Qualified Plans – Parties in Interest

Course: Retirement Planning
Lesson 6: Matching Business Owner Needs to the Right Qualified Plan

Student Question:

How is “connection to the plan” defined in regards to a “party in interest” when talking about qualified plans?  Would a plan participant count as someone with a connection to the plan?

From the Coursework:

A party in interest is any person or entity with a connection to the plan. Parties in interest are limited in or excluded from transactions with a qualified plan.

Thank You


Instructor Response:

Hi Anibal,

Great question Anibal!

“Connection” should be interpreted broadly. For example, most third-party providers such as accountants, actuaries, attorneys, ESOP lenders, and other plan consultants are parties-in-interest. The plan sponsor, trustees, and participants are certainly parties-in-interest.  Be aware that there are prohibited transaction exemptions that allow participants to take distributions and otherwise exercise their rights.  Other exemptions allow the plan to pay consultants and, if the plan is an ESOP, to borrow money from banks or other lenders.

How completely does this address your question?

Onward and Upward,