Labor Department Amendments Address Benefit Plans' Post-Sept 11 Liquidity Issues

Washington, DC, March 20, 2002 - The Department of Labor has adopted  amendments to PTE 80-26 that were  proposed last fall to address potential liquidity problems faced by employee benefit plans due to the events of September 11, 2001.

PTE 80-26 is a class exemption that permits the lending of money or other extensions of credit from a party in interest or disqualified person to an employee benefit plan and the repayment of those loans or credit extensions, provided that the conditions specified in the exemption are met.

Under the amendments, which were adopted as proposed, the class exemption is effective September 11, 2001 through January 9, 2002 under the following conditions:

• no interest or other fee is charged to the plan, and no discount for payment in cash is relinquished by the plan, in connection therewith;
• the proceeds thereof are used only for a purpose incidental to the ordinary operation of the plan that arises in connection with difficulties encountered by the plan in liquidating, or otherwise accessing its assets, or accessing its data in a timely manner as a direct or indirect result of the September 11, 2001 disruption;
• the loan or extension of credit is unsecured;
• the loan or extension of credit is not directly or indirectly made by a plan; and
• the loan or extension of credit begins on or after September 11, 2001, and is repaid or terminated no later than January 9, 2002.