Participant direction and fiduciary liability under ERISA

P/OPINION 75-81


                                                                 404


                            April 15, 1975


Dear              :

This is in response to your letter of March 6, 1975, in which
you posed the following questions pertaining to the
Employee Retirement Income Security Act of 1974:

       1.   Does section 404(c) of the Act exempt all
            "earmarked" transactions made in compliance
            with the terms of an employee benefit plan?
            (We assume that by the term "earmarked"
            transactions you mean a transaction which
            involves the exercise of control by a
            participant or beneficiary over assets
            in his account in an individual account
            plan which permits such exercise of control).

       2.   Will the excise taxes of section 4975 of the
            Internal Revenue Code of 1954 be levied in
            respect of a transaction which falls within
            section 404(c) of the Act?

With regard to your first question, section 404(c) does
not provide a blanket exemption from all of the provisions
of the Act for transactions which involve an exercise of
control by a participant or beneficiary over the assets
in his or her own account in an individual account plan
which permits such exercise of control. However, section
404(c) does absolve plan fiduciaries of liability under
Part 4 of Title I "for any loss, or by reason of any
breach, which results from such participant's or beneficiary's
exercise of control." In addition, it provides that the
participant or beneficiary is not to be deemed a fiduciary
by reason of such exercise.

Your second question, relating to the imposition of excise
taxes imposed under section 4975 of the Code, is a matter
within the jurisdiction of the Internal Revenue Service.
Accordingly, your inquiries in that regard should be
addressed to the Internal Revenue Service.

Sincerely,