- 24 -
Employee Retirement Income Security Act of 1974 (ERISA), Pub. L.
93-406, 88 Stat. 877.
Petitioner contends further that violation of the prudent
investor rule is not necessarily a violation of the exclusive
benefit rule. Petitioner asserts that, even if the loan was not
prudent, the lack of prudence may be evidence of an exclusive
benefit rule violation, but it is not conclusive.
Additionally, petitioner contends that when the loan was
made, the plan was not subject to title I of ERISA, because the
Shedds were the plan's sole participants and that under
Department of Labor (DOL) regulations, 29 C.F.R. sec. 2510.3-3(b)
and (c)(1) (1997),10 no "employee" was a participant in the plan
9(...continued)
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
title.
10 29 C.F.R. sec. 2510.3-3(b) and (c)(1) (1997), provides
in pertinent part as follows:
(b) Plans without employees. For purposes of Title I of the
Act and this chapter, the term "employee benefit plan" shall
not include any plan, * * * under which no employees are
participants covered under the plan, * * *.
(c) Employees. For purposes of this section:
(continued...)
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