Participant trustee control and ERISA bonding

P/OPINION 75-24


                                                         3(21)✓
                                                         404
                                                         412


                        October 21, 1975


Dear              :

Your letter of January 10, 1975 to                 of
the          Regional Office has been referred to this
office for reply. In your letter, you inquired whether
a person who is both a trustee and a participant in an
employee benefit plan should be considered to be a
fiduciary with respect to the plan under section 404(c)
of the Employee Retirement Income Security Act of 1974
(the Act) if such person is a trustee with respect
to both his individual account and the individual accounts
or other plan participants and beneficiaries.

Section 404(c) provides, generally, that a participant
or beneficiary of a plan which provides for individual
accounts and which permits participants and beneficiaries
to exercise control over the assets of their accounts will
not be deemed to be a fiduciary by reason of exercising
such control with respect to his account. It further
provides that no person who is otherwise a fiduciary
with respect to the plan shall be liable under Part 4
of Title I of the Act for any loss, or by reason of any
breach, which results from a participant's or beneficiary's
exercise of such control.

Thus, a participant or beneficiary who exercises control
over plan assets will not be deemed to be a fiduciary so
long as such control relates only to assets in such parti-
cipant's or beneficiary's individual account. However,
if such person exercises control over assets in the
individual accounts of other participants and beneficiaries,
he will be deemed to be a fiduciary with respect to the plan,
as that term is defined in section 3(21) of the Act.
2

P/OPINION 75-24



Your letter also inquires as to the applicability of
the bonding provisions of section 412 of the Act to
the person described above. Subject to certain exceptions,
section 412(a) of the Act requires that every person who
handles funds or other property of an employee benefit plan
covered by Part 4 of Title I of the Act shall be bonded.
The term "handles," as used in this context, is defined
in 29 CFR 464.7 adopted under section 13 of the Welfare
and Pension Plans Disclosure Act (a copy of which is
enclosed herewith) and incorporated by reference in the
temporary bonding regulation adopted under section 412 of the
Act (40 FR 2203, January 10, 1975). Thus, if the trustee
of the plan described in your letter handles plan assets
within the meaning of 29 CFR 464.7, he or she should be
bonded in accordance with the provisions of section 412
of the Act.

Finally, pursuant to your September 16, 1975 telephone
conversation with           of my staff, I understand
that you no longer require a copy of form EBS-1 for registration
of pension and profit sharing plans as requested in your
letter. This response has therefore been addressed solely
to your substantive inquiries.

Sincerely,