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Release Date: April 6, 2006
Trade Press Release
Contact Name: Gloria Della
Phone Number: 202.693.8664
Washington, DC - The U.S. Department of Labor's
Employee Benefits Security Administration (EBSA) today announced
publication of a final amendment to the class exemption on interest-free
loans.
Prohibited Transaction Exemption (PTE) 80-26 is a
class exemption that permits certain interest-free loans to a plan
from a party in interest (e.g., from the employer that sponsors the
plan) in instances where the plan faces a temporary cash shortage.
This exemption was previously used following Y2K-induced computer
problems and when the markets closed after the September 11, 2001
terrorist attacks. The interest-free loans facilitated by the
exemption allow plans facing liquidity problems the ability to
continue to pay benefits and for other purposes necessary for the
ordinary operation of the plan.
The amendment removes the three-day limitation that
previously applied to certain loans described in the exemption. Based
on its experience, the department decided that removing the three-day
limitation would facilitate these interest-free, unsecured loans that
are beneficial to plans, without diminishing any of the safeguards
designed to protect plans.
After review of the two comments on the December 15, 2004
proposal, the final amendment to PTE 80-26 was published with one minor
change. The final amendment to the exemption is scheduled to be published
in the April 7, 2006 Federal Register. For more information about the
exemption, visit EBSA's Web site at www.dol.gov/ebsa.
U.S. Department of Labor news releases are accessible on the
Department's Newsroom
page. The information in this news release will be made available
in alternate format upon request (large print, Braille, audio tape or
disc) from the COAST office. Please specify which news release when
placing your request at 202.693.7765 or TTY 202.693.7755. The U.S.
Department of Labor is committed to providing America's employers and
employees with easy access to understandable information on how to comply
with its laws and regulations. For more information, please visit the
Department's Compliance
Assistance page.
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