DOL Proposes Amendment to Prohibited Transaction Exemption Concerning Interest-Free Loans

The Department of Labor (the "DOL") proposed an amendment to Prohibited Transaction Exemption 80-26 ("PTE 80-26") under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). PTE 80-26 is a class exemption that permits parties-in-interest with respect to employee benefit plans to make interest-free loans to such plans if certain conditions are met. Currently under PTE 80-26, such an interest-free loan must be either (i) for the payment of ordinary operating expenses of the plan, including the payment of benefits and periodic premium payments, or (ii) for a period of not more than three business days for a purpose incidental to the ordinary operation of the plan. If finalized, the proposed amendment would eliminate the three business day limitation on interest-free loans for a purpose incidental to the ordinary operation of the plan. The proposed amendment will become effective on the date after the date the final exemption is published in the Federal Register.