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Insurance commissions paid to a plan sponsor’s sibling
Summary DOL said the brother of a sponsoring company’s president was not a party in interest solely because of that sibling relationship, since ERISA’s listed family relationships did not include siblings. The letter could not determine whether the insurance agent’s commissions were a prohibited transaction because another relationship, including fiduciary status, might make him a party in interest. The answer is limited to the facts provided.
Document
Federal opinion letter
Agency
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Document number
P/O 77-05
Date issued
March 24, 1977
Status
Unknown
EBSA's index does not mark withdrawn or superseded opinions; still posted on dol.gov as of 2026-10-26.
Status last verified October 26, 2026
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About this page: The full text below is the official document from U.S. Department of Labor, Employee Benefits Security Administration (EBSA). Ezel adds the plain-English summary and tracks the document's status. The official source linked on this page is authoritative for any reliance.
(Same letter as P/O 77-05)
March 24, 1977
Dear :
Thank you for your letter concerning the Employee Retirement Income Security Act of 1974 (ERISA).
You state that one of the benefit plans underwritten by
your company is the (named), Inc. Employees Pension Trust
Plan. Mr. (X) is an agent of your company and you indicate
he will receive commissions related to the life insurance
contracts purchased by the Plan. You further indicate that
Mr. (X) is the brother of the president of the corporation
sponsoring the Plan. You ask whether a prohibited transaction under ERISA arises in this situation from the
brother relationship.
Section 406(a)(1) of ERISA prohibits certain transactions
between a plan and a party in interest. Section 3(14)(F)
defines the term "party in interest" to include a relative
of an individual who is a party in interest as described in
section 3(14)(A), (B), (C), or (E). Section 3(15) defines
the term "relative" as a "spouse, ancestor, lineal descendant, or spouse of a lineal descendant." Because this
definition does not include the relationship of sibling,
(X) is not a party in interest with respect to the Plan
even though he is the brother of a person who might be a
party in interest as described in section 3(14)(A), (B),
(C), or (E). Your letter does not, however, provide
sufficient information for us to determine whether Mr. (X)
is a party in interest with respect to the Plan by reason
of another relationship to the Plan. For example, it is
unclear whether Mr. (X) is a fiduciary with respect to the
Plan under section 3(21) of ERISA and, therefore, a party
in interest under section 3(14)(A) of ERISA. Accordingly,
we are unable to determine from the facts set forth in your
letter whether Mr. (X)'s receipt of commissions in connection with the sale of insurance to the Plan constitutes a
prohibited transaction under section 406 of ERISA.
Because your letter also raises questions under section 4975
of the Internal Revenue Code of 1954, we have conferred with
representatives of the Internal Revenue Service and they
concur in the views set forth above as they apply to that
section.
Sincerely,
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