[Code of Federal Regulations]
[Title 29, Volume 9]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR2550.408b-6]

[Page 505]
 
                             TITLE 29--LABOR
 
CHAPTER XXV--PENSION AND WELFARE BENEFITS ADMINISTRATION, DEPARTMENT OF 
                                  LABOR
 
PART 2550--RULES AND REGULATIONS FOR FIDUCIARY RESPONSIBILITY--Table of Contents
 
Sec. 2550.408b-6  Statutory exemption for ancillary services by a bank or similar financial institution.

    (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 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]