Plan assets: Difference between revisions

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-[[Plan assets]] is a concept under the feared but respected [[Employee Retirement Income Security Act]] which strikes terror into the heart of investment managers, and a shiver of tense but almost orgasmic excitement down the spine of an [[ERISA lawyer]]. The same sort of sensation normal peope get watching that closing scenes of ''[[Silence of the Lambs]]''<ref>You know, the bit where Clarice is in the house alone with Buffalo Bill.</ref>.
+{{g}}[[Plan assets]] is a concept under the feared but respected [[Employee Retirement Income Security Act]] which strikes terror into the heart of investment managers, and a shiver of tense but almost orgasmic excitement down the spine of an [[ERISA lawyer]]. The same sort of sensation normal people get watching that closing scenes of ''[[Silence of the Lambs]]''<ref>You know, the bit where Clarice is in the house alone with Buffalo Bill.</ref>.
-The concern is concern over the U.S. Department of Labor’s “[[plan asset regulations]]” which determine a [[fund]]'s assets will be treated as held directly by an [[ERISA plan investor]] for the purposes of [[ERISA]] and the [[Internal Revenue Code of 1986]].
+The concern is concern over the U.S. Department of Labor’s “[[plan asset regulations]]” which determine a [[fund]]’s assets will be treated as held directly by an [[ERISA plan investor]] for the purposes of [[ERISA]] and the [[Internal Revenue Code of 1986]].
+==={{tag|ERISA}} [[representation]]s and [[prohibited transaction]]s===
+Even a non-US manager might be invited to make this sort of a representation:
-{{seealso}}
+{{Box|
+'''No ERISA Funds'''. The Fund’s assets do not include “[[plan assets]]” within the meaning of Section 3(42) of {{tag|ERISA}}, and Party B is not otherwise subject to Title I of ERISA or Section 4975 of the Code. <br>
+'''Definitions'''.  Section {{isdaprov|14}} is hereby amended to include the following definitions in their appropriate alphabetical order:
+:“'''Code'''” means the U.S. [[Internal Revenue Code of 1986]], as amended, or any successor statute.
+:“'''ERISA'''” means the U.S. [[Employee Retirement Income Security Act of 1974]], as amended, or any successor statute.
+}}
+The second limb of this is rather tendentious. What has the [[Internal Revenue Code]] got to do with retirement plans? Well, if an {{tag|ERISA}} plan transacts with any party having a conflict of interest — its own manager, fiduciaries and so on — this is a [[prohibited transaction]] which is subject to a 15% tax. This is the kind of thing that freaks people out about ERISA.
+Still, there’s a less tendentious way of getting there. Section 4795 of the [[Internal Revenue Code]] imposes a tax, but only on “prohibited transactions”, which are only with  [[disqualified person]]s. [[Disqualified person]]s are defined as “[[parties in interest]]” to an ERISA [[employee benefit plan]]. So, if you recraft the representation so, you achieve the same effect:
+{{Box|
+'''No ERISA Funds'''. Party B holds no “[[plan assets]]” and is not a “[[party in interest]]” to an [[employee benefit plan]], in each case as contemplated by the U.S. [[Employee Retirement Income Security Act of 1974]] (or any successor statute).
+}}
+{{sa}}
 *[[ERISA]]
+{{ref}}