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corporation in which a fiduciary owns 50 percent or more of the
stock is also a disqualified person or party in interest.
Section 4975(e)(3) provides:
For purposes of this section, the term “fiduciary” means any
person who–-
(A) exercises any discretionary authority or
discretionary control respecting management of such
plan or exercises any authority or control respecting
management or disposition of its assets
ERISA section 3(21)(A)(i), 29 U.S.C. section 1002(21)(A)(i),
contains virtually the same language.
If this were the end of the statutory framework, petitioner
would clearly be a “disqualified person” and liable for the
excise tax imposed by section 4975(a). Mr. Flaherty is a
fiduciary because he directs the management of the plans’ assets,
more than 50 percent of petitioner’s stock is owned by Mr.
Flaherty, and the plans lent money to petitioner.
The labor provisions of ERISA, however, provide an exception
to the definition of fiduciary:
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)--
(A) such participant or beneficiary shall not be
deemed to be a fiduciary by reason of such exercise,
and
(B) 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
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Last modified: May 25, 2011