(a) In general. Section 408(b)(6) of the Employee Retirement Income
Security Act of 1974 (the Act) exempts from the prohibitions of section
406 of the Act the provision of certain ancillary services by a bank or
similar financial institution (as defined in Sec. 2550.408b-4(c)(1)
supervised by the United States or a State to a plan for which it acts
as a fiduciary if the conditions of Sec. 2550.408b-6(b) are met. Such
ancillary services include services which do not meet the requirements
of section 408(b)(2) of the Act because the provision of such services
involves an act described in section 406(b)(1) of the Act (relating to
fiduciaries dealing with the assets of plans in their own interest or
for their own account) by the fiduciary bank or similar financial
institution or an act described in section 406(b)(2) of the Act
(relating to fiduciaries in their individual or in any other capacity
acting in any transaction involving the plan on behalf of a party (or
representing a party) whose interests are adverse to the interests of
the plan or the interests of its participants or beneficiaries). Section
408(b)(6) provides an exemption from sections 406(b)(1) and (2) because
section 408(b)(6) contemplates the provision of such ancillary services
without the approval of a second fiduciary (as described in Sec.
2550.408b-2(e)(2)) if the conditions of Sec. 2550.408b-6(b) are met.
Thus, for example, plan assets held by a fiduciary bank which are
reasonably
[[Page 524]]
expected to be needed to satisfy current plan expenses may be placed by
the bank in a non-interest-bearing checking account in the bank if the
conditions of Sec. 2550.408b-6(b) are met, notwithstanding the
provisions of section 408(b)(4) of the Act (relating to investments in
bank deposits). However, section 408(b)(6) does not provide an exemption
for an act described in section 406(b)(3) of the Act (relating to
fiduciaries receiving consideration for their own personal account from
any party dealing with a plan in connection with a transaction involving
the assets of the plan). The receipt of such consideration is a separate
transaction not described in section 408(b)(6). Section 408(b)(6) does
not contain an exemption from other provisions of the Act, such as
section 404, or other provisions of law which may impose requirements or
restrictions relating to the transactions which are exempt under section
408(b)(6) of the Act. See, for example, section 401 of the Internal
Revenue Code of 1954. The provisions of section 408(b)(6) of the Act are
further limited by section 408(d) of the Act (relating to transactions
with owner-employees and related persons).
(b) Conditions. Such service must be provided--
(1) At not more than reasonable compensation;
(2) Under adequate internal safeguards which assure that the
provision of such service is consistent with sound banking and financial
practice, as determined by Federal or State supervisory authority; and
(3) Only to the extent that such service is subject to specific
guidelines issued by the bank or similar financial institution which
meet the requirements of Sec. 2550.408b-6(c).
[42 FR 32392, June 24, 1977; 42 FR 36823, July 18, 1977]
