[Code of Federal Regulations]
[Title 29, Volume 9]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR2550.408e]

[Page 516-517]
 
                             TITLE 29--LABOR
 
 CHAPTER XXV--EMPLOYEE BENEFITS SECURITY ADMINISTRATION, DEPARTMENT OF 
                                  LABOR
 
PART 2550_RULES AND REGULATIONS FOR FIDUCIARY RESPONSIBILITY
--Table of Contents
 
Sec. 2550.408e  Statutory exemption for acquisition or sale of qualifying 

employer securities and for acquisition, sale, or lease of qualifying 
employer real property.

    (a) General. Section 408(e) of the Employee Retirement Income 
Security Act of 1974 (the Act) exempts from the prohibitions of section 
406(a) and 406(b)(1) and (2) of the Act any acquisition or sale by a 
plan of qualifying employer securities (as defined in section 407(d)(5) 
of the Act), or any acquisition, sale or lease by a plan of qualifying 
employer real property (as defined in section 407(d)(4) of the Act) if 
certain conditions are met. The conditions are that:
    (1) The acquisition, sale or lease must be for adequate 
consideration (which is defined in paragraph (d) of this section);
    (2) No commission may be charged directly or indirectly to the plan 
with respect to the transaction; and
    (3) In the case of an acquisition or lease of qualifying employer 
real property, or an acquisition of qualifying employer securities, by a 
plan other than an eligible individual account plan (as defined in 
section 407(d)(3) of the Act), the acquisition or lease must comply with 
the requirements of section 407(a) of the Act.
    (b) Acquisition. For purposes of section 408(e) and this section, an 
acquisition by a plan of qualifying employer securities or qualifying 
employer real property shall include, but not be limited to, an 
acquisition by purchase, by the exchange of plan assets, by the exercise 
of warrants or rights, by the conversion of a security, by default of a 
loan where the qualifying employer security or qualifying employer real 
property was security for the loan, or in connection with the 
contribution of such securities or real property to the plan. However, 
an acquisition of a security shall not be deemed to have occurred if a 
plan acquires the security as a result of a stock dividend or stock 
split.
    (c) Sale. For purposes of section 408(e) and this section, a sale of 
qualifying employer real property or qualifying employer securities 
shall include any disposition for value.

[[Page 517]]

    (d) Adequate consideration. For purposes of section 408(e) and this 
section, adequate consideration means:
    (1) In the case of a marketable obligation, a price not less 
favorable to the plan than the price determined under section 407(e)(1) 
of the Act; and
    (2) In all other cases, a price not less favorable to the plan than 
the price determined under section 3(18) of the Act.
    (e) Commission. For purposes of section 408(e) and this section, the 
term ``commission'' includes any fee, commission or similar charge paid 
in connection with a transaction, except that the term ``commission'' 
does not include a charge incurred for the purpose of enabling the 
appropriate plan fiduciaries to evaluate the desirability of entering 
into a transaction to which this section would apply, such as an 
appraisal or investment advisory fee.

[45 FR 51197, Aug. 1, 1980]