-11 authority or control over the assets of a Group IRA trust or pooled trust in which its assets are invested, and certain other persons, are "fiduciaries" with respect to the trust, as defined in Pension Act section 3(21), and are subject to the fiduciary responsibility standards at Pension Act sections 401-414. Without attempting to exhaustively describe these standards, they include discharge of the fiduciary's duties (A) for the exclusive benefit of the participants and their beneficiaries and defraying reasonable expenses; (B) in accordance with a prudent man standard; (C) under specific injunction to diversify investments; and (D) in accordance with the plan documents and instruments. Liability is imposed for certain breaches of duty by co-fiduciaries. There is a specific duty to embody the plan in a written instrument and to hold assets in trust form. Prohibited transactions, similar to those under the tax provisions, are proscribed under Pension Act section 406, and there are prohibitions on certain persons holding certain positions under Pension Act section 411. The trustee of a Group IRA trust will be subject also to the prohibited transaction rules, and the excise taxes imposed thereon, at section 4975 and the reporting requirements of section 408(1), as developed by the Secretary of the Treasury. -12 Reporting, Disclosure and Fiduciary Standards IRA Trusts By its nature an IRA trust created by an individual without employer or employee association involvement could not be an "investment company" under the Act because of the exemption at Act section 3(c)(1) for any issuer whose outstanding securities are beneficially owned by not more than one hundred persons and which is not making and does not presently propose to make a public offering of its securities. If this exemption is deemed by the Commission not to be available in the case of a series or group of IRA trusts created by employees of the same or a related employer or by members of an employee association because of employer or association involvement in their establishment, presumably such a group of trusts would also be considered by the Department of Labor to be a Group IRA trust subject to the reporting disclosure and fiduciary standards discussed under the preceding heading. If there is any other basis on which section 3(c)(1) would be deemed unavailable by the Commission for an individually created account, we would appreciate the opportunity to comment. As indicated above, an IRA trust established by an individual without employer or employee association involvement, is exempt entirely from Title I. Such an account could be held by a bank in custodial form under 65-699 - 76-27 -13 section 408(h) and although the custodian will be treated as a trustee under section 408(h), the obligations of the bank will be determined under local law, which will vary from state to state. Continental specifically represents that it will hold the assets of an IRA trust only in a fiduciary capacity and, as such, will be subject to Regulation 9 of the Regulations of the Comptroller of the Currency. Under Regulation 9.11, Continental will be subject to the duties and fiduciary standards imposed under Illinois law. In addition, a national bank is prohibited from selfdealing with respect to accounts held in a fiduciary capacity, and is required to maintain such accounts separate from other assets. Although exempt from the reporting and disclosure provisions of Title I of the Pension Act, the trustee of an IRA trust will be required to make such reports regarding the account and the participants regarding contributions and distributions as the Secretary of the Treasury may prescribe under regulations. Further, the Conference Report states: The conferees understand that the Internal Revenue Service anticipates developing a prototype individual retirement account which would include a full disclosure of all the material elements governing the retirement savings deduction. --14 This prototype plan would qualify under the requirements for an individual retirement so that individuals would be fully informed on such an account. Also, in accordance Reporting, Disclosure and Fiduciary Standards Collective Trusts - The fiduciary standards provisions of Title I of the Pension Act will be applicable to the trustee and The reporting and disclosure provisions will not be applicable to a collective trust as such. However, Pension Act section 103(b)(3)(G) requires that the report of a participating trust include the most recent annual state ment of the collective trust and the Secretary of Labor may provide for the filing of a master copy under Pension Act section 103(b)(4). Accordingly, to the extent the assets of an IRA trust are invested in a collective trust Application of Federal Securities Laws to Other Forms of Individual and collective trusts for H.R. 10 plans and other pension and profit-sharing plans qualified |