3989 / What is the PTE that permits disqualified persons other than a plan to make unsecured interest-free loans to a plan to pay ordinary operating expenses?
Administrative Exemption: 80-26
Prohibited Transaction Exemption 80-261 permits a disqualified person other than another plan to make unsecured interest-free loans to a plan to pay ordinary operating expenses (including the payment of benefits and periodic premiums under an insurance or annuity contract) or, for a period no longer than three days, for a purpose incidental to the ordinary operation of the plan. The Department of Labor adopted a temporary amendment to PTE 80-26 to include interest-free loans made to plans affected by the 9/11 terrorist attacks.2 In 2006, the Department amended the regulation to eliminate the three-day limit, provided that if the loan is for longer than 60 days, the terms of the agreement are written.3 An amendment proposed in 2013 would provide retroactive and temporary relief for certain guarantees of the payment of debits to plan investment accounts (including IRAs) by parties in interest to such plans as well as certain loans and loan repayments made pursuant to such guarantees.4
1. 1980-2 CB 323.
2. Temp. Amendments to PTE 80-26. 67 Fed. Reg. 9485 (Mar. 3, 2002).