The Department of Labor (DOL) recently issued a series of frequently asked questions (FAQs) addressing leasing arrangements by multiemployer plans. Multiemployer plan trustees may unwittingly be participating in a prohibited transaction when they lease office space to or from unions, related plans, or other parties in interest whose members participate in the plan.
ERISA prohibits a plan fiduciary from causing the plan to sell, exchange, or lease any property between the plan and a party in interest. Leases between a plan and a party in interest and self-dealing/conflicts of interests involving multiemployer plan trustees, as well as leasing of classroom space by multiemployer apprenticeship plans, are examples of common prohibited transactions. In many cases, a number of statutory and prohibited transaction exemptions are available to multiemployer plans engaging in these types of arrangements. The FAQs describe the consequences to a plan fiduciary if a leasing arrangement is prohibited, but does not qualify for an exemption.
In light of the latest guidance, if your plan is involved in one of these leasing arrangements, it may be a good time to review the arrangement with plan legal counsel. To review the DOL's FAQs visit www.dol.gov/ebsa/faqs/faq-leasingarrangements.html.