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-
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.
The prohibitions provided in section 1106 of this title shall not apply to any of the following transactions:
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).
Such ancillary services shall not be provided at more than reasonable compensation.
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.
Nothing in section 1106 of this title shall be construed to prohibit any fiduciary from-
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.
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)-
Section 1106(b)(2) of this title shall not apply to any merger or transfer described in subsection (b)(11).
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.
For purposes of this subsection, the term "eligible investment advice arrangement" means an arrangement-
An investment advice program meets the requirements of this paragraph if the requirements of subparagraphs (B), (C), and (D) are met.
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-
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).
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.
The term "eligible investment expert" means any person-
The requirements of this subparagraph are met with respect to any investment advice program if-
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.
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.
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-
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.
The requirements of this paragraph are met if-
The requirements of this paragraph are met if-
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.
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).
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.
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-
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.
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.
For purposes of this subsection and subsection (b)(14)-
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-
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.
The term "affiliate" of another entity means an affiliated person of the entity (as defined in section 80a-2(a)(3) of title 15).
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).
Provided that all of the conditions described in paragraph (2) are met, the restrictions imposed by subsections (a), (b)(1), and (b)(2) of section 1106 of this title shall not apply to-
in any arrangement where such entity described in section 1002(37)(G)(vi) of this title or any related organization or subsidiary of such entity provides pharmacy benefit services that include prior authorization and appeals, a retail pharmacy network, pharmacy benefit administration, mail order fulfillment, formulary support, manufacturer payments, audits, and specialty pharmacy and goods, to any such group health plan.
The conditions described in this paragraph are the following:
In the event an entity described in section 1002(37)(G)(vi) of this title or any affiliate of such entity violates any of the conditions of such exemption, such exemption shall not apply with respect to such entity or affiliate and all enforcement and claims available under this chapter shall apply with respect to such entity or affiliate.
Nothing in this subsection shall be construed to modify any obligation of a group health plan otherwise set forth in this chapter.
In this subsection, the term "group health plan" has the meaning given such term in section 1191b(a) of this title.
1 So in original. Probably should be "this subparagraph".
2 So in original. Probably should be preceded by "in".
3 So in original. Probably should be "arm's-length".
4 So in original. The word "of" probably should appear.
29 U.S.C. § 1108
EDITORIAL NOTES
REFERENCES IN TEXTThis chapter, referred to in subsecs. (a), (b)(2)(B)(vi)(I), and (h)(3), (4), 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.
AMENDMENTS2022-Subsec. (b)(13). Pub. L. 117-328, §606(b)(3), substituted "January 1, 2033" for "January 1, 2026" and "(as in effect on December 29, 2022)" for "(as in effect on July 31, 2015)". Subsec. (b)(21). Pub. L. 117-328, §113(d), added par. (21).2020-Subsec. (b)(2). Pub. L. 116-260 designated existing provisions as subpar. (A) and added subpar. (B). 2019-Subsec. (h). Pub. L. 116-94 added subsec. (h).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 provisions 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).
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2022 AMENDMENT Amendment by section 113(d) of Pub. L. 117-328 applicable with respect to plan years beginning after Dec. 29, 2022, see section 113(e) of Pub. L. 117-328 set out as a note under section 401 of Title 26, Internal Revenue Code.Amendment by section 606(b)(3) of Pub. L. 117-328 applicable to transfers made after Dec. 29, 2022, see section 606(c) of Pub. L. 117-328 set out as a note under section 420 of Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 2020 AMENDMENT Pub. L. 116-260 div. BB, title II, §202(e), Dec. 27, 2020, 134 Stat. 2900, provided that: "The amendments made by subsections (a) and (c) [enacting section 300gg-46 of Title 42, The Public Health and Welfare, and amending this section] shall apply beginning 1 year after the date of enactment of this Act [Dec. 27, 2020]."
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. 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.
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 EXISTING REGULATIONS Pub. L. 116-260 div. BB, title II, §202(b), Dec. 27, 2020, 134 Stat. 2899, provided that: "Nothing in the amendments made by subsection (a) [amending this section] shall be construed to affect the applicability of section 2550.408b-2 of title 29, Code of Federal Regulations (or any successor regulations), with respect to any applicable entity other than a covered plan or a covered service provider (as defined in section 408(b)(2)(B)(ii) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1108(b)(2)(B)(ii)], as amended by subsection (a))."
TRANSITION RULE Pub. L. 116-260 div. BB, title II, §202(d), Dec. 27, 2020, 134 Stat. 2900, provided that: "No contract executed prior to the effective date described in subsection (e) [see Effective Date of 2020 Amendment note above] by a group health plan subject to the requirements of section 408(b)(2)(B) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1108(b)(2)(B)] (as amended by subsection (a)) or by a health insurance issuer subject to the requirements of section 2746 of the Public Health Service Act [42 U.S.C. 300gg-46] (as added by subsection (c)) shall be subject to the requirements of such section 408(b)(2)(B) or such section 2746, as applicable."
APPLICABILITY OF AMENDMENTS BY PUB. L. 116-94With respect to a group health plan subject to subsec. (h) of this section and section 4975(c) of Title 26, Internal Revenue Code, as amended by section 1302(a), (b) of div. P of Pub. L. 116-94 beginning at the end of the fifth plan year of such group health plan that begins after Dec. 20, 2019, subsec. (h) of this section and section 4975(c) of Title 26 to have no force or effect, see section 1302(c) of div. P of Pub. L. 116-94 set out as a note under section 4975 of Title 26.
APPLICABILITY OF AMENDMENTS BY SUBTITLES A AND B OF TITLE I OF PUB. L. 109-280For 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 EXEMPTIONSAny 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, 1989For 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.