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ERISA ‘74 labor law provisions and the tax law provisions.
Section 406(b)(1) and (3) of ERISA ‘74 (codified as 29 U.S.C.
1106(b)(1) and (3)) corresponds to subparagraphs (E) and (F) of
section 4975(c)(1). However, the tax law does not have an
equivalent of section 406(b)(2) of ERISA ‘74:
(b) A fiduciary with respect to a plan shall not--
* * * * * * *
(2) in his individual or in any other capacity act
in any transaction involving the plan on behalf of a
party (or represent a party) whose interests are
adverse to the interests of the plan or the interests
of its participants or beneficiaries * * *.
The statement of managers, H. Conf. Rept. 93-1280, supra at
309, 1974-3 C.B. at 470, explains this difference between the
labor and tax titles as follows:
In addition, the labor provisions (but not the tax
provisions) prohibit a fiduciary from acting in any
transaction involving the plan on behalf of a person
(or representing a party) whose interests are adverse
to the interests of the plan or of its participants or
beneficiaries. This prevents a fiduciary from being
put in a position where he has dual loyalties, and,
therefore, he cannot act exclusively for the benefit of
a plan’s participants and beneficiaries. (This
prohibition is not included in the tax provisions,
because of the difficulty in determining an appropriate
measure for an excise tax.)
Thus, it appears that a conflict of interest involving a
fiduciary’s obligations to the other party in a transaction may
be actionable under the labor title, but it may be that such a
conflict of interest by itself may not be actionable under
section 4975(c)(1)(E).
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