The Department of Labor (DOL) has issued final amendments to Prohibited Transaction Exemption (PTE) 96–23, a class exemption that permits various transactions involving employee benefit plans whose assets are managed by in-house asset managers (INHAMs), provided the conditions of the exemption are met. The INHAM exemption generally allows that portion of a plan managed by an INHAM to engage in all transactions described in ERISA section 406(a)(1)(A) - (D) (sales or exchanges of property, lending of money, furnishing of goods or services, and transfers of plan assets) with virtually all party-ininterest service providers except the INHAM or a person related to the INHAM. The amendment, published April 1, 2011, amends PTE 96-23 in several respects, including:
- Expanding the definition of INHAM to include a subsidiary that is 80% or more owned by the employer or parent company
- Broadening the scope of the class exemption to permit certain transactions with a "co-joint venturer" if the joint venture relationship is the entity's sole relationship to the employer (or if the co-joint venturer is both a joint venturer and a service provider)
- Extending relief to certain existing leases with an employer or an affiliate resulting from the planʼs acquisition of the underlying office or commercial space
The amendment to PTE 96-23 also increased the 5% ownership threshold for related persons (the so-called "related to test”) to 10%, and increases the amount of assets that must be managed in order to qualify as an INHAM from $50 million to $85 million. Amended PTE 96-23 can be found at http://www.gpo.gov/fdsys/pkg/FR-2011-04-01/pdf/2011-7655.pdf.