Fiduciary compensation transition interpretation

P/OPINION 75-21


                                                             3(14)✓
                                                             406
                                                             408
                                                             414


                          March 4, 1975


Dear              :

Your letter of February 5, 1975, relating to ERISA
IB 75-1, has been referred to me by
of the Department of Labor for reply.

Section 414(c) of the Employee Retirement Income Security
Act of 1974 applies to compensation for persons serving as
fiduciaries to a plan who are already receiving full-time
compensation from an employer or employee organization.

Since such a person is already a party in interest by
virtue of section 3(14)(B) of the Act, section 406 might
be construed to prevent the employee-fiduciary from
receiving benefits or from receiving compensation for
services rendered. Section 408(c) was inserted as an
exemption from the section 406 prohibited transaction rules
to enable such benefits to be received and such services
to be rendered. The clause in section 408(c)(2) relating
to full-time employees receiving solely reimbursement for
expenses is a limitation within an exemption from section

406. Once it is understood to be merely this, and not an
independent prohibition, it becomes apparent why section
414(c)(4) applies to such a situation, and why no reference
has been made to section 408(c) in the interpretive bulletin.

For your information the Internal Revenue Service has taken
an identical view of the analogous provisions of section
4975 of the Internal Revenue Code in their Technical
Information Release (TIR 1329), a copy of which is
enclosed.

Sincerely,