A party-in-interest is defined by the Employee Retirement Income Security Act of 1974 (ERISA) to include the following:
- Any person who provides services to the plan,
- Fiduciaries and employees of the plan,
- An employer whose employees are covered by the plan,
- A person who owns 50 percent or more of such an employer or employee association, and
- Relatives of any of the aforementioned individuals.
Certain plan transactions with parties-in-interest are prohibited under ERISA. These transactions are:
- A sale, exchange, or lease of property;
- A loan or other extension of credit (including late deposits of employee deferrals to the trust);
- The furnishing of goods, services or facilities;
- A transfer of the plan’s assets to a party-in-interest for the use or benefit of a party-in-interest;
- An acquisition of employer securities or real property in violation of the 10 percent limitation.
There are certain exceptions regarding party-in-interest transactions that do not prevent a party-in -interest from receiving reasonable compensation for services to a plan or receiving benefits from a plan as a participant or beneficiary, as long as the benefits are in accordance with the terms of a plan as applied to all other participants and beneficiaries. In addition, payments to parties-in-interest for reasonable compensation for office space and other services necessary for the operation of a plan are permitted.
Understanding these concepts will help your plan create an effective anti-fraud policy and help fiduciaries maintain their proper legal and financial roles.
If you have any questions or concerns about an anti-fraud policy, fill in the form below and our experts will be in touch.
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