makes reasonable
efforts under the circumstances to remedy the
breach.
(b) Assets held by two or more trustees
(1) Except as otherwise provided in subsection
(d) and in section 1103(a)(1) and (2) of this title,

Page 485

TITLE 29—LABOR

if the assets of a plan are held by two or more
trustees—
(A) each shall use reasonable care to prevent
a co-trustee from committing a breach; and
(B) they shall jointly manage and control
the assets of the plan, except that nothing in
this subparagraph (B) shall preclude any
agreement, authorized by the trust instrument, allocating specific responsibilities, obligations, or duties among trustees, in which
event a trustee to whom certain responsibilities, obligations, or duties have not been allocated shall not be liable by reason of this subparagraph (B) either individually or as a trustee for any loss resulting to the plan arising
from the acts or omissions on the part of another trustee to whom such responsibilities,
obligations, or duties have been allocated.
(2) Nothing in this subsection shall limit any
liability that a fiduciary may have under subsection (a) or any other provision of this part.
(3)(A) In the case of a plan the assets of which
are held in more than one trust, a trustee shall
not be liable under paragraph (1) except with respect to an act or omission of a trustee of a
trust of which he is a trustee.
(B) No trustee shall be liable under this subsection for following instructions referred to in
section 1103(a)(1) of this title.
(c) Allocation of fiduciary responsibility; designated persons to carry out fiduciary responsibilities
(1) The instrument under which a plan is
maintained may expressly provide for procedures (A) for allocating fiduciary responsibilities (other than trustee responsibilities) among
named fiduciaries, and (B) for named fiduciaries
to designate persons other than named fiduciaries to carry out fiduciary responsibilities
(other than trustee responsibilities) under the
plan.
(2) If a plan expressly provides for a procedure
described in paragraph (1), and pursuant to such
procedure any fiduciary responsibility of a
named fiduciary is allocated to any person, or a
person is designated to carry out any such responsibility, then such named fiduciary shall
not be liable for an act or omission of such person in carrying out such responsibility except to
the extent that—
(A) the named fiduciary violated section
1104(a)(1) of this title—
(i) with respect to such allocation or designation,
(ii) with respect to the establishment or
implementation of the procedure under paragraph (1), or
(iii) in continuing the allocation or designation; or
(B) the named fiduciary would otherwise be
liable in accordance with subsection (a).
(3) For purposes of this subsection, the term
‘‘trustee responsibility’’ means any responsibility provided in the plan’s trust instrument (if
any) to manage or control the assets of the plan,
other than a power under the trust instrument
of a named fiduciary to appoint an investment
manager in accordance with section 1102(c)(3) of
this title.

§ 1106

(d) Investment managers
(1) If an investment manager or managers
have been appointed under section 1102(c)(3) of
this title, then, notwithstanding subsections
(a)(2) and (3) and subsection (b), no trustee shall
be liable for the acts or omissions of such investment manager or managers, or be under an
obligation to invest or otherwise manage any
asset of the plan which is subject to the management of such investment manager.
(2) Nothing in this subsection shall relieve any
trustee of any liability under this part for any
act of such trustee.
(Pub. L. 93–406, title I, § 405, Sept. 2, 1974, 88 Stat.
878.)
§ 1106. Prohibited transactions
(a) Transactions between plan and party in interest
Except as provided in section 1108 of this title:
(1) A fiduciary with respect to a plan shall
not cause the plan to engage in a transaction,
if he knows or should know that such transaction constitutes a direct or indirect—
(A) sale or exchange, or leasing, of any
property between the plan and a party in interest;
(B) lending of money or other extension of
credit between the plan and a party in interest;
(C) furnishing of goods, services, or facilities between the plan and a party in interest;
(D) transfer to, or use by or for the benefit
of a party in interest, of any assets of the
plan; or
(E) acquisition, on behalf of the plan, of
any employer security or employer real
property in violation of section 1107(a) of
this title.
(2) No fiduciary who has authority or discretion to control or manage the assets of a plan
shall permit the plan to hold any employer security or employer real property if he knows
or should know that holding such security or
real property violates section 1107(a) of this
title.
(b) Transactions between plan and fiduciary
A fiduciary with respect to a plan shall not—
(1) deal with the assets of the plan in his own
interest or for his own account,
(2) in his individual or in any other capacity
act in any transaction involving the plan on
behalf of a party (or represent a party) whose
interests are adverse to the interests of the
plan or the interests of its participants or
beneficiaries, or
(3) receive any consideration for his own personal account from any party dealing with
such plan in connection with a transaction involving the assets of the plan.
(c) Transfer of real or personal property to plan
by party in interest
A transfer of real or personal property by a
party in interest to a plan shall be treated as a
sale or exchange if the property is subject to a
mortgage or similar lien which the plan assumes
or if it is subject to a mortgage or similar lien

§ 1107

TITLE 29—LABOR

which a party-in-interest placed on the property
within the 10-year period ending on the date of
the transfer.
(Pub. L. 93–406, title I, § 406, Sept. 2, 1974, 88 Stat.
879.)
§ 1107. Limitation with respect to acquisition and
holding of employer securities and employer
real property by certain plans
(a) Percentage limitation
Except as otherwise provided in this section
and section 1114 of this title:
(1) A plan may not acquire or hold—
(A) any employer security which is not a
qualifying employer security, or
(B) any employer real property which is
not qualifying employer real property.
(2) A plan may not acquire any qualifying
employer security or qualifying employer real
property, if immediately after such acquisition the aggregate fair market value of employer securities and employer real property
held by the plan exceeds 10 percent of the fair
market value of the assets of the plan.
(3)(A) After December 31, 1984, a plan may
not hold any qualifying employer securities or
qualifying employer real property (or both) to
the extent that the aggregate fair market
value of such securities and property determined on December 31, 1984, exceeds 10 percent
of the greater of—
(i) the fair market value of the assets of
the plan, determined on December 31, 1984,
or
(ii) the fair market value of the assets of
the plan determined on January 1, 1975.
(B) Subparagraph (A) of this paragraph shall
not apply to any plan which on any date after
December 31, 1974; and before January 1, 1985,
did not hold employer securities or employer
real property (or both) the aggregate fair market value of which determined on such date
exceeded 10 percent of the greater of
(i) the fair market value of the assets of
the plan, determined on such date, or
(ii) the fair market value of the assets of
the plan determined on January 1, 1975.
(4)(A) After December 31, 1979, a plan may
not hold any employer securities or employer
real property in excess of the amount specified
in regulations under subparagraph (B). This
subparagraph shall not apply to a plan after
the earliest date after December 31, 1974, on
which it complies with such regulations.
(B) Not later than December 31, 1976, the
Secretary shall prescribe regulations which
shall have the effect of requiring that a plan
divest itself of 50 percent of the holdings of
employer securities and employer real property which the plan would be required to divest before January 1, 1985, under paragraph
(2) or subsection (c) (whichever is applicable).
(b) Exception
(1) Subsection (a) of this section shall not
apply to any acquisition or holding of qualifying
employer securities or qualifying employer real
property by an eligible individual account plan.
(2)(A) If this paragraph applies to an eligible
individual account plan, the portion of such plan

Page 486

which consists of applicable elective deferrals
(and earnings allocable thereto) shall be treated
as a separate plan—
(i) which is not an eligible individual account plan, and
(ii) to which the requirements of this section
apply.
(B)(i) This paragraph shall apply to any eligible individual account plan if any portion of the
plan’s applicable elective deferrals (or earnings
allocable thereto) are required to be invested in
qualifying employer securities or qualifying employer real property or both—
(I) pursuant to the terms of the plan, or
(II) at the direction of a person other than
the participant on whose behalf such elective
deferrals are made to the plan (or a beneficiary).
(ii) This paragraph shall not apply to an individual account plan for a plan year if, on the
last day of the preceding plan year, the fair market value of the assets of all individual account
plans maintained by the employer equals not
more than 10 percent of the fair market value of
the assets of all pension plans (other than multiemployer plans) maintained by the employer.
(iii) This paragraph shall not apply to an individual account plan that is an employee stock
ownership plan as defined in section 4975(e)(7) of
title 26.
(iv) This paragraph shall not apply to an individual account plan if, pursuant to the terms of
the plan, the portion of any employee’s applicable elective deferrals which is required to be invested in qualifying employer securities and
qualifying employer real property for any year
may not exceed 1 percent of the employee’s compensation which is taken into account under the
plan in determining the maximum amount of
the employee’s applicable elective deferrals for
such year.
(C) For purposes of this paragraph, the term
‘‘applicable elective deferral’’ means any elective deferral (as defined in section 402(g)(3)(A) of
title 26) which is made pursuant to a qualified
cash or deferred arrangement as defined in section 401(k) of title 26.
(3) CROSS REFERENCES.—
(A) For exemption from diversification requirements for holding of qualifying employer securities
and qualifying employer real property by eligible
individual account plans, see section 1104(a)(2) of
this title.
(B) For exemption from prohibited transactions
for certain acquisitions of qualifying employer securities and qualifying employer real property which
are not in violation of 10 percent limitation, see section 1108(e) of this title.
(C) For transitional rules respecting securities or
real property subject to binding contracts in effect
on June 30, 1974, see section 1114(c) of this title.
(D) For diversification requirements for qualifying employer securities held in certain individual
account plans, see section 1054(j) of this title.

(c) Election
(1) A plan which makes the election, under
paragraph (3) shall be treated as satisfying the
requirement of subsection (a)(3) if and only if
employer securities held on any date after December 31, 1974 and before January 1, 1985 have
a fair market value, determined as of December

Page 487

TITLE 29—LABOR

31, 1974, not in excess of 10 percent of the lesser
of—
(A) the fair market value of the assets of the
plan determined on such date (disregarding
any portion of the fair market value of employer securities which is attributable to appreciation of such securities after December
31, 1974) but not less than the fair market
value of plan assets on January 1, 1975, or
(B) an amount equal to the sum of (i) the
total amount of the contributions to the plan
received after December 31, 1974, and prior to
such date, plus (ii) the fair market value of
the assets of the plan, determined on January
1, 1975.
(2) For purposes of this subsection, in the case
of an employer security held by a plan after
January 1, 1975, the ownership of which is derived from ownership of employer securities held
by the plan on January 1, 1975, or from the exercise of rights derived from such ownership, the
value of such security held after January 1, 1975,
shall be based on the value as of January 1, 1975,
of the security from which ownership was derived. The Secretary shall prescribe regulations
to carry out this paragraph.
(3) An election under this paragraph may not
be made after December 31, 1975. Such an election shall be made in accordance with regulations prescribed by the Secretary, and shall be
irrevocable. A plan may make an election under
this paragraph only if on January 1, 1975, the
plan holds no employer real property. After such
election and before January 1, 1985 the plan may
not acquire any employer real property.
(d) Definitions
For purposes of this section—
(1) The term ‘‘employer security’’ means a
security issued by an employer of employees
covered by the plan, or by an affiliate of such
employer. A contract to which section
1108(b)(5) of this title applies shall not be
treated as a security for purposes of this section.
(2) The term ‘‘employer real property’’
means real property (and related personal
property) which is leased to an employer of
employees covered by the plan, or to an affiliate of such employer. For purposes of determining the time at which a plan acquires employer real property for purposes of this section, such property shall be deemed to be acquired by the plan on the date on which the
plan acquires the property or on the date on
which the lease to the employer (or affiliate)
is entered into, whichever is later.
(3)(A) The term ‘‘eligible individual account
plan’’ means an individual account plan which
is (i) a profit-sharing, stock bonus, thrift, or
savings plan; (ii) an employee stock ownership
plan; or (iii) a money purchase plan which was
in existence on September 2, 1974, and which
on such date invested primarily in qualifying
employer securities. Such term excludes an individual retirement account or annuity described in section 408 of title 26.
(B) Notwithstanding subparagraph (A), a
plan shall be treated as an eligible individual
account plan with respect to the acquisition
or holding of qualifying employer real prop-

§ 1107

erty or qualifying employer securities only if
such plan explicitly provides for acquisition
and holding of qualifying employer securities
or qualifying employer real property (as the
case may be). In the case of a plan in existence
on September 2, 1974, this subparagraph shall
not take effect until January 1, 1976.
(C) The term ‘‘eligible individual account
plan’’ does not include any individual account
plan the benefits of which are taken into account in determining the benefits payable to a
participant under any defined benefit plan.
(4) The term ‘‘qualifying employer real property’’ means parcels of employer real property—
(A) if a substantial number of the parcels
are dispersed geographically;
(B) if each parcel of real property and the
improvements thereon are suitable (or
adaptable without excessive cost) for more
than one use;
(C) even if all of such real property is
leased to one lessee (which may be an employer, or an affiliate of an employer); and
(D) if the acquisition and retention of such
property comply with the provisions of this
part (other than section 1104(a)(1)(B) of this
title to the extent it requires diversification,
and sections 1104(a)(1)(C), 1106 of this title,
and subsection (a) of this section).
(5) The term ‘‘qualifying employer security’’
means an employer security which is—
(A) stock,
(B) a marketable obligation (as defined in
subsection (e)), or
(C) an interest in a publicly traded partnership (as defined in section 7704(b) of title
26), but only if such partnership is an existing partnership as defined in section
10211(c)(2)(A) of the Revenue Act of 1987
(Public Law 100–203).
After December 17, 1987, in the case of a plan
other than an eligible individual account plan,
an employer security described in subparagraph (A) or (C) shall be considered a qualifying employer security only if such employer
security satisfies the requirements of subsection (f)(1).
(6) The term ‘‘employee stock ownership
plan’’ means an individual account plan—
(A) which is a stock bonus plan which is
qualified, or a stock bonus plan and money
purchase plan both of which are qualified,
under section 401 of title 26, and which is designed to invest primarily in qualifying employer securities, and
(B) which meets such other requirements
as the Secretary of the Treasury may prescribe by regulation.
(7) A corporation is an affiliate of an employer if it is a member of any controlled
group of corporations (as defined in section
1563(a) of title 26, except that ‘‘applicable percentage’’ shall be substituted for ‘‘80 percent’’
wherever the latter percentage appears in such
section) of which the employer who maintains
the plan is a member. For purposes of the preceding sentence, the term ‘‘applicable percentage’’ means 50 percent, or such lower percentage as the Secretary may prescribe by regula-

§ 1107

TITLE 29—LABOR

tion. A person other than a corporation shall
be treated as an affiliate of an employer to the
extent provided in regulations of the Secretary. An employer which is a person other
than a corporation shall be treated as affiliated with another person to the extent provided by regulations of the Secretary. Regulations under this paragraph shall be prescribed
only after consultation and coordination with
the Secretary of the Treasury.
(8) The Secretary may prescribe regulations
specifying the extent to which conversions,
splits, the exercise of rights, and similar
transactions are not treated as acquisitions.
(9) For purposes of this section, an arrangement which consists of a defined benefit plan
and an individual account plan shall be treated as 1 plan if the benefits of such individual
account plan are taken into account in determining the benefits payable under such defined benefit plan.
(e) Marketable obligations
For purposes of subsection (d)(5), the term
‘‘marketable obligation’’ means a bond, debenture, note, or certificate, or other evidence of indebtedness (hereinafter in this subsection referred to as ‘‘obligation’’) if—
(1) such obligation is acquired—
(A) on the market, either (i) at the price of
the obligation prevailing on a national securities exchange which is registered with the
Securities and Exchange Commission, or (ii)
if the obligation is not traded on such a national securities exchange, at a price not
less favorable to the plan than the offering
price for the obligation as established by
current bid and asked prices quoted by persons independent of the issuer;
(B) from an underwriter, at a price (i) not
in excess of the public offering price for the
obligation as set forth in a prospectus or offering circular filed with the Securities and
Exchange Commission, and (ii) at which a
substantial portion of the same issue is acquired by persons independent of the issuer;
or
(C) directly from the issuer, at a price not
less favorable to the plan than the price paid
currently for a substantial portion of the
same issue by persons independent of the issuer;
(2) immediately following acquisition of
such obligation—
(A) not more than 25 percent of the aggregate amount of obligations issued in such
issue and outstanding at the time of acquisition is held by the plan, and
(B) at least 50 percent of the aggregate
amount referred to in subparagraph (A) is
held by persons independent of the issuer;
and
(3) immediately following acquisition of the
obligation, not more than 25 percent of the assets of the plan is invested in obligations of
the employer or an affiliate of the employer.
(f) Maximum percentage of stock held by plan;
time of holding or acquisition; necessity of
legally binding contract
(1) Stock satisfies the requirements of this
paragraph if, immediately following the acquisition of such stock—

Page 488

(A) no more than 25 percent of the aggregate
amount of stock of the same class issued and
outstanding at the time of acquisition is held
by the plan, and
(B) at least 50 percent of the aggregate
amount referred to in subparagraph (A) is held
by persons independent of the issuer.
(2) Until January 1, 1993, a plan shall not be
treated as violating subsection (a) solely by
holding stock which fails to satisfy the requirements of paragraph (1) if such stock—
(A) has been so held since December 17, 1987,
or
(B) was acquired after December 17, 1987,
pursuant to a legally binding contract in effect on December 17, 1987, and has been so held
at all times after the acquisition.
(Pub. L. 93–406, title I, § 407, Sept. 2, 1974, 88 Stat.
880; Pub. L. 100–203, title IX, § 9345(a)(1), (2), (b),
Dec. 22, 1987, 101 Stat. 1330–373; Pub. L. 101–239,
title VII, §§ 7881(l)(1)–(4), 7891(a)(1), 7894(e)(2),
Dec. 19, 1989, 103 Stat. 2443, 2445, 2450; Pub. L.
101–540, § 1, Nov. 8, 1990, 104 Stat. 2379; Pub. L.
105–34, title XV, § 1524(a), Aug. 5, 1997, 111 Stat.
1071; Pub. L. 109–280, title IX, § 901(b)(2), Aug. 17,
2006, 120 Stat. 1032.)
REFERENCES IN TEXT
Section 10211(c)(2)(A) of the Revenue Act of 1987 (Public Law 100–203), referred to in subsec. (d)(5)(C), is set
out as a note under section 7704 of Title 26, Internal
Revenue Code.
AMENDMENTS
2006—Subsec. (b)(3)(D). Pub. L. 109–280 added subpar.
(D).
1997—Subsec. (b)(2), (3). Pub. L. 105–34 added par. (2)
and redesignated former par. (2) as (3).
1990—Subsec. (d)(5). Pub. L. 101–540 amended par. (5)
generally. Prior to amendment, par. (5) read as follows:
‘‘The term ‘qualifying employer security’ means an employer security which is stock or a marketable obligation (as defined in subsection (e)). After December 17,
1987, in the case of a plan other than an eligible individual account plan, stock shall be considered a qualifying
employer security only if such stock satisfies the requirements of subsection (f)(1).’’
1989—Subsec. (d)(3)(A), (6)(A), (7). Pub. L. 101–239,
§ 7891(a)(1), substituted ‘‘Internal Revenue Code of 1986’’
for ‘‘Internal Revenue Code of 1954’’, which for purposes
of codification was translated as ‘‘title 26’’ thus requiring no change in text.
Subsec. (d)(3)(C). Pub. L. 101–239, § 7881(l)(1), realigned
margin.
Subsec. (d)(6)(A). Pub. L. 101–239, § 7894(e)(2), substituted ‘‘money purchase plan’’ for ‘‘money purchase’’
and ‘‘employer securities’’ for ‘‘employee securities’’.
Subsec. (d)(9). Pub. L. 101–239, § 7881(l)(2), substituted
‘‘such individual account plan’’ for ‘‘such arrangement’’ and realigned margin.
Subsec. (f)(1). Pub. L. 101–239, § 7881(l)(3)(A), (4), substituted ‘‘paragraph’’ for ‘‘subsection’’ and ‘‘if, immediately following the acquisition of such stock’’ for
‘‘if’’.
Subsec. (f)(3). Pub. L. 101–239, § 7881(l)(3)(B), struck
out par. (3) which read as follows: ‘‘After December 17,
1987, no plan may acquire stock which does not satisfy
the requirements of paragraph (1) unless the acquisition is made pursuant to a legally binding contract in
effect on such date.’’
1987—Subsec. (d)(3)(C). Pub. L. 100–203, § 9345(a)(1),
added subpar. (C).
Subsec. (d)(5). Pub. L. 100–203, § 9345(b)(1), inserted at
end ‘‘After December 17, 1987, in the case of a plan
other than an eligible individual account plan, stock

Page 489

TITLE 29—LABOR

shall be considered a qualifying employer security only
if such stock satisfies the requirements of subsection
(f)(1).’’
Subsec. (d)(9). Pub. L. 100–203, § 9345(a)(2), added par.
(9).
Subsec. (f). Pub. L. 100–203, § 9345(b)(2), added subsec.
(f).
EFFECTIVE DATE OF 2006 AMENDMENT
Amendment by Pub. L. 109–280 applicable to plan
years beginning after Dec. 31, 2006, with special rules
for collectively bargained agreements and certain employer securities held in an ESOP, see section 901(c) of
Pub. L. 109–280, set out as a note under section 401 of
Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 1997 AMENDMENT
Pub. L. 105–34, title XV, § 1524(b), Aug. 5, 1997, 111
Stat. 1072, as amended by Pub. L. 107–16, title VI,
§ 655(a), June 7, 2001, 115 Stat. 131, provided that:
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
the amendments made by this section [amending this
section] shall apply to elective deferrals for plan years
beginning after December 31, 1998.
‘‘(2) NONAPPLICATION TO PREVIOUSLY ACQUIRED PROPERTY.—The amendments made by this section shall not
apply to any elective deferral which is invested in assets consisting of qualifying employer securities, qualifying employer real property, or both, if such assets
were acquired before January 1, 1999.’’
[Pub. L. 107–16, title VI, § 655(b), June 7, 2001, 115 Stat.
131, provided that: ‘‘The amendment made by this section [amending section 1524(b) of Pub. L. 105–34, set out
above] shall apply as if included in the provision of the
Taxpayer Relief Act of 1997 [Pub. L. 105–34] to which it
relates.’’]
EFFECTIVE DATE OF 1990 AMENDMENT
Pub. L. 101–540, § 2, Nov. 8, 1990, 104 Stat. 2379, provided that: ‘‘The amendment made by section 1
[amending this section] shall apply to interests in publicly traded partnerships acquired before, on, or after
January 1, 1987.’’
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by section 7881(l)(1)–(4) of Pub. L. 101–239
effective, except as otherwise provided, as if included in
the provision of the Pension Protection Act, Pub. L.
100–203, §§ 9302–9346, to which such amendment relates,
see section 7882 of Pub. L. 101–239, set out as a note
under section 401 of Title 26, Internal Revenue Code.
Amendment by section 7891(a)(1) of Pub. L. 101–239 effective, except as otherwise provided, as if included in
the provision of the Tax Reform Act of 1986, Pub. L.
99–514, to which such amendment relates, see section
7891(f) of Pub. L. 101–239, set out as a note under section
1002 of this title.
Amendment by section 7894(e)(2) of Pub. L. 101–239 effective, except as otherwise provided, as if originally
included in the provision of the Employee Retirement
Income Security Act of 1974, Pub. L. 93–406, to which
such amendment relates, see section 7894(i) of Pub. L.
101–239, set out as a note under section 1002 of this title.
EFFECTIVE DATE OF 1987 AMENDMENT
Pub. L. 100–203, title IX, § 9345(a)(3), Dec. 22, 1987, 101
Stat. 1330–373, provided that: ‘‘The amendments made
by this subsection [amending this section] shall apply
with respect to arrangements established after December 17, 1987.’’
REGULATIONS
Secretary authorized, effective Sept. 2, 1974, to promulgate regulations wherever provisions of this part
call for the promulgation of regulations, see sections
1031 and 1114 of this title.

§ 1108

§ 1108. Exemptions from prohibited transactions
(a) Grant of exemptions
The Secretary shall establish an exemption
procedure for purposes of this subsection. Pursuant to such procedure, he may grant a conditional or unconditional exemption of any fiduciary or transaction, or class of fiduciaries or
transactions, from all or part of the restrictions
imposed by sections 1106 and 1107(a) of this title.
Action under this subsection may be taken only
after consultation and coordination with the
Secretary of the Treasury. An exemption granted under this section shall not relieve a fiduciary from any other applicable provision of this
chapter. The Secretary may not grant an exemption under this subsection unless he finds
that such exemption is—
(1) administratively feasible,
(2) in the interests of the plan and of its participants and beneficiaries, and
(3) protective of the rights of participants
and beneficiaries of such plan.
Before granting an exemption under this subsection from section 1106(a) or 1107(a) of this
title, the Secretary shall publish notice in the
Federal Register of the pendency of the exemption, shall require that adequate notice be given
to interested persons, and shall afford interested
persons opportunity to present views. The Secretary may not grant an exemption under this
subsection from section 1106(b) of this title unless he affords an opportunity for a hearing and
makes a determination on the record with respect to the findings required by paragraphs (1),
(2), and (3) of this subsection.
(b) Enumeration of transactions exempted from
section 1106 prohibitions
The prohibitions provided in section 1106 of
this title shall not apply to any of the following
transactions:
(1) Any loans made by the plan to parties in
interest who are participants or beneficiaries
of the plan if such loans (A) are available to
all such participants and beneficiaries on a
reasonably equivalent basis, (B) are not made
available to highly compensated employees
(within the meaning of section 414(q) of title
26) in an amount greater than the amount
made available to other employees, (C) are
made in accordance with specific provisions
regarding such loans set forth in the plan, (D)
bear a reasonable rate of interest, and (E) are
adequately secured. A loan made by a plan
shall not fail to meet the requirements of the
preceding sentence by reason of a loan repayment suspension described under section
414(u)(4) of title 26.
(2) Contracting or making reasonable arrangements with a party in interest for office
space, or legal, accounting, or other services
necessary for the establishment or operation
of the plan, if no more than reasonable compensation is paid therefor.
(3) A loan to an employee stock ownership
plan (as defined in section 1107(d)(6) of this
title), if—
(A) such loan is primarily for the benefit
of participants and beneficiaries of the plan,
and

§ 1108

TITLE 29—LABOR

(B) such loan is at an interest rate which
is not in excess of a reasonable rate.
If the plan gives collateral to a party in interest for such loan, such collateral may consist
only of qualifying employer securities (as defined in section 1107(d)(5) of this title).
(4) The investment of all or part of a plan’s
assets in deposits which bear a reasonable interest rate in a bank or similar financial institution supervised by the United States or a
State, if such bank or other institution is a fiduciary of such plan and if—
(A) the plan covers only employees of such
bank or other institution and employees of
affiliates of such bank or other institution,
or
(B) such investment is expressly authorized by a provision of the plan or by a fiduciary (other than such bank or institution or
affiliate thereof) who is expressly empowered by the plan to so instruct the trustee
with respect to such investment.
(5) Any contract for life insurance, health
insurance, or annuities with one or more insurers which are qualified to do business in a
State, if the plan pays no more than adequate
consideration, and if each such insurer or insurers is—
(A) the employer maintaining the plan, or
(B) a party in interest which is wholly
owned (directly or indirectly) by the employer maintaining the plan, or by any person which is a party in interest with respect
to the plan, but only if the total premiums
and annuity considerations written by such
insurers for life insurance, health insurance,
or annuities for all plans (and their employers) with respect to which such insurers are
parties in interest (not including premiums
or annuity considerations written by the
employer maintaining the plan) do not exceed 5 percent of the total premiums and annuity considerations written for all lines of
insurance in that year by such insurers (not
including premiums or annuity considerations written by the employer maintaining
the plan).
(6) The providing of any ancillary service by
a bank or similar financial institution supervised by the United States or a State, if such
bank or other institution is a fiduciary of such
plan, and if—
(A) such bank or similar financial institution has adopted adequate internal safeguards which assure that the providing of
such ancillary service is consistent with
sound banking and financial practice, as determined by Federal or State supervisory
authority, and
(B) the extent to which such ancillary
service is provided is subject to specific
guidelines issued by such bank or similar financial institution (as determined by the
Secretary after consultation with Federal
and State supervisory authority), and adherence to such guidelines would reasonably
preclude such bank or similar financial institution from providing such ancillary service (i) in an excessive or unreasonable manner, and (ii) in a manner that would be in-

Page 490

consistent with the best interests of participants and beneficiaries of employee benefit
plans.
Such ancillary services shall not be provided
at more than reasonable compensation.
(7) The exercise of a privilege to convert securities, to the extent provided in regulations
of the Secretary, but only if the plan receives
no less than adequate consideration pursuant
to such conversion.
(8) Any transaction between a plan and (i) a
common or collective trust fund or pooled investment fund maintained by a party in interest which is a bank or trust company supervised by a State or Federal agency or (ii) a
pooled investment fund of an insurance company qualified to do business in a State, if—
(A) the transaction is a sale or purchase of
an interest in the fund,
(B) the bank, trust company, or insurance
company receives not more than reasonable
compensation, and
(C) such transaction is expressly permitted
by the instrument under which the plan is
maintained, or by a fiduciary (other than
the bank, trust company, or insurance company, or an affiliate thereof) who has authority to manage and control the assets of
the plan.
(9) The making by a fiduciary of a distribution of the assets of the plan in accordance
with the terms of the plan if such assets are
distributed in the same manner as provided
under section 1344 of this title (relating to allocation of assets).
(10) Any transaction required or permitted
under part 1 of subtitle E of subchapter III.
(11) A merger of multiemployer plans, or the
transfer of assets or liabilities between multiemployer plans, determined by the Pension
Benefit Guaranty Corporation to meet the requirements of section 1411 of this title.
(12) The sale by a plan to a party in interest
on or after December 18, 1987, of any stock, if—
(A) the requirements of paragraphs (1) and
(2) of subsection (e) are met with respect to
such stock,
(B) on the later of the date on which the
stock was acquired by the plan, or January
1, 1975, such stock constituted a qualifying
employer security (as defined in section
1107(d)(5) of this title as then in effect), and
(C) such stock does not constitute a qualifying employer security (as defined in section 1107(d)(5) of this title as in effect at the
time of the sale).
(13) Any transfer made before January 1,
2026, of excess pension assets from a defined
benefit plan to a retiree health account in a
qualified transfer permitted under section 420
of title 26 (as in effect on July 31, 2015).
(14) Any transaction in connection with the
provision of investment advice described in
section 1002(21)(A)(ii) of this title to a participant or beneficiary of an individual account
plan that permits such participant or beneficiary to direct the investment of assets in
their individual account, if—
(A) the transaction is—
(i) the provision of the investment advice to the participant or beneficiary of

Page 491

TITLE 29—LABOR

the plan with respect to a security or
other property available as an investment
under the plan,
(ii) the acquisition, holding, or sale of a
security or other property available as an
investment under the plan pursuant to the
investment advice, or
(iii) the direct or indirect receipt of fees
or other compensation by the fiduciary adviser or an affiliate thereof (or any employee, agent, or registered representative
of the fiduciary adviser or affiliate) in connection with the provision of the advice or
in connection with an acquisition, holding,
or sale of a security or other property
available as an investment under the plan
pursuant to the investment advice; and
(B) the requirements of subsection (g) are
met.
(15)(A) Any transaction involving the purchase or sale of securities, or other property
(as determined by the Secretary), between a
plan and a party in interest (other than a fiduciary described in section 1002(21)(A) of this
title) with respect to a plan if—
(i) the transaction involves a block trade,
(ii) at the time of the transaction, the interest of the plan (together with the interests of any other plans maintained by the
same plan sponsor), does not exceed 10 percent of the aggregate size of the block trade,
(iii) the terms of the transaction, including the price, are at least as favorable to the
plan as an arm’s length 1 transaction, and
(iv) the compensation associated with the
purchase and sale is not greater than the
compensation associated with an arm’s
length 1 transaction with an unrelated party.
(B) For purposes of this paragraph, the term
‘‘block trade’’ means any trade of at least
10,000 shares or with a market value of at least
$200,000 which will be allocated across two or
more unrelated client accounts of a fiduciary.
(16) Any transaction involving the purchase
or sale of securities, or other property (as determined by the Secretary), between a plan
and a party in interest if—
(A) the transaction is executed through an
electronic communication network, alternative trading system, or similar execution
system or trading venue subject to regulation and oversight by—
(i) the applicable Federal regulating entity, or
(ii) such foreign regulatory entity as the
Secretary may determine by regulation,
(B) either—
(i) the transaction is effected pursuant
to rules designed to match purchases and
sales at the best price available through
the execution system in accordance with
applicable rules of the Securities and Exchange Commission or other relevant governmental authority, or
(ii) neither the execution system nor the
parties to the transaction take into account the identity of the parties in the
execution of trades,
1 So

in original. Probably should be ‘‘arm’s-length’’.

§ 1108

(C) the price and compensation associated
with the purchase and sale are not greater
than the price and compensation associated
with an arm’s length 1 transaction with an
unrelated party,
(D) if the party in interest has an ownership interest in the system or venue described in subparagraph (A), the system or
venue has been authorized by the plan sponsor or other independent fiduciary for transactions described in this paragraph, and
(E) not less than 30 days prior to the initial transaction described in this paragraph
executed through any system or venue described in subparagraph (A), a plan fiduciary
is provided written or electronic notice of
the execution of such transaction through
such system or venue.
(17)(A) Transactions described in subparagraphs (A), (B), and (D) of section 1106(a)(1) of
this title between a plan and a person that is
a party in interest other than a fiduciary (or
an affiliate) who has or exercises any discretionary authority or control with respect to
the investment of the plan assets involved in
the transaction or renders investment advice
(within the meaning of section 1002(21)(A)(ii)
of this title) with respect to those assets, solely by reason of providing services to the plan
or solely by reason of a relationship to such a
service provider described in subparagraph (F),
(G), (H), or (I) of section 1002(14) of this title,
or both, but only if in connection with such
transaction the plan receives no less, nor pays
no more, than adequate consideration.
(B) For purposes of this paragraph, the term
‘‘adequate consideration’’ means—
(i) in the case of a security for which there
is a generally recognized market—
(I) the price of the security prevailing on
a national securities exchange which is
registered under section 6 of the Securities
Exchange Act of 1934 [15 U.S.C. 78f], taking
into account factors such as the size of the
transaction and marketability of the security, or
(II) if the security is not traded on such
a national securities exchange, a price not
less favorable to the plan than the offering
price for the security as established by the
current bid and asked prices quoted by persons independent of the issuer and of the
party in interest, taking into account factors such as the size of the transaction and
marketability of the security, and
(ii) in the case of an asset other than a security for which there is a generally recognized market, the fair market value of the
asset as determined in good faith by a fiduciary or fiduciaries in accordance with regulations prescribed by the Secretary.
(18) FOREIGN EXCHANGE TRANSACTIONS.—Any
foreign exchange transactions, between a bank
or broker-dealer (or any affiliate of either),
and a plan (as defined in section 1002(3) of this
title) with respect to which such bank or
broker-dealer (or affiliate) is a trustee, custodian, fiduciary, or other party in interest, if—
(A) the transaction is in connection with
the purchase, holding, or sale of securities or

§ 1108

TITLE 29—LABOR

other investment assets (other than a foreign exchange transaction unrelated to any
other investment in securities or other investment assets),
(B) at the time the foreign exchange transaction is entered into, the terms of the
transaction are not less favorable to the
plan than the terms generally available in
comparable arm’s length 1 foreign exchange
transactions between unrelated parties, or
the terms afforded by the bank or brokerdealer (or any affiliate of either) in comparable arm’s-length foreign exchange transactions involving unrelated parties,
(C) the exchange rate used by such bank or
broker-dealer (or affiliate) for a particular
foreign exchange transaction does not deviate by more than 3 percent from the interbank bid and asked rates for transactions of
comparable size and maturity at the time of
the transaction as displayed on an independent service that reports rates of exchange in
the foreign currency market for such currency, and
(D) the bank or broker-dealer (or any affiliate of either) does not have investment discretion, or provide investment advice, with
respect to the transaction.
(19) CROSS TRADING.—Any transaction described in sections 1106(a)(1)(A) and 1106(b)(2)
of this title involving the purchase and sale of
a security between a plan and any other account managed by the same investment manager, if—
(A) the transaction is a purchase or sale,
for no consideration other than cash payment against prompt delivery of a security
for which market quotations are readily
available,
(B) the transaction is effected at the independent current market price of the security
(within the meaning of section 270.17a–7(b) of
title 17, Code of Federal Regulations),
(C) no brokerage commission, fee (except
for customary transfer fees, the fact of
which is disclosed pursuant to subparagraph
(D)), or other remuneration is paid in connection with the transaction,
(D) a fiduciary (other than the investment
manager engaging in the cross-trades or any
affiliate) for each plan participating in the
transaction authorizes in advance of any
cross-trades (in a document that is separate
from any other written agreement of the
parties) the investment manager to engage
in cross trades at the investment manager’s
discretion, after such fiduciary has received
disclosure regarding the conditions under
which cross trades may take place (but only
if such disclosure is separate from any other
agreement or disclosure involving the asset
management relationship), including the
written policies and procedures of the investment manager described in subparagraph (H),
(E) each plan participating in the transaction has assets of at least $100,000,000, except that if the assets of a plan are invested
in a master trust containing the assets of
plans maintained by employers in the same
controlled group (as defined in section

Page 492

1107(d)(7) of this title), the master trust has
assets of at least $100,000,000,
(F) the investment manager provides to
the plan fiduciary who authorized cross trading under subparagraph (D) a quarterly report detailing all cross trades executed by
the investment manager in which the plan
participated during such quarter, including
the following information, as applicable: (i)
the identity of each security bought or sold;
(ii) the number of shares or units traded;
(iii) the parties involved in the cross-trade;
and (iv) trade price and the method used to
establish the trade price,
(G) the investment manager does not base
its fee schedule on the plan’s consent to
cross trading, and no other service (other
than the investment opportunities and cost
savings available through a cross trade) is
conditioned on the plan’s consent to cross
trading,
(H) the investment manager has adopted,
and cross-trades are effected in accordance
with, written cross-trading policies and procedures that are fair and equitable to all accounts participating in the cross-trading
program, and that include a description of
the manager’s pricing policies and procedures, and the manager’s policies and procedures for allocating cross trades in an objective manner among accounts participating
in the cross-trading program, and
(I) the investment manager has designated
an individual responsible for periodically reviewing such purchases and sales to ensure
compliance with the written policies and
procedures described in subparagraph (H),
and following such review, the individual
shall issue an annual written report no later
than 90 days following the period to which it
relates signed under penalty of perjury to
the plan fiduciary who authorized cross trading under subparagraph (D) describing the
steps performed during the course of the review, the level of compliance, and any specific instances of non-compliance.
The written report under subparagraph (I)
shall also notify the plan fiduciary of the
plan’s right to terminate participation in the
investment manager’s cross-trading program
at any time.
(20)(A) Except as provided in subparagraphs
(B) and (C), a transaction described in section
1106(a) of this title in connection with the acquisition, holding, or disposition of any security or commodity, if the transaction is corrected before the end of the correction period.
(B) Subparagraph (A) does not apply to any
transaction between a plan and a plan sponsor
or its affiliates that involves the acquisition
or sale of an employer security (as defined in
section 1107(d)(1) of this title) or the acquisition, sale, or lease of employer real property
(as defined in section 1107(d)(2) of this title).
(C) In the case of any fiduciary or other
party in interest (or any other person knowingly participating in such transaction), subparagraph (A) does not apply to any transaction if, at the time the transaction occurs,
such fiduciary or party in interest (or other
person) knew (or reasonably should have

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TITLE 29—LABOR

known) that the transaction would (without
regard to this paragraph) constitute a violation of section 1106(a) of this title.
(D) For purposes of this paragraph, the term
‘‘correction period’’ means, in connection with
a fiduciary or party in interest (or other person knowingly participating in the transaction), the 14-day period beginning on the
date on which such fiduciary or party in interest (or other person) discovers, or reasonably
should have discovered, that the transaction
would (without regard to this paragraph) constitute a violation of section 1106(a) of this
title.
(E) For purposes of this paragraph—
(i) The term ‘‘security’’ has the meaning
given such term by section 475(c)(2) of title
26 (without regard to subparagraph (F)(iii)
and the last sentence thereof).
(ii) The term ‘‘commodity’’ has the meaning given such term by section 475(e)(2) of
title 26 (without regard to subparagraph
(D)(iii) thereof).
(iii) The term ‘‘correct’’ means, with respect to a transaction—
(I) to undo the transaction to the extent
possible and in any case to make good to
the plan or affected account any losses resulting from the transaction, and
(II) to restore to the plan or affected account any profits made through the use of
assets of the plan.
(c) Fiduciary benefits and compensation not prohibited by section 1106
Nothing in section 1106 of this title shall be
construed to prohibit any fiduciary from—
(1) receiving any benefit to which he may be
entitled as a participant or beneficiary in the
plan, so long as the benefit is computed and
paid on a basis which is consistent with the
terms of the plan as applied to all other participants and beneficiaries;
(2) receiving any reasonable compensation
for services rendered, or for the reimbursement of expenses properly and actually incurred, in the performance of his duties with
the plan; except that no person so serving who
already receives full time pay from an employer or an association of employers, whose
employees are participants in the plan, or
from an employee organization whose members are participants in such plan shall receive
compensation from such plan, except for reimbursement of expenses properly and actually
incurred; or
(3) serving as a fiduciary in addition to being
an officer, employee, agent, or other representative of a party in interest.
(d) Owner-employees; family members; shareholder employees
(1) Section 1107(b) of this title and subsections
(b), (c), and (e) of this section shall not apply to
a transaction in which a plan directly or indirectly—
(A) lends any part of the corpus or income of
the plan to,
(B) pays any compensation for personal services rendered to the plan to, or
(C) acquires for the plan any property from,
or sells any property to,

§ 1108

any person who is with respect to the plan an
owner-employee (as defined in section 401(c)(3)
of title 26), a member of the family (as defined
in section 267(c)(4) of such title) of any such
owner-employee, or any corporation in which
any such owner-employee owns, directly or indirectly, 50 percent or more of the total combined
voting power of all classes of stock entitled to
vote or 50 percent or more of the total value of
shares of all classes of stock of the corporation.
(2)(A) For purposes of paragraph (1), the following shall be treated as owner-employees:
(i) A shareholder-employee.
(ii) A participant or beneficiary of an individual retirement plan (as defined in section
7701(a)(37) of title 26).
(iii) An employer or association of employees which establishes such an individual retirement plan under section 408(c) of such
title.
(B) Paragraph (1)(C) shall not apply to a transaction which consists of a sale of employer securities to an employee stock ownership plan (as
defined in section 1107(d)(6) of this title) by a
shareholder-employee, a member of the family
(as defined in section 267(c)(4) of such title) of
any such owner-employee, or a corporation in
which such a shareholder-employee owns stock
representing a 50 percent or greater interest described in paragraph (1).
(C) For purposes of paragraph (1)(A), the term
‘‘owner-employee’’ shall only include a person
described in clause (ii) or (iii) of subparagraph
(A).
(3) For purposes of paragraph (2), the term
‘‘shareholder-employee’’ means an employee or
officer of an S corporation (as defined in section
1361(a)(1) of such title) who owns (or is considered as owning within the meaning of section
318(a)(1) of such title) more than 5 percent of the
outstanding stock of the corporation on any day
during the taxable year of such corporation.
(e) Acquisition or sale by plan of qualifying employer securities; acquisition, sale, or lease
by plan of qualifying employer real property
Sections 1106 and 1107 of this title shall not
apply to the acquisition or sale by a plan of
qualifying employer securities (as defined in
section 1107(d)(5) of this title) or acquisition,
sale or lease by a plan of qualifying employer
real property (as defined in section 1107(d)(4) of
this title)—
(1) if such acquisition, sale, or lease is for
adequate consideration (or in the case of a
marketable obligation, at a price not less favorable to the plan than the price determined
under section 1107(e)(1) of this title),
(2) if no commission is charged with respect
thereto, and
(3) if—
(A) the plan is an eligible individual account plan (as defined in section 1107(d)(3) of
this title), or
(B) in the case of an acquisition or lease of
qualifying employer real property by a plan
which is not an eligible individual account
plan, or of an acquisition of qualifying employer securities by such a plan, the lease or
acquisition is not prohibited by section
1107(a) of this title.

§ 1108

TITLE 29—LABOR

(f) Applicability of statutory prohibitions to
mergers or transfers
Section 1106(b)(2) of this title shall not apply
to any merger or transfer described in subsection (b)(11).
(g) Provision of investment advice to participant
and beneficiaries
(1) In general
The prohibitions provided in section 1106 of
this title shall not apply to transactions described in subsection (b)(14) if the investment
advice provided by a fiduciary adviser is provided under an eligible investment advice arrangement.
(2) Eligible investment advice arrangement
For purposes of this subsection, the term
‘‘eligible investment advice arrangement’’
means an arrangement—
(A) which either—
(i) provides that any fees (including any
commission or other compensation) received by the fiduciary adviser for investment advice or with respect to the sale,
holding, or acquisition of any security or
other property for purposes of investment
of plan assets do not vary depending on the
basis of any investment option selected, or
(ii) uses a computer model under an investment advice program meeting the requirements of paragraph (3) in connection
with the provision of investment advice by
a fiduciary adviser to a participant or beneficiary, and
(B) with respect to which the requirements
of paragraph (4), (5), (6), (7), (8), and (9) are
met.
(3) Investment advice program using computer
model
(A) In general
An investment advice program meets the
requirements of this paragraph if the requirements of subparagraphs (B), (C), and
(D) are met.
(B) Computer model
The requirements of this subparagraph are
met if the investment advice provided under
the investment advice program is provided
pursuant to a computer model that—
(i) applies generally accepted investment
theories that take into account the historic returns of different asset classes over
defined periods of time,
(ii) utilizes relevant information about
the participant, which may include age,
life expectancy, retirement age, risk tolerance, other assets or sources of income,
and preferences as to certain types of investments,
(iii) utilizes prescribed objective criteria
to provide asset allocation portfolios comprised of investment options available
under the plan,
(iv) operates in a manner that is not biased in favor of investments offered by the
fiduciary adviser or a person with a material affiliation or contractual relationship
with the fiduciary adviser, and

Page 494

(v) takes into account all investment options under the plan in specifying how a
participant’s account balance should be invested and is not inappropriately weighted
with respect to any investment option.
(C) Certification
(i) In general
The requirements of this subparagraph
are met with respect to any investment
advice program if an eligible investment
expert certifies, prior to the utilization of
the computer model and in accordance
with rules prescribed by the Secretary,
that the computer model meets the requirements of subparagraph (B).
(ii) Renewal of certifications
If, as determined under regulations prescribed by the Secretary, there are material modifications to a computer model,
the requirements of this subparagraph are
met only if a certification described in
clause (i) is obtained with respect to the
computer model as so modified.
(iii) Eligible investment expert
The term ‘‘eligible investment expert’’
means any person—
(I) which meets such requirements as
the Secretary may provide, and
(II) does not bear any material affiliation or contractual relationship with
any investment adviser or a related person thereof (or any employee, agent, or
registered representative of the investment adviser or related person).
(D) Exclusivity of recommendation
The requirements of this subparagraph are
met with respect to any investment advice
program if—
(i) the only investment advice provided
under the program is the advice generated
by the computer model described in subparagraph (B), and
(ii) any transaction described in subsection (b)(14)(A)(ii) occurs solely at the
direction of the participant or beneficiary.
Nothing in the preceding sentence shall preclude the participant or beneficiary from requesting investment advice other than that
described in subparagraph (A), but only if
such request has not been solicited by any
person connected with carrying out the arrangement.
(4) Express authorization by separate fiduciary
The requirements of this paragraph are met
with respect to an arrangement if the arrangement is expressly authorized by a plan fiduciary other than the person offering the investment advice program, any person providing investment options under the plan, or any
affiliate of either.
(5) Annual audit
The requirements of this paragraph are met
if an independent auditor, who has appropriate
technical training or experience and proficiency and so represents in writing—
(A) conducts an annual audit of the arrangement for compliance with the requirements of this subsection, and

Page 495

TITLE 29—LABOR

(B) following completion of the annual
audit, issues a written report to the fiduciary who authorized use of the arrangement
which presents its specific findings regarding compliance of the arrangement with the
requirements of this subsection.
For purposes of this paragraph, an auditor is
considered independent if it is not related to
the person offering the arrangement to the
plan and is not related to any person providing
investment options under the plan.
(6) Disclosure
The requirements of this paragraph are met
if—
(A) the fiduciary adviser provides to a participant or a beneficiary before the initial
provision of the investment advice with regard to any security or other property offered as an investment option, a written notification (which may consist of notification
by means of electronic communication)—
(i) of the role of any party that has a material affiliation or contractual relationship with the fiduciary adviser in the development of the investment advice program and in the selection of investment
options available under the plan,
(ii) of the past performance and historical rates of return of the investment options available under the plan,
(iii) of all fees or other compensation relating to the advice that the fiduciary adviser or any affiliate thereof is to receive
(including compensation provided by any
third party) in connection with the provision of the advice or in connection with
the sale, acquisition, or holding of the security or other property,
(iv) of any material affiliation or contractual relationship of the fiduciary adviser or affiliates thereof in the security or
other property,
(v) 2 the manner, and under what circumstances, any participant or beneficiary information provided under the arrangement
will be used or disclosed,
(vi) of the types of services provided by
the fiduciary adviser in connection with
the provision of investment advice by the
fiduciary adviser,
(vii) that the adviser is acting as a fiduciary of the plan in connection with the
provision of the advice, and
(viii) that a recipient of the advice may
separately arrange for the provision of advice by another adviser, that could have no
material affiliation with and receive no
fees or other compensation in connection
with the security or other property, and
(B) at all times during the provision of advisory services to the participant or beneficiary, the fiduciary adviser—
(i) maintains the information described
in subparagraph (A) in accurate form and
in the manner described in paragraph (8),
(ii) provides, without charge, accurate
information to the recipient of the advice
no less frequently than annually,
2 So

in original. The word ‘‘of’’ probably should appear.

§ 1108

(iii) provides, without charge, accurate
information to the recipient of the advice
upon request of the recipient, and
(iv) provides, without charge, accurate
information to the recipient of the advice
concerning any material change to the information required to be provided to the
recipient of the advice at a time reasonably contemporaneous to the change in information.
(7) Other conditions
The requirements of this paragraph are met
if—
(A) the fiduciary adviser provides appropriate disclosure, in connection with the
sale, acquisition, or holding of the security
or other property, in accordance with all applicable securities laws,
(B) the sale, acquisition, or holding occurs
solely at the direction of the recipient of the
advice,
(C) the compensation received by the fiduciary adviser and affiliates thereof in connection with the sale, acquisition, or holding
of the security or other property is reasonable, and
(D) the terms of the sale, acquisition, or
holding of the security or other property are
at least as favorable to the plan as an arm’s
length 1 transaction would be.
(8) Standards for presentation of information
(A) In general
The requirements of this paragraph are
met if the notification required to be provided to participants and beneficiaries under
paragraph (6)(A) is written in a clear and
conspicuous manner and in a manner calculated to be understood by the average plan
participant and is sufficiently accurate and
comprehensive to reasonably apprise such
participants and beneficiaries of the information required to be provided in the notification.
(B) Model form for disclosure of fees and
other compensation
The Secretary shall issue a model form for
the disclosure of fees and other compensation required in paragraph (6)(A)(iii) which
meets the requirements of subparagraph (A).
(9) Maintenance for 6 years of evidence of compliance
The requirements of this paragraph are met
if a fiduciary adviser who has provided advice
referred to in paragraph (1) maintains, for a
period of not less than 6 years after the provision of the advice, any records necessary for
determining whether the requirements of the
preceding provisions of this subsection and of
subsection (b)(14) have been met. A transaction prohibited under section 1106 of this
title shall not be considered to have occurred
solely because the records are lost or destroyed prior to the end of the 6-year period
due to circumstances beyond the control of
the fiduciary adviser.

§ 1108

TITLE 29—LABOR

(10) Exemption for plan sponsor and certain
other fiduciaries
(A) In general
Subject to subparagraph (B), a plan sponsor or other person who is a fiduciary (other
than a fiduciary adviser) shall not be treated
as failing to meet the requirements of this
part solely by reason of the provision of investment advice referred to in section
1002(21)(A)(ii) of this title (or solely by reason of contracting for or otherwise arranging for the provision of the advice), if—
(i) the advice is provided by a fiduciary
adviser pursuant to an eligible investment
advice arrangement between the plan
sponsor or other fiduciary and the fiduciary adviser for the provision by the fiduciary adviser of investment advice referred
to in such section,
(ii) the terms of the eligible investment
advice arrangement require compliance by
the fiduciary adviser with the requirements of this subsection, and
(iii) the terms of the eligible investment
advice arrangement include a written acknowledgment by the fiduciary adviser
that the fiduciary adviser is a fiduciary of
the plan with respect to the provision of
the advice.
(B) Continued duty of prudent selection of
adviser and periodic review
Nothing in subparagraph (A) shall be construed to exempt a plan sponsor or other
person who is a fiduciary from any requirement of this part for the prudent selection
and periodic review of a fiduciary adviser
with whom the plan sponsor or other person
enters into an eligible investment advice arrangement for the provision of investment
advice referred to in section 1002(21)(A)(ii) of
this title. The plan sponsor or other person
who is a fiduciary has no duty under this
part to monitor the specific investment advice given by the fiduciary adviser to any
particular recipient of the advice.
(C) Availability of plan assets for payment
for advice
Nothing in this part shall be construed to
preclude the use of plan assets to pay for
reasonable expenses in providing investment
advice referred to in section 1002(21)(A)(ii) of
this title.
(11) Definitions
For purposes of this subsection and subsection (b)(14)—
(A) Fiduciary adviser
The term ‘‘fiduciary adviser’’ means, with
respect to a plan, a person who is a fiduciary
of the plan by reason of the provision of investment advice referred to in section
1002(21)(A)(ii) of this title by the person to a
participant or beneficiary of the plan and
who is—
(i) registered as an investment adviser
under the Investment Advisers Act of 1940
(15 U.S.C. 80b–1 et seq.) or under the laws
of the State in which the fiduciary maintains its principal office and place of business,

Page 496

(ii) a bank or similar financial institution referred to in subsection (b)(4) or a
savings association (as defined in section
1813(b)(1) of title 12), but only if the advice
is provided through a trust department of
the bank or similar financial institution
or savings association which is subject to
periodic examination and review by Federal or State banking authorities,
(iii) an insurance company qualified to
do business under the laws of a State,
(iv) a person registered as a broker or
dealer under the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.),
(v) an affiliate of a person described in
any of clauses (i) through (iv), or
(vi) an employee, agent, or registered
representative of a person described in
clauses (i) through (v) who satisfies the requirements of applicable insurance, banking, and securities laws relating to the
provision of the advice.
For purposes of this part, a person who develops the computer model described in
paragraph (3)(B) or markets the investment
advice program or computer model shall be
treated as a person who is a fiduciary of the
plan by reason of the provision of investment
advice
referred
to
in
section
1002(21)(A)(ii) of this title to a participant or
beneficiary and shall be treated as a fiduciary adviser for purposes of this subsection
and subsection (b)(14), except that the Secretary may prescribe rules under which only
1 fiduciary adviser may elect to be treated
as a fiduciary with respect to the plan.
(B) Affiliate
The term ‘‘affiliate’’ of another entity
means an affiliated person of the entity (as
defined in section 80a–2(a)(3) of title 15).
(C) Registered representative
The term ‘‘registered representative’’ of
another entity means a person described in
section 3(a)(18) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(18)) (substituting
the entity for the broker or dealer referred
to in such section) or a person described in
section 202(a)(17) of the Investment Advisers
Act of 1940 (15 U.S.C. 80b–2(a)(17)) (substituting the entity for the investment adviser referred to in such section).
(Pub. L. 93–406, title I, § 408, Sept. 2, 1974, 88 Stat.
883; Pub. L. 96–364, title III, § 308, Sept. 26, 1980,
94 Stat. 1295; Pub. L. 97–354, § 5(a)(43), Oct. 19,
1982, 96 Stat. 1697; Pub. L. 99–514, title XI,
§ 1114(b)(15)(B), title XVIII, § 1898(i)(1), Oct. 22,
1986, 100 Stat. 2452, 2957; Pub. L. 101–239, title
VII, §§ 7881(l)(5), 7891, 7894(e)(4)(A), Dec. 19, 1989,
103 Stat. 2443, 2445, 2450; Pub. L. 101–508, title
XII, § 12012(b), Nov. 5, 1990, 104 Stat. 1388–571;
Pub. L. 103–465, title VII, § 731(c)(4)(C), Dec. 8,
1994, 108 Stat. 5004; Pub. L. 104–188, title I,
§ 1704(n)(2), Aug. 20, 1996, 110 Stat. 1886; Pub. L.
105–34, title XV, § 1506(b)(2), Aug. 5, 1997, 111 Stat.
1066; Pub. L. 106–170, title V, § 535(a)(2)(C), Dec.
17, 1999, 113 Stat. 1934; Pub. L. 107–16, title VI,
§ 612(b), June 7, 2001, 115 Stat. 100; Pub. L.
108–218, title II, § 204(b)(3), Apr. 10, 2004, 118 Stat.
609; Pub. L. 108–357, title VII, § 709(a)(3), Oct. 22,

Page 497

TITLE 29—LABOR

2004, 118 Stat. 1551; Pub. L. 109–280, title I,
§ 108(a)(11), formerly § 107(a)(11), title VI,
§§ 601(a)(1), (2), 611(a)(1), (c)(1), (d)(1), (e)(1), (g)(1),
612(a), Aug. 17, 2006, 120 Stat. 819, 952, 953, 967–969,
971, 972, 975, renumbered Pub. L. 111–192, title II,
§ 202(a), June 25, 2010, 124 Stat. 1297; Pub. L.
110–458, title I, § 106(a)(1), (b)(1), Dec. 23, 2008, 122
Stat. 5106; Pub. L. 112–141, div. D, title II,
§ 40241(b), July 6, 2012, 126 Stat. 859; Pub. L.
114–41, title II, § 2007(b), July 31, 2015, 129 Stat.
459.)
REFERENCES IN TEXT
This chapter, referred to in subsec. (a), was in the
original ‘‘this Act’’, meaning Pub. L. 93–406, known as
the Employee Retirement Income Security Act of 1974.
Titles I, III, and IV of such Act are classified principally to this chapter. For complete classification of
this Act to the Code, see Short Title note set out under
section 1001 of this title and Tables.
The Investment Advisers Act of 1940, referred to in
subsec. (g)(11)(A)(i), is title II of act Aug. 22, 1940, ch.
686, 54 Stat. 847, which is classified generally to subchapter II (§ 80b–1 et seq.) of chapter 2D of Title 15,
Commerce and Trade. For complete classification of
this Act to the Code, see section 80b–20 of Title 15 and
Tables.
The Securities Exchange Act of 1934, referred to in
subsec. (g)(11)(A)(iv), is act June 6, 1934, ch. 404, 48 Stat.
881, which is classified principally to chapter 2B (§ 78a
et seq.) of Title 15, Commerce and Trade. For complete
classification of this Act to the Code, see section 78a of
Title 15 and Tables.
AMENDMENTS
2015—Subsec. (b)(13). Pub. L. 114–41 substituted ‘‘January 1, 2026’’ for ‘‘January 1, 2022’’ and ‘‘July 31, 2015’’
for ‘‘July 6, 2012’’. The latter substitution was executed
to reflect the probable intent of Congress notwithstanding an extra closing quotation mark in the directory language.
2012—Subsec. (b)(13). Pub. L. 112–141 substituted ‘‘January 1, 2022’’ for ‘‘January 1, 2014’’ and ‘‘July 6, 2012’’
for ‘‘August 17, 2006’’.
2008—Subsec. (b)(18)(C). Pub. L. 110–458, § 106(b)(1),
struck out ‘‘or less’’ after ‘‘deviate by more’’.
Subsec. (g)(3)(D)(ii). Pub. L. 110–458, § 106(a)(1)(A), substituted ‘‘subsection (b)(14)(A)(ii)’’ for ‘‘subsection
(b)(14)(B)(ii)’’.
Subsec. (g)(6)(A)(i). Pub. L. 110–458, § 106(a)(1)(B), substituted ‘‘fiduciary adviser’’ for ‘‘financial adviser’’.
Subsec. (g)(11)(A). Pub. L. 110–458, § 106(a)(1)(C), substituted ‘‘a participant’’ for ‘‘the participant’’ in introductory and concluding provisions and ‘‘subsection
(b)(4)’’ for ‘‘section 1108(b)(4) of this title’’ in cl. (ii).
2006—Subsec. (b)(13). Pub. L. 109–280, § 108(a)(11), formerly § 107(a)(11), as renumbered by Pub. L. 111–192,
substituted ‘‘August 17, 2006’’ for ‘‘October 22, 2004’’.
Subsec. (b)(14). Pub. L. 109–280, § 601(a)(1), added par.
(14).
Subsec. (b)(15) to (19). Pub. L. 109–280, § 611(a)(1), (c)(1),
(d)(1), (e)(1), (g)(1), added pars. (15) to (19).
Subsec. (b)(20). Pub. L. 109–280, § 612(a), added par. (20).
Subsec. (g). Pub. L. 109–280, § 601(a)(2), added subsec.
(g).
2004—Subsec. (b)(13). Pub. L. 108–357 substituted ‘‘October 22, 2004’’ for ‘‘April 10, 2004’’.
Pub. L. 108–218 substituted ‘‘January 1, 2014’’ for
‘‘January 1, 2006’’ and ‘‘April 10, 2004’’ for ‘‘December 17,
1999’’.
2001—Subsec. (d)(2)(C). Pub. L. 107–16 added subpar.
(C).
1999—Subsec. (b)(13). Pub. L. 106–170 substituted
‘‘made before January 1, 2006’’ for ‘‘in a taxable year
beginning before January 1, 2001’’ and ‘‘December 17,
1999’’ for ‘‘January 1, 1995’’.
1997—Subsec. (d). Pub. L. 105–34 amended subsec. (d)
generally, substituting present provisions for provi-

§ 1108

sions exempting transactions involving an owner-employee, a member of the family, or a corporation controlled by any such owner-employee through the ownership, directly or indirectly, of 50 percent or more of
the total combined voting power of all classes of stock
entitled to vote or 50 percent or more of the total value
of shares of all classes of stock of the corporation.
1996—Subsec. (b)(1). Pub. L. 104–188 inserted at end ‘‘A
loan made by a plan shall not fail to meet the requirements of the preceding sentence by reason of a loan repayment suspension described under section 414(u)(4) of
title 26.’’
1994—Subsec. (b)(13). Pub. L. 103–465 substituted
‘‘2001’’ for ‘‘1996’’ and ‘‘1995’’ for ‘‘1991’’.
1990—Subsec. (b)(13). Pub. L. 101–508 added par. (13).
1989—Subsec. (b)(12). Pub. L. 101–239, § 7881(l)(5), added
par. (12).
Subsec. (d). Pub. L. 101–239, § 7891(a)(1), in last sentence, substituted ‘‘section 401(c)(3) of the Internal
Revenue Code of 1986’’ for ‘‘section 401(c)(3) of the Internal Revenue Code of 1954’’, which for purposes of codification was translated as ‘‘section 401(c)(3) of title 26’’
thus requiring no change in text.
Pub. L. 101–239, § 7891(a)(2), in last sentence, substituted ‘‘section 408 of the Internal Revenue Code of
1986’’ for ‘‘section 408 of the Internal Revenue Code of
1954’’ and ‘‘section 408(c) of the Internal Revenue Code
of 1986’’ for ‘‘section 408(c) of such Code’’ which for purposes of codification were translated as ‘‘section 408 of
title 26’’ and ‘‘section 408(c) of title 26’’, respectively,
thus requiring no change in text.
Pub. L. 101–239, § 7894(e)(4)(A), in last sentence, substituted ‘‘individual retirement account or individual
retirement annuity described in section 408 of title 26
or a retirement bond described in section 409 of title 26
(as effective for obligations issued before January 1,
1984)’’ for ‘‘individual retirement account, individual
retirement annuity, or an individual retirement bond
(as defined in section 408 or 409 of title 26)’’ and ‘‘section 408(c) of such Code’’ for ‘‘section 408(c) of such
code’’, which for purposes of codification was translated as ‘‘section 408(c) of title 26’’ thus requiring no
change in text.
1986—Subsec. (b)(1)(B). Pub. L. 99–514, § 1114(b)(15)(B),
substituted ‘‘highly compensated employees (within
the meaning of section 414(q) of title 26)’’ for ‘‘highly
compensated employees, officers, or shareholders’’.
Subsec. (d). Pub. L. 99–514, § 1898(i)(1), struck out
‘‘(a),’’ before ‘‘(b),’’ in introductory provisions.
1982—Subsec. (d). Pub. L. 97–354 substituted ‘‘section
1379 of title 26 as in effect on the day before the date
of the enactment of the Subchapter S Revision Act of
1982’’ for ‘‘section 1379 of title 26’’.
1980—Subsec. (b)(10), (11). Pub. L. 96–364, § 308(a),
added pars. (10) and (11).
Subsec. (f). Pub. L. 96–364, § 308(b), added subsec. (f).
EFFECTIVE DATE OF 2008 AMENDMENT
Amendment by Pub. L. 110–458 effective as if included
in the provisions of Pub. L. 109–280 to which the amendment relates, except as otherwise provided, see section
112 of Pub. L. 110–458, set out as a note under section 72
of Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 2006 AMENDMENT
Amendment by section 108(a)(11) of Pub. L. 109–280 applicable to plan years beginning after 2007, see section
108(e) of Pub. L. 109–280, set out as a note under section
1021 of this title.
Pub. L. 109–280, title VI, § 601(a)(3), Aug. 17, 2006, 120
Stat. 958, provided that: ‘‘The amendments made by
this subsection [amending this section] shall apply
with respect to advice referred to in section 3(21)(A)(ii)
of the Employee Retirement Income Security Act of
1974 [29 U.S.C. 1002(21)(A)(ii)] provided after December
31, 2006.’’
Amendment by section 611(a)(1), (c)(1), (d)(1), (e)(1),
(g)(1) of Pub. L. 109–280 applicable to transactions occurring after Aug. 17, 2006, see section 611(h)(1) of Pub.

§ 1109

TITLE 29—LABOR

L. 109–280, set out as a note under section 4975 of Title
26, Internal Revenue Code.
Amendment by section 612(a) of Pub. L. 109–280 applicable to any transaction which the fiduciary or disqualified person discovers, or reasonably should have
discovered, after Aug. 17, 2006, constitutes a prohibited
transaction, see section 612(c) of Pub. L. 109–280, set out
as a note under section 4975 of Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 2001 AMENDMENT
Amendment by Pub. L. 107–16 applicable to years beginning after Dec. 31, 2001, see section 612(c) of Pub. L.
107–16, set out as a note under section 4975 of Title 26,
Internal Revenue Code.
EFFECTIVE DATE OF 1999 AMENDMENT
Amendment by Pub. L. 106–170 applicable to qualified
transfers occurring after Dec. 17, 1999, see section
535(c)(1) of Pub. L. 106–170, set out as a note under section 420 of Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105–34 applicable to taxable
years beginning after Dec. 31, 1997, see section 1506(c) of
Pub. L. 105–34, set out as a note under section 409 of
Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104–188 effective as of Dec. 12,
1994, see section 1704(n)(3) of Pub. L. 104–188, set out as
a note under section 414 of Title 26, Internal Revenue
Code.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101–508 applicable to qualified
transfers under section 420 of title 26 made after Nov.
5, 1990, see section 12012(e) of Pub. L. 101–508, set out as
a note under section 1021 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by section 7881(l)(5) of Pub. L. 101–239 effective, except as otherwise provided, as if included in
the provision of the Pension Protection Act, Pub. L.
100–203, §§ 9302–9346, to which such amendment relates,
see section 7882 of Pub. L. 101–239, set out as a note
under section 401 of Title 26, Internal Revenue Code.
Amendment by section 7891(a) of Pub. L. 101–239 effective, except as otherwise provided, as if included in the
provision of the Tax Reform Act of 1986, Pub. L. 99–514,
to which such amendment relates, see section 7891(f) of
Pub. L. 101–239, set out as a note under section 1002 of
this title.
Section 7894(e)(4)(B) of Pub. L. 101–239 provided that:
‘‘The amendments made by subparagraph (A) [amending this section] shall take effect as if originally included in section 491(b) of the Deficit Reduction Act of
1984 [Pub. L. 98–369].’’
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 1114(b)(15)(B) of Pub. L. 99–514
applicable to years beginning after Dec. 31, 1988, see
section 1114(c)(3) of Pub. L. 99–514, set out as a note
under section 414 of Title 26, Internal Revenue Code.
Section 1898(i)(2) of Pub. L. 99–514 provided that: ‘‘The
amendment made by paragraph (1) [amending this section] shall apply to transactions after the date of the
enactment of this Act [Oct. 22, 1986].’’
EFFECTIVE DATE OF 1982 AMENDMENT
Amendment by Pub. L. 97–354 applicable to taxable
years beginning after Dec. 31, 1982, see section 6(a) of
Pub. L. 97–354, set out as a note under section 1361 of
Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96–364 effective Sept. 26, 1980,
except as specifically provided, see section 1461(e) of
this title.

Page 498
REGULATIONS

Pub. L. 109–280, title VI, § 611(g)(3), Aug. 17, 2006, 120
Stat. 975, provided that: ‘‘No later than 180 days after
the date of the enactment of this Act [Aug. 17, 2006],
the Secretary of Labor, after consultation with the Securities and Exchange Commission, shall issue regulations regarding the content of policies and procedures
required to be adopted by an investment manager
under section 408(b)(19) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1108(b)(19)].’’
Secretary of the Treasury or his delegate to issue before Feb. 1, 1988, final regulations to carry out amendments made by section 1114 of Pub. L. 99–514, see section 1141 of Pub. L. 99–514, set out as a note under section 401 of Title 26, Internal Revenue Code.
Secretary authorized, effective Sept. 2, 1974, to promulgate regulations wherever provisions of this part
call for the promulgation of regulations, see sections
1031 and 1114 of this title.
APPLICABILITY OF AMENDMENTS BY SUBTITLES A AND B
OF TITLE I OF PUB. L. 109–280
For special rules on applicability of amendments by
subtitles A (§§ 101–108) and B (§§ 111–116) of title I of Pub.
L. 109–280 to certain eligible cooperative plans, PBGC
settlement plans, and eligible government contractor
plans, see sections 104, 105, and 106 of Pub. L. 109–280,
set out as notes under section 401 of Title 26, Internal
Revenue Code.
COORDINATION OF 2006 AMENDMENT WITH EXISTING
EXEMPTIONS
Any exemption under subsec. (b) of this section provided by amendment by section 601(a)(1), (2) of Pub. L.
109–280 not to alter existing individual or class exemptions provided by statute or administrative action, see
section 601(c) of Pub. L. 109–280, set out as a note under
section 4975 of Title 26, Internal Revenue Code.
PLAN AMENDMENTS NOT REQUIRED UNTIL
JANUARY 1, 1989
For provisions directing that if any amendments
made by subtitle A or subtitle C of title XI [§§ 1101–1147
and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L.
99–514 require an amendment to any plan, such plan
amendment shall not be required to be made before the
first plan year beginning on or after Jan. 1, 1989, see
section 1140 of Pub. L. 99–514, as amended, set out as a
note under section 401 of Title 26, Internal Revenue
Code.

§ 1109. Liability for breach of fiduciary duty
(a) Any person who is a fiduciary with respect
to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally
liable to make good to such plan any losses to
the plan resulting from each such breach, and to
restore to such plan any profits of such fiduciary
which have been made through use of assets of
the plan by the fiduciary, and shall be subject to
such other equitable or remedial relief as the
court may deem appropriate, including removal
of such fiduciary. A fiduciary may also be removed for a violation of section 1111 of this
title.
(b) No fiduciary shall be liable with respect to
a breach of fiduciary duty under this subchapter
if such breach was committed before he became
a fiduciary or after he ceased to be a fiduciary.
(Pub. L. 93–406, title I, § 409, Sept. 2, 1974, 88 Stat.
886.)
§ 1110. Exculpatory provisions; insurance
(a) Except as provided in sections 1105(b)(1)
and 1105(d) of this title, any provision in an

Page 499

TITLE 29—LABOR

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.
(b) Nothing in this subpart 1 shall preclude—
(1) a plan from purchasing insurance for its
fiduciaries or for itself to cover liability or
losses occurring by reason of the act or omission of a fiduciary, if such insurance permits
recourse by the insurer against the fiduciary
in the case of a breach of a fiduciary obligation by such fiduciary;
(2) a fiduciary from purchasing insurance to
cover liability under this part from and for his
own account; or
(3) an employer or an employee organization
from purchasing insurance to cover potential
liability of one or more persons who serve in a
fiduciary capacity with regard to an employee
benefit plan.
(Pub. L. 93–406, title I, § 410, Sept. 2, 1974, 88 Stat.
886.)
§ 1111. Persons prohibited from holding certain
positions
(a) Conviction or imprisonment
No person who has been convicted of, or has
been imprisoned as a result of his conviction of,
robbery, bribery, extortion, embezzlement,
fraud, grand larceny, burglary, arson, a felony
violation of Federal or State law involving substances defined in section 802(6) of title 21, murder, rape, kidnaping, perjury, assault with intent to kill, any crime described in section
80a–9(a)(1) of title 15, a violation of any provision of this chapter, a violation of section 186 of
this title, a violation of chapter 63 of title 18, a
violation of section 874, 1027, 1503, 1505, 1506, 1510,
1951, or 1954 of title 18, a violation of the LaborManagement Reporting and Disclosure Act of
1959 (29 U.S.C. 401), any felony involving abuse or
misuse of such person’s position or employment
in a labor organization or employee benefit plan
to seek or obtain an illegal gain at the expense
of the members of the labor organization or the
beneficiaries of the employee benefit plan, or
conspiracy to commit any such crimes or attempt to commit any such crimes, or a crime in
which any of the foregoing crimes is an element,
shall serve or be permitted to serve—
(1) as an administrator, fiduciary, officer,
trustee, custodian, counsel, agent, employee,
or representative in any capacity of any employee benefit plan,
(2) as a consultant or adviser to an employee
benefit plan, including but not limited to any
entity whose activities are in whole or substantial part devoted to providing goods or
services to any employee benefit plan, or
(3) in any capacity that involves decisionmaking authority or custody or control of the
moneys, funds, assets, or property of any employee benefit plan,
during or for the period of thirteen years after
such conviction or after the end of such imprisonment, whichever is later, unless the sentencing court on the motion of the person convicted
1 So

in original. This part does not contain subparts.

§ 1111

sets a lesser period of at least three years after
such conviction or after the end of such imprisonment, whichever is later, or unless prior to
the end of such period, in the case of a person so
convicted or imprisoned (A) his citizenship
rights, having been revoked as a result of such
conviction, have been fully restored, or (B) if the
offense is a Federal offense, the sentencing judge
or, if the offense is a State or local offense, the
United States district court for the district in
which the offense was committed, pursuant to
sentencing guidelines and policy statements
under section 994(a) of title 28, determines that
such person’s service in any capacity referred to
in paragraphs (1) through (3) would not be contrary to the purposes of this subchapter. Prior
to making any such determination the court
shall hold a hearing and shall give notice to 1
such proceeding by certified mail to the Secretary of Labor and to State, county, and Federal prosecuting officials in the jurisdiction or
jurisdictions in which such person was convicted. The court’s determination in any such
proceeding shall be final. No person shall knowingly hire, retain, employ, or otherwise place
any other person to serve in any capacity in violation of this subsection. Notwithstanding the
preceding provisions of this subsection, no corporation or partnership will be precluded from
acting as an administrator, fiduciary, officer,
trustee, custodian, counsel, agent, or employee
of any employee benefit plan or as a consultant
to any employee benefit plan without a notice,
hearing, and determination by such court that
such service would be inconsistent with the intention of this section.
(b) Penalty
Any person who intentionally violates this
section shall be fined not more than $10,000 or
imprisoned for not more than five years, or
both.
(c) Definitions
For the purpose of this section—
(1) A person shall be deemed to have been
‘‘convicted’’ and under the disability of ‘‘conviction’’ from the date of the judgment of the
trial court, regardless of whether that judgment remains under appeal.
(2) The term ‘‘consultant’’ means any person
who, for compensation, advises, or represents
an employee benefit plan or who provides
other assistance to such plan, concerning the
establishment or operation of such plan.
(3) A period of parole or supervised release
shall not be considered as part of a period of
imprisonment.
(d) Salary of person barred from employee benefit plan office during appeal of conviction
Whenever any person—
(1) by operation of this section, has been
barred from office or other position in an employee benefit plan as a result of a conviction,
and
(2) has filed an appeal of that conviction,
any salary which would be otherwise due such
person by virtue of such office or position, shall
1 So

in original. Probably should be ‘‘of’’.

§ 1112

TITLE 29—LABOR

be placed in escrow by the individual or organization responsible for payment of such salary.
Payment of such salary into escrow shall continue for the duration of the appeal or for the
period of time during which such salary would
be otherwise due, whichever period is shorter.
Upon the final reversal of such person’s conviction on appeal, the amounts in escrow shall be
paid to such person. Upon the final sustaining of
that person’s conviction on appeal, the amounts
in escrow shall be returned to the individual or
organization responsible for payments of those
amounts. Upon final reversal of such person’s
conviction, such person shall no longer be
barred by this statute 2 from assuming any position from which such person was previously
barred.
(Pub. L. 93–406, title I, § 411, Sept. 2, 1974, 88 Stat.
887; Pub. L. 98–473, title II, §§ 229, 230, 802, Oct. 12,
1984, 98 Stat. 2031, 2131; Pub. L. 100–182, § 15(b),
Dec. 7, 1987, 101 Stat. 1269.)
REFERENCES IN TEXT
This chapter, referred to in subsec. (a), was in the
original ‘‘this Act’’, meaning Pub. L. 93–406, known as
the Employee Retirement Income Security Act of 1974.
Titles I, III, and IV of such Act are classified principally to this chapter. For complete classification of
this Act to the Code, see Short Title note set out under
section 1001 of this title and Tables.
The Labor-Management Reporting and Disclosure
Act of 1959, referred to in subsec. (a), is Pub. L. 86–257,
Sept. 14, 1959, 73 Stat. 519, as amended, which is classified principally to chapter 11 (§ 401 et seq.) of this title.
For complete classification of this Act to the Code, see
Short Title note set out under section 401 of this title,
and Tables.
AMENDMENTS
1987—Subsec. (a). Pub. L. 100–182, in concluding provisions, substituted ‘‘if the offense is a Federal offense,
the sentencing judge or, if the offense is a State or
local offense, the United States district court for the
district in which the offense was committed, pursuant
to sentencing guidelines and policy statements under
section 994(a) of title 28,’’ for ‘‘the United States Parole
Commission’’, ‘‘court shall’’ for ‘‘Commission shall’’,
‘‘court’s’’ for ‘‘Commission’s’’, ‘‘such court’’ for ‘‘such
Parole Commission’’, and ‘‘a hearing’’ for ‘‘an administrative hearing’’.
1984—Subsec. (a). Pub. L. 98–473, § 229, which directed
substitution of ‘‘if the offense is a Federal offense, the
sentencing judge or, if the offense is a State or local offense, on motion of the United States Department of
Justice, the district court of the United States for the
district in which the offense was committed, pursuant
to sentencing guidelines and policy statements issued
pursuant to section 994(a) of title 28,’’ for ‘‘the Board of
Parole of the United States Justice Department’’,
‘‘court’’ and ‘‘court’s’’ for ‘‘Board’’ and ‘‘Board’s’’, respectively, and ‘‘a’’ for ‘‘an administrative’’, was (except for the last substitution) incapable of execution in
view of the previous amendment by section 802 of Pub.
L. 98–473 which became effective prior to the effective
date of the amendment by section 229. See note below.
Pub. L. 98–473, § 802(a), in amending provisions after
‘‘the Labor-Management Reporting and Disclosure Act
of 1959 (29 U.S.C. 401),’’ generally, inserted provisions
relating to abuse or misuse of employment in a labor
organization or employee benefit plan, in cl. (1) substituted ‘‘employee, or representative in any capacity’’
for ‘‘or employee’’, in cl. (2) substituted ‘‘consultant or
adviser to an’’ for ‘‘consultant to any’’, added cl. (3),
substituted ‘‘the period of thirteen years’’ for ‘‘five
2 So

in original. Probably should be ‘‘section’’.

Page 500

years’’, ‘‘unless the sentencing court on the motion of
the person convicted sets a lesser period of at least
three years after such conviction or after the end of
such imprisonment, whichever is later, or unless prior
to the end of such period,’’ for ‘‘unless prior to the end
of such five-year period,’’, in cl. (B) substituted ‘‘the
United States Parole Commission’’ for ‘‘the Board of
Parole of the United States Department of Justice’’
and ‘‘paragraphs (1) through (3)’’ for ‘‘paragraph (1) or
(2)’’, and in provisions following cl. (B) substituted
‘‘Commission’’ and ‘‘Commission’s’’ for ‘‘Board’’ and
‘‘Board’s’’, respectively, inserted provision of notice to
the Secretary of Labor, and substituted ‘‘hire, retain,
employ, or otherwise place any other person to serve in
any capacity’’ for ‘‘permit any other person to serve in
any capacity referred to in paragraph (1) or (2)’’ and
‘‘Parole Commission’’ for ‘‘Board of Parole’’.
Subsec. (b). Pub. L. 98–473, § 802(b), substituted ‘‘five
years’’ for ‘‘one year’’.
Subsec. (c)(1). Pub. L. 98–473, § 802(c), substituted
‘‘, regardless of whether that judgment remains under
appeal’’ for ‘‘or the date of the final sustaining of such
judgment on appeal, whichever is the later event’’.
Subsec. (c)(3). Pub. L. 98–473, § 230, inserted ‘‘or supervised release’’ after ‘‘parole’’.
Subsec. (d). Pub. L. 98–473, § 802(d), added subsec. (d).
EFFECTIVE DATE OF 1987 AMENDMENT
Amendment by Pub. L. 100–182 applicable with respect to offenses committed after Dec. 7, 1987, see section 26 of Pub. L. 100–182, set out as a note under section 3006A of Title 18, Crimes and Criminal Procedure.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendments by sections 229 and 230 of Pub. L. 98–473
effective Nov. 1, 1987, and applicable only to offenses
committed after the taking effect of such amendments,
see section 235(a)(1) of Pub. L. 98–473, set out as an Effective Date note under section 3551 of Title 18, Crimes
and Criminal Procedure.
Amendment by section 802 of Pub. L. 98–473 effective
with respect to any judgment of conviction entered by
the trial court after Oct. 12, 1984, except as otherwise
provided, see section 804 of Pub. L. 98–473, set out as a
note under section 504 of this title.

§ 1112. Bonding
(a) Requisite bonding of plan officials
Every fiduciary of an employee benefit plan
and every person who handles funds or other
property of such a plan (hereafter in this section
referred to as ‘‘plan official’’) shall be bonded as
provided in this section; except that—
(1) where such plan is one under which the
only assets from which benefits are paid are the
general assets of a union or of an employer, the
administrator, officers, and employees of such
plan shall be exempt from the bonding requirements of this section,
(2) no bond shall be required of any entity
which is registered as a broker or a dealer under
section 78o(b) of title 15 if the broker or dealer
is subject to the fidelity bond requirements of a
self-regulatory organization (within the meaning of section 78c(a)(26) of title 15).1
(3) no bond shall be required of a fiduciary (or
of any director, officer, or employee of such fiduciary) if such fiduciary—
(A) is a corporation organized and doing
business under the laws of the United States
or of any State;
(B) is authorized under such laws to exercise
trust powers or to conduct an insurance business;
1 So

in original. The period probably should be ‘‘, and’’.

Page 501

§ 1113

TITLE 29—LABOR

(C) is subject to supervision or examination
by Federal or State authority; and
(D) has at all times a combined capital and
surplus in excess of such a minimum amount
as may be established by regulations issued by
the Secretary, which amount shall be at least
$1,000,000. Paragraph (2) shall apply to a bank
or other financial institution which is authorized to exercise trust powers and the deposits
of which are not insured by the Federal Deposit Insurance Corporation, only if such bank
or institution meets bonding or similar requirements under State law which the Secretary determines are at least equivalent to
those imposed on banks by Federal law.
The amount of such bond shall be fixed at the
beginning of each fiscal year of the plan. Such
amount shall be not less than 10 per centum of
the amount of funds handled. In no case shall
such bond be less than $1,000 nor more than
$500,000, except that the Secretary, after due notice and opportunity for hearing to all interested parties, and after consideration of the
record, may prescribe an amount in excess of
$500,000, subject to the 10 per centum limitation
of the preceding sentence. For purposes of fixing
the amount of such bond, the amount of funds
handled shall be determined by the funds handled by the person, group, or class to be covered
by such bond and by their predecessor or predecessors, if any, during the preceding reporting
year, or if the plan has no preceding reporting
year, the amount of funds to be handled during
the current reporting year by such person,
group, or class, estimated as provided in regulations of the Secretary. Such bond shall provide
protection to the plan against loss by reason of
acts of fraud or dishonesty on the part of the
plan official, directly or through connivance
with others. Any bond shall have as surety
thereon a corporate surety company which is an
acceptable surety on Federal bonds under authority granted by the Secretary of the Treasury pursuant to sections 9304–9308 of title 31.
Any bond shall be in a form or of a type approved by the Secretary, including individual
bonds or schedule or blanket forms of bonds
which cover a group or class. In the case of a
plan that holds employer securities (within the
meaning of section 1107(d)(1) of this title), this
subsection shall be applied by substituting
‘‘$1,000,000’’ for ‘‘$500,000’’ each place it appears.
(b) Unlawful acts
It shall be unlawful for any plan official to
whom subsection (a) applies, to receive, handle,
disburse, or otherwise exercise custody or control of any of the funds or other property of any
employee benefit plan, without being bonded as
required by subsection (a) and it shall be unlawful for any plan official of such plan, or any
other person having authority to direct the performance of such functions, to permit such functions, or any of them, to be performed by any
plan official, with respect to whom the requirements of subsection (a) have not been met.
(c) Conflict of interest prohibited in procuring
bonds
It shall be unlawful for any person to procure
any bond required by subsection (a) from any

surety or other company or through any agent
or broker in whose business operations such plan
or any party in interest in such plan has any
control or significant financial interest, direct
or indirect.
(d) Exclusiveness of statutory basis for bonding
requirement for persons handling funds or
other property of employee benefit plans
Nothing in any other provision of law shall require any person, required to be bonded as provided in subsection (a) because he handles funds
or other property of an employee benefit plan,
to be bonded insofar as the handling by such person of the funds or other property of such plan
is concerned.
(e) Regulations
The Secretary shall prescribe such regulations
as may be necessary to carry out the provisions
of this section including exempting a plan from
the requirements of this section where he finds
that (1) other bonding arrangements or (2) the
overall financial condition of the plan would be
adequate to protect the interests of the beneficiaries and participants. When, in the opinion
of the Secretary, the administrator of a plan offers adequate evidence of the financial responsibility of the plan, or that other bonding arrangements would provide adequate protection
of the beneficiaries and participants, he may exempt such plan from the requirements of this
section.
(Pub. L. 93–406, title I, § 412, Sept. 2, 1974, 88 Stat.
888; Pub. L. 109–280, title VI, §§ 611(b), 622(a), Aug.
17, 2006, 120 Stat. 968, 979.)
CODIFICATION
In subsec. (a), ‘‘sections 9304–9308 of title 31’’ substituted for ‘‘sections 6 through 13 of title 6, United
States Code’’ on authority of Pub. L. 97–258, § 4(b), Sept.
13, 1982, 96 Stat. 1067, the first section of which enacted
Title 31, Money and Finance.
AMENDMENTS
2006—Subsec. (a). Pub. L. 109–280, § 622(a), inserted at
end of concluding provisions ‘‘In the case of a plan that
holds employer securities (within the meaning of section 1107(d)(1) of this title), this subsection shall be applied by substituting ‘$1,000,000’ for ‘$500,000’ each place
it appears.’’
Subsec. (a)(2), (3). Pub. L. 109–280, § 611(b), added par.
(2) and redesignated former par. (2) as (3).
EFFECTIVE DATE OF 2006 AMENDMENT
Amendment by section 611(b) of Pub. L. 109–280 applicable to plan years beginning after Aug. 17, 2006, see
section 611(h)(2) of Pub. L. 109–280, set out as a note
under section 4975 of Title 26, Internal Revenue Code.
Pub. L. 109–280, title VI, § 622(b), Aug. 17, 2006, 120
Stat. 979, provided that: ‘‘The amendment made by this
section [amending this section] shall apply to plan
years beginning after December 31, 2007.’’
REGULATIONS
Secretary authorized, effective Sept. 2, 1974, to promulgate regulations wherever provisions of this part
call for the promulgation of regulations, see sections
1031 and 1114 of this title.

§ 1113. Limitation of actions
No action may be commenced under this subchapter with respect to a fiduciary’s breach of
any responsibility, duty, or obligation under

§ 1114

TITLE 29—LABOR

this part, or with respect to a violation of this
part, after the earlier of—
(1) six years after (A) the date of the last action which constituted a part of the breach or
violation, or (B) in the case of an omission the
latest date on which the fiduciary could have
cured the breach or violation, or
(2) three years after the earliest date on
which the plaintiff had actual knowledge of
the breach or violation;
except that in the case of fraud or concealment,
such action may be commenced not later than
six years after the date of discovery of such
breach or violation.
(Pub. L. 93–406, title I, § 413, Sept. 2, 1974, 88 Stat.
889; Pub. L. 100–203, title IX, § 9342(b), Dec. 22,
1987, 101 Stat. 1330–371; Pub. L. 101–239, title VII,
§§ 7881(j)(4), 7894(e)(5), Dec. 19, 1989, 103 Stat. 2443,
2450.)
AMENDMENTS
1989—Pub. L. 101–239, § 7894(e)(5), struck out ‘‘(a)’’ before ‘‘No action’’.
Par. (2). Pub. L. 101–239, § 7881(j)(4), struck out comma
after ‘‘violation’’.
1987—Subsec. (a)(2). Pub. L. 100–203 struck out ‘‘(A)’’
after ‘‘date’’ and struck out ‘‘or (B) on which a report
from which he could reasonably be expected to have obtained knowledge of such breach or violation was filed
with the Secretary under this subchapter’’.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by section 7881(j)(4) of Pub. L. 101–239 effective, except as otherwise provided, as if included in
the provision of the Pension Protection Act, Pub. L.
100–203, §§ 9302–9346, to which such amendment relates,
see section 7882 of Pub. L. 101–239, set out as a note
under section 401 of Title 26, Internal Revenue Code.
Amendment by section 7894(e)(5) of Pub. L. 101–239 effective, except as otherwise provided, as if originally
included in the provision of the Employee Retirement
Income Security Act of 1974, Pub. L. 93–406, to which
such amendment relates, see section 7894(i) of Pub. L.
101–239, set out as a note under section 1002 of this title.
EFFECTIVE DATE OF 1987 AMENDMENT
Amendment by Pub. L. 100–203 applicable with respect to reports required to be filed after Dec. 31, 1987,
see section 9342(d)(1) of Pub. L. 100–203, set out as a note
under section 1132 of this title.

§ 1114. Effective date
(a) Except as provided in subsections (b), (c),
and (d), this part shall take effect on January 1,
1975.
(b)(1) The provisions of this part authorizing
the Secretary to promulgate regulations shall
take effect on September 2, 1974.
(2) Upon application of a plan, the Secretary
may postpone until not later than January 1,
1976, the applicability of any provision of sections 1102, 1103 (other than 1103(c)), 1105 (other
than 1105(a) and (d)), and 1110(a) of this title, as
it applies to any plan in existence on September
2, 1974, if he determines such postponement is
(A) necessary to amend the instrument establishing the plan under which the plan is maintained and (B) not adverse to the interest of participants and beneficiaries.
(3) This part shall take effect on September 2,
1974, with respect to a plan which terminates
after June 30, 1974, and before January 1, 1975,
and to which at the time of termination section
1321 of this title applies.

Page 502

(c) Sections 1106 and 1107(a) of this title (relating to prohibited transactions) shall not apply—
(1) until June 30, 1984, to a loan of money or
other extension of credit between a plan and a
party in interest under a binding contract in
effect on July 1, 1974 (or pursuant to renewals
of such a contract), if such loan or other extension of credit remains at least as favorable
to the plan as an arm’s-length transaction
with an unrelated party would be, and if the
execution of the contract, the making of the
loan, or the extension of credit was not, at the
time of such execution, making, or extension,
a prohibited transaction (within the meaning
of section 503(b) of title 26 or the corresponding provisions of prior law);
(2) until June 30, 1984, to a lease or joint use
of property involving the plan and a party in
interest pursuant to a binding contract in effect on July 1, 1974 (or pursuant to renewals of
such a contract), if such lease or joint use remains at least as favorable to the plan as an
arm’s-length transaction with an unrelated
party would be and if the execution of the contract was not, at the time of such execution,
a prohibited transaction (within the meaning
of section 503(b) of title 26 or the corresponding provisions of prior law);
(3) until June 30, 1984, to the sale, exchange
or other disposition of property described in
paragraph (2) between a plan and a party in interest if—
(A) in the case of a sale, exchange, or other
disposition of the property by the plan to
the party in interest, the plan receives an
amount which is not less than the fair market value of the property at the time of such
disposition; and
(B) in the case of the acquisition of the
property by the plan, the plan pays an
amount which is not in excess of the fair
market value of the property at the time of
such acquisition;
(4) until June 30, 1977, to the provision of
services, to which paragraphs (1), (2), and (3)
do not apply between a plan and a party in interest—
(A) under a binding contract in effect on
July 1, 1974 (or pursuant to renewals of such
contract), or
(B) if the party in interest ordinarily and
customarily furnished such services on June
30, 1974, if such provision of services remains
at least as favorable to the plan as an arm’slength transaction with an unrelated party
would be and if such provision of services
was not, at the time of such provision, a prohibited transaction (within the meaning of
section 503(b) of title 26) or the corresponding provisions of prior law; or
(5) the sale, exchange, or other disposition of
property which is owned by a plan on June 30,
1974, and all times thereafter, to a party in interest, if such plan is required to dispose of
such property in order to comply with the provisions of section 1107(a) of this title (relating
to the prohibition against holding excess employer securities and employer real property),
and if the plan receives not less than adequate
consideration.

Page 503

TITLE 29—LABOR

(d) Any election, or failure to elect, by a disqualified person under section 2003(c)(1)(B) of
this Act shall be treated for purposes of this
part (but not for purposes of section 1144 of this
title) as an act or omission occurring before the
effective date of this part.
(e) The preceding provisions of this section
shall not apply with respect to amendments
made to this part in provisions enacted after
September 2, 1974.
(Pub. L. 93–406, title I, § 414, Sept. 2, 1974, 88 Stat.
889; Pub. L. 101–239, title VII, § 7894(e)(6), (h)(4),
Dec. 19, 1989, 103 Stat. 2450, 2451.)
REFERENCES IN TEXT
Section 2003(c)(1)(B) of this Act, referred to in subsec.
(d), is section 2003(c)(1)(B) of Pub. L. 93–406, which is set
out as an Effective Date; Savings Provisions note under
section 4975 of Title 26, Internal Revenue Code.
AMENDMENTS
1989—Subsec. (c)(2). Pub. L. 101–239, § 7894(e)(6), substituted ‘‘Internal Revenue Code of 1986’’ for ‘‘Internal
Revenue Code of 1954’’, which for purposes of codification was translated as ‘‘title 26’’ thus requiring no
change in text, and substituted ‘‘or the corresponding
provisions of prior law)’’ for ‘‘) or the corresponding
provisions of prior law’’.
Subsec. (e). Pub. L. 101–239, § 7894(h)(4), added subsec.
(e).
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101–239 effective, except as
otherwise provided, as if originally included in the provision of the Employee Retirement Income Security
Act of 1974, Pub. L. 93–406, to which such amendment
relates, see section 7894(i) of Pub. L. 101–239, set out as
a note under section 1002 of this title.
PART 5—ADMINISTRATION AND ENFORCEMENT

§ 1131. Criminal penalties
(a) Any person who willfully violates any provision of part 1 of this subtitle, or any regulation or order issued under any such provision,
shall upon conviction be fined not more than
$100,000 or imprisoned not more than 10 years, or
both; except that in the case of such violation
by a person not an individual, the fine imposed
upon such person shall be a fine not exceeding
$500,000.
(b) Any person that violates section 1149 of
this title shall upon conviction be imprisoned
not more than 10 years or fined under title 18, or
both.
(Pub. L. 93–406, title I, § 501, Sept. 2, 1974, 88 Stat.
891; Pub. L. 107–204, title IX, § 904, July 30, 2002,
116 Stat. 805; Pub. L. 111–148, title VI, § 6601(b),
Mar. 23, 2010, 124 Stat. 779.)
AMENDMENTS
2010—Pub. L. 111–148 designated existing provisions as
subsec. (a) and added subsec. (b).
2002—Pub. L. 107–204 substituted ‘‘$100,000’’ for
‘‘$5,000’’, ‘‘10 years’’ for ‘‘one year’’, and ‘‘$500,000’’ for
‘‘$100,000’’.
REGULATIONS
Secretary authorized, effective Sept. 2, 1974, to promulgate regulations wherever provisions of this subchapter call for the promulgation of regulations, see
section 1031 of this title.

§ 1132

§ 1132. Civil enforcement
(a) Persons empowered to bring a civil action
A civil action may be brought—
(1) by a participant or beneficiary—
(A) for the relief provided for in subsection
(c) of this section, or
(B) to recover benefits due to him under
the terms of his plan, to enforce his rights
under the terms of the plan, or to clarify his
rights to future benefits under the terms of
the plan;
(2) by the Secretary, or by a participant,
beneficiary or fiduciary for appropriate relief
under section 1109 of this title;
(3) by a participant, beneficiary, or fiduciary
(A) to enjoin any act or practice which violates any provision of this subchapter or the
terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this
subchapter or the terms of the plan;
(4) by the Secretary, or by a participant, or
beneficiary for appropriate relief in the case of
a violation of 1025(c) of this title;
(5) except as otherwise provided in subsection (b), by the Secretary (A) to enjoin any
act or practice which violates any provision of
this subchapter, or (B) to obtain other appropriate equitable relief (i) to redress such violation or (ii) to enforce any provision of this
subchapter;
(6) by the Secretary to collect any civil penalty under paragraph (2), (4), (5), (6), (7), (8), or
(9) of subsection (c) or under subsection (i) or
(l);
(7) by a State to enforce compliance with a
qualified medical child support order (as defined in section 1169(a)(2)(A) of this title);
(8) by the Secretary, or by an employer or
other person referred to in section 1021(f)(1) of
this title, (A) to enjoin any act or practice
which violates subsection (f) of section 1021 of
this title, or (B) to obtain appropriate equitable relief (i) to redress such violation or (ii)
to enforce such subsection;
(9) in the event that the purchase of an insurance contract or insurance annuity in connection with termination of an individual’s
status as a participant covered under a pension plan with respect to all or any portion of
the participant’s pension benefit under such
plan constitutes a violation of part 4 of this
title 1 or the terms of the plan, by the Secretary, by any individual who was a participant or beneficiary at the time of the alleged
violation, or by a fiduciary, to obtain appropriate relief, including the posting of security
if necessary, to assure receipt by the participant or beneficiary of the amounts provided or
to be provided by such insurance contract or
annuity, plus reasonable prejudgment interest
on such amounts;
(10) in the case of a multiemployer plan that
has been certified by the actuary to be in endangered or critical status under section 1085
of this title, if the plan sponsor—
(A) has not adopted a funding improvement or rehabilitation plan under that sec1 So

in original. Probably should be ‘‘subtitle’’.