CHAPTER 14 PROHIBITED TRANSACTIONS

Prohibited transactions are dealt with in the Internal Revenue Code as well as in Title I of ERISA. The purpose of the prohibited transactions rules is to protect the interests of plan participants by prohibiting dealings between the plan and persons who may have conflicts of interest with the plan. Although a transaction which is prohibited might actually benefit the plan participants, the transaction is nonetheless prohibited because the nature of the relationship between the plan and the person engaging in the prohibited transaction is one that has an increased likelihood of causing potential harm to the plan.