What Is PTE 91-38 for a 401(k) Plan?

PTE 91-38 is the principal class exemption for transactions inside bank collective investment funds holding retirement-plan assets. It is often described too loosely as the exemption that lets a 401(k) invest in a collective investment trust. That skips a legal layer. ERISA Section 408(b)(8) can exempt the plan's entry into or exit from the bank fund. PTE 91-38 addresses many prohibited transactions that occur after pooled plan assets are inside the fund.^[1][2][8]

That separation changes how a fiduciary should build the file.

There are two questions:

1. Can the plan enter the pooled bank vehicle?
2. Can the vehicle transact with this counterparty?

The answers can come from different exemptions.

CIT, CCT and CIF Do Not Mean Exactly the Same Thing Everywhere

Industry professionals often say:

collective investment trust — CIT.

PTE 91-38 uses:

collective investment fund.

The exemption defines that term as a common or collective trust fund or pooled investment fund maintained by a bank or trust company.^[2]

Form 5500 materials commonly use:

common/collective trust — CCT.^[14]

OCC Regulation 9.18 uses:

collective investment fund.^[11]

In everyday retirement-plan discussions, those labels often point to closely related bank-pooled vehicles.

For legal analysis, use the definition in the rule being applied.

The First Legal Layer Is ERISA Section 408(b)(8)

A bank can be a party in interest to a plan.

Without an exemption, a plan's purchase of an interest in a fund maintained by that bank can implicate Section 406.^[8][9]

ERISA Section 408(b)(8) provides statutory relief when a plan buys or sells an interest in:

• a common or collective trust fund
• a pooled investment fund maintained by a supervised bank or trust company
• a qualifying insurance-company pooled investment fund.^[8]

For the bank-fund route, three conditions matter.

The transaction is a purchase or sale of a fund interest

The statutory exemption addresses entry to or exit from the pooled vehicle.

Compensation is reasonable

The bank or trust company cannot receive more than reasonable compensation.

The investment is properly authorized

The transaction must be expressly permitted by:

• the plan instrument, or
• a fiduciary other than the bank, trust company or affiliate that has authority to manage and control plan assets.^[8]

That is the admission-level exemption.

PTE 91-38 Starts Where Section 408(b)(8) Stops

Once plan money is inside a CIT, the underlying portfolio can transact with:

• issuers
• lenders
• landlords
• tenants
• service providers
• brokers
• counterparties.

One of those entities may be a party in interest to one participating plan.

That relationship can cause ERISA Section 406 to reach the pooled transaction even though the bank selected it for many unrelated investors.

PTE 91-38 gives bank collective funds broad conditional relief from that indirect conflict.^[1][2]

This is why citing only Section 408(b)(8) is incomplete when the issue is an underlying fund transaction.

Example: Entry Into the CIT vs. Bond Purchase Inside It

Plan A invests:

$25 million

in Bank B's fixed-income CIT.

Step 1 — Plan buys CIT units

Bank B is a party in interest.

The plan's purchase of the fund interest can be analyzed under Section 408(b)(8).^[8]

Step 2 — CIT buys Company C bonds

Company C provides services to Plan A and is a party in interest.

Now the transaction is:

bank fund ↔ Company C.

That is not merely another purchase of a CIT interest.

PTE 91-38 becomes the relevant vehicle-level exemption.

The same $25 million investment creates two different legal questions.

The Underlying Assets Can Be Plan Assets

ERISA's plan-asset framework generally looks through many unregistered pooled investment entities when plans hold sufficient equity participation, subject to specific exceptions.^[13]

Bank collective funds used for retirement assets are therefore managed with ERISA fiduciary and prohibited-transaction consequences at the underlying portfolio level.

That is also reflected in DOL advisory opinions treating the bank trustee as a fiduciary because of discretionary authority over assets of the pooled fund.^[5][7]

A CIT is not a legal wrapper that makes Section 406 disappear.

Pooling changes the mechanics.

It does not eliminate plan-asset status.

PTE 80-51 Became PTE 91-38

The original class exemption was:

PTE 80-51.

DOL amended it in 1991 and redesignated the result:

PTE 91-38.^[1][2]

The major change was practical.

For current transactions, the general sponsor-group concentration threshold increased from:

5% to 10%.^[2]

The amendment was effective for the relevant percentage condition as of July 1, 1990.^[2]

DOL later issued a technical correction in November 1991 changing two statutory cross-references in the multiple-employer-plan definition.^[3]

The Current General Test Uses 10% of the Fund

For transactions on or after July 1, 1990, the ordinary Section I(a)(1)(A) route generally requires the combined investment of the relevant sponsor group's plans not to exceed:

10% of total collective-fund assets.^[2]

The calculation is:

related sponsor-plan interests in the CIT ÷ total CIT assets.

It is not:

CIT investment ÷ employer retirement assets.

That denominator is the most common conceptual error.

Example: A $1.2 Billion CIT

CIT assets:

$1.2 billion.

Employer X 401(k):

$80 million.

Employer X pension plan:

$28 million.

Combined sponsor-group interest:

$108 million.

Percentage:

$108 million ÷ $1.2 billion = 9%.

The ordinary concentration threshold is satisfied.

If the pension plan adds:

$20 million

and nothing else changes:

Sponsor group:

$128 million.

Fund total:

$1.22 billion.

Percentage:

10.49%.

Now reliance on the ordinary percentage route needs to be reassessed.

Splitting the Investment Across Plans Does Not Change the Test

Suppose the employer wants:

$120 million

in one CIT.

It allocates:

• $70 million to 401(k)
• $50 million to pension plan.

The fund has:

$900 million

after the investments.

Looking separately:

• 401(k) = 7.78%
• pension = 5.56%.

Combined:

13.33%.

The exemption combines interests across plans tied to that sponsoring employer or employee organization.^[2]

Legal form does not reduce sponsor-group concentration.

Why Does the Exemption Care About 10%?

The threshold is not an investment-diversification rule.

It is a conflict-control rule.

When one employer group owns a small percentage of a large pooled fund, that group's party-in-interest relationships are more plausibly incidental to the bank's overall investment process.

When the same sponsor controls 30%, 40% or 60% of the pool, the premise weakens.

A large investor can have:

• bargaining leverage
• relationship influence
• transaction significance.

The percentage cap does not prove independence.

It limits concentration.

The Maintaining Bank Is Not an Ordinary Covered Counterparty

The general route excludes transactions where the party in interest is:

• the bank that maintains the collective fund
• another collective fund maintained by that bank
• an affiliate of the bank.^[2][5][6]

That boundary is fundamental.

The exemption was designed to solve indirect party-in-interest conflicts created by pooled plan participation.

It was not designed as broad permission for the bank to trade freely with itself.

Example: External Counterparty vs. Bank Affiliate

Transaction A

CIT purchases a loan from unrelated Dealer D.

Dealer D is a party in interest only because it provides services to one 4% plan investor.

That fits the type of indirect conflict the general route is designed to address.

Transaction B

CIT buys a loan directly from the bank's lending affiliate.

The seller is part of the bank organization maintaining the fund.

The ordinary Section I(a)(1) protection is not the answer merely because every plan investor is below 10%.^[2]

Another exemption must cover the specific conflict if the transaction is to proceed.

Section I(a) Does Not Eliminate Every Fiduciary Conflict

The basic relief reaches specified restrictions under:

• Section 406(a)
• Section 406(b)(2)
• Section 407(a).^[2]

It does not provide blanket relief from:

Section 406(b)(1).

That provision prohibits a fiduciary from dealing with plan assets in its own interest or for its own account.^[9]

This distinction matters when the bank itself benefits economically from the transaction.

A trade can satisfy the pooled-fund percentage test and still raise a separate self-dealing problem.

A Specialized Short-Term Fund Has an Alternative Route

Section I(a)(1)(B) provides another structure for a specialized collective fund with a policy of investing—and that actually invests—substantially all assets in qualifying short-term obligations.^[2]

The listed examples include:

• corporate obligations
• governmental obligations
• related repurchase agreements
• certificates of deposit
• bankers acceptances
• variable-amount notes of borrowers of prime credit.^[2]

The maturity rule is central.

The obligation must generally have:

• stated maturity of one year or less, or
• maturity within one year from the specialized fund's acquisition date.^[2]

Intended Holding Period Does Not Change Legal Maturity

A portfolio manager buys a:

five-year corporate note

and expects to sell it in 90 days.

That is not the same as buying a qualifying one-year-or-less obligation.

The short-term route is based on the instrument's maturity structure.

Not the manager's forecast of when the position will be sold.

This distinction matters in liquidity funds that reach for yield with longer securities.

OCC Short-Term Investment Fund Rules Are a Separate Layer

OCC Regulation 9.18 has its own detailed requirements for national-bank short-term investment funds, including:

• stable-NAV objectives where applicable
• weighted-average maturity limits
• weighted-average life limits
• liquidity standards
• stress testing
• shadow pricing
• reporting and escalation requirements.^[11]

Those banking rules do not replace PTE 91-38.

A bank STIF can satisfy OCC requirements and still need ERISA prohibited-transaction relief for a particular counterparty.

Conversely, meeting the PTE short-term definition does not prove compliance with every banking-law STIF rule.

Multiple-Employer Plans Have a Separate Test

Section I(a)(2) addresses transactions between a collective fund and an employer—or employer affiliate—whose employees participate in a multiple-employer plan.^[2][3]

The rule combines:

• the multiple-employer plan's percentage in the bank fund
• whether the employer is a substantial employer under the referenced ERISA definition.

For post-1980 transactions, one route applies where:

• the multiple-employer plan's fund interest is no more than 10%
• the employer is not a substantial employer.

Another route can apply above 10% under a stricter substantial-employer formulation.^[2]

This is not the standard same-sponsor calculation.

MEP structure changes the test.

Employer Securities and Real Property Have Their Own Conditions

Section I(a)(3) deals with specified acquisitions, sales or holdings of:

• employer securities
• employer real property

when the collective fund does not satisfy the ordinary general or multiple-employer provisions.^[2]

The special route includes conditions such as:

• no commission to the bank, employer or relevant affiliates for the covered acquisition, sale or lease
• real property suitable or adaptable for different tenants
• geographic dispersion of property leased or held for lease
• bank not affiliated with the security issuer.^[2]

The structure recognizes that pooled ownership can create technical employer-asset issues even when the fund is diversified.

Employer Debt Can Trigger 25% and 50% Tests

For specified issuer obligations acquired by the fund, the exemption can require:

• no more than 25% of the outstanding obligations of the issue to be held by the plan immediately after acquisition
• for a restricted security, at least 50% of the issue to be held by persons independent of the issuer under the stated conditions.^[2]

Those percentages do not replace the 10% CIT participation test.

They measure different risks.

10%

How concentrated is the sponsor group inside the pooled vehicle?

25%

How concentrated is the relevant plan in an employer debt issue?

50%

Is there meaningful independent ownership of a restricted issue?

One transaction can require more than one calculation.

Non-Eligible Individual Account Plans Have Another 10% Limit

For a plan that is not an eligible individual account plan, the special employer-security/property route has an additional condition.

Immediately after acquisition, employer securities and employer real property over which the bank has investment discretion cannot exceed:

10%

of the fair market value of all plan assets over which the bank has such discretion.^[2]

That 10% is a different denominator from:

10% of the collective fund.

Same percentage.

Different test.

A compliance worksheet should label both.

Section I(b) Gives Broader Relief for Certain Service Providers

Section I(b)(1) can provide relief from Sections 406(a)(1)(A)-(D) and 406(b)(1) and (2) for a transaction with a person whose party-in-interest status arises solely because of:

• services to the plan
• specified relationships to a service provider
• both.^[2]

The counterparty must lack the prohibited discretionary authority, control, responsibility or influence over:

• the plan's investment into the fund
• assets held by the fund.^[2]

The counterparty also cannot be an affiliate of the maintaining bank.

This is much more targeted than saying:

service providers are exempt.

Example: Recordkeeper Without Investment Control

Recordkeeper R serves Plan A.

Plan A owns 12% of a bank CIT, so the ordinary 10% route is unavailable.

R has no authority over:

• whether Plan A uses the CIT
• what assets the CIT buys
• how the CIT disposes of investments.

The CIT enters an arm's-length commercial transaction with R.

Section I(b)(1) may provide a separate path if every condition is satisfied.^[2]

If R also controls the underlying portfolio, the premise fails.

Role matters more than job title.

Real-Property Goods and Leases Use a Dollar Test

Section I(b)(2) provides targeted relief for specified transactions involving real property owned by the collective fund.^[2]

The annual amount with the relevant party-in-interest group cannot exceed the larger of:

• $25,000
• 0.5% of collective-fund fair market value on the applicable prior valuation date.^[2]

This threshold applies to that specific category.

It is not a general transaction cap.

Example: $300 Million Real-Estate CIT

Fund value:

$300 million.

0.5%:

$1.5 million.

The larger amount is:

$1.5 million.

For the covered goods or lease arrangements with the same party-in-interest group, that is the relevant annual ceiling under the provision.

If fund value is only:

$3 million,

0.5% is:

$15,000.

The $25,000 floor controls.

Bank Real-Property Management Is an At-Cost Rule

Section I(b)(3) permits the maintaining bank or an affiliate to provide management services for fund-owned real property if compensation does not exceed:

the cost of the services.^[2]

That is stricter than:

reasonable compensation.

Suppose cost is:

$450,000

and an unrelated manager would charge:

$700,000.

Charging the fund $700,000 because it is market rate does not fit an at-cost condition.

The bank needs another exemption if it wants a profit-bearing arrangement not covered by this provision.

Public Accommodations Can Serve Parties in Interest

A collective fund can own:

• hotel
• parking facility
• recreational property
• other place of public accommodation.

Section I(b)(4) allows services, facilities and incidental goods to be furnished to a party in interest on a basis comparable to what is offered to the general public.^[2]

The point is practical.

ERISA should not require an employee of a participating sponsor to avoid a publicly operated hotel because a pooled CIT owns the building.

But preferential insider terms are not what the provision protects.

Every Covered Transaction Needs Arm's-Length Economics

Section III requires that, at entry and at any renewal requiring bank consent, terms are no less favorable to the collective fund than terms generally available in arm's-length transactions between unrelated parties.^[2]

This is the economic center of the exemption.

The pooled structure gives the bank room to transact despite indirect relationships.

It does not permit:

• off-market pricing
• weak collateral
• favorable leases to insiders
• excessive service charges
• poor execution.

The benchmark should fit the transaction type.

Six Years of Records Are Mandatory

The bank generally must preserve records needed to determine whether the exemption conditions were satisfied for:

six years from the transaction date.^[2][4]

The records are available for examination by specified:

• DOL representatives
• IRS representatives
• plan fiduciaries with authority over the fund interest
• contributing employers
• participants
• beneficiaries
• authorized representatives.^[2]

The exemption protects confidential trade-secret and privileged commercial or financial information from the nongovernmental inspection groups.^[2]

Only the Bank Bears the Recordkeeping Penalty Under the Stated Rule

The 1991 amendment restated the record provision to clarify that, if required records are not maintained or made available, the maintaining bank—not another party in interest—is the person exposed to the specified ERISA civil penalty or Code tax consequence for that recordkeeping failure.^[2]

That allocation does not make recordkeeping optional.

It identifies who bears the exemption-specific consequence.

For plan fiduciaries, missing records still make oversight harder.

PTE 91-38 Has a Useful Continuing-Transaction Rule

Section IV(h) addresses transaction timing.^[2]

If the requirements are satisfied when:

• transaction is entered
• transaction is renewed with bank consent
• acquisition is made

the exemption can continue to protect the ongoing transaction or holding.

That prevents ordinary later market movement from automatically destroying relief.

But the rule has an important exception when plan participation rises above the percentage limit because of additional assets allocated by the plan.^[2]

New Contributions Can Break Relief Where Market Movement Does Not

Assume sponsor group owns:

9.5%

of CIT.

The fund later shrinks because unrelated investors redeem.

Sponsor percentage rises to:

10.4%.

That fact pattern is not identical to the sponsor contributing new money.

The rule specifically says relief for a holding can cease when the percentage limit is exceeded and a portion of the excess results from an increase in assets allocated to the fund by the plan; reinvested fund earnings are excluded from that concept.^[2]

A compliance system should track:

• new allocations
• fund redemptions
• valuations
• continuing holdings.

Not just current percentage.

Each Plan Owns a Proportionate Interest in Every Fund Asset

Section IV(i) treats each participating plan as owning the same proportionate undivided interest in each collective-fund asset as its proportionate interest in the total fund on the most recent preceding valuation date.^[2]

If Plan A owns:

6%

of the CIT, PTE analysis treats it as owning:

6%

of each underlying asset.

That attribution rule is why employer-security and party-in-interest relationships matter through the pool.

A plan cannot say:

"We own units, not the underlying bond."

For exemption purposes, the proportional look-through matters.

Separate Investment Accounts Can Be Separate Funds

The definition section contains a useful rule for multi-sleeve trusts.

If a bank-maintained common or collective trust contains separate investment accounts, each account can be treated as a separate:

collective investment fund

rather than testing only the umbrella fund.^[2]

This has real consequences.

Suppose one trust has:

• $2 billion equity sleeve
• $500 million real-estate sleeve
• $300 million short-term sleeve.

A plan invests only in the real-estate account.

The relevant PTE analysis can be performed at that separate investment-account level where the definition applies.

The $2.8 billion umbrella number is not automatically the denominator.

Example: Sleeve-Level 10% Test

Umbrella trust:

$2.8 billion.

Real-estate sleeve:

$500 million.

Employer group invests:

$60 million

only in that sleeve.

Against umbrella:

$60M ÷ $2.8B = 2.14%.

Against the separate investment account:

$60M ÷ $500M = 12%.

If the sleeve is treated as its own collective investment fund under Section IV(e)(2), the second calculation is the relevant one.

A high-level trust report can hide the concentration that matters legally.

Nested CITs Have a Multiplication Rule

Section IV(j) deals directly with a fund-of-funds structure.^[2]

If:

• Plan A owns X% of Fund 1
• Fund 1 owns Y% of Fund 2

Plan A's indirect interest in Fund 2 is:

X% × Y%.

The same multiplication continues through further collective-fund layers.

This is unusually explicit.

The exemption does not allow nested pooling to erase sponsor concentration.

Example: 8% × 30%

Plan A owns:

8%

of Fund 1.

Fund 1 owns:

30%

of Fund 2.

Plan A's indirect Fund 2 interest:

8% × 30% = 2.4%.

Now Fund 2 owns:

40%

of Fund 3.

Plan A's indirect Fund 3 interest:

2.4% × 40% = 0.96%.

The calculation follows the capital through the structure.

This is especially useful for:

• target-date CITs
• multi-asset CITs
• white-label CIT structures
• fund-of-CITs portfolios.

"Maintained by a Bank" Is More Than a Name on the Trust

PTE 91-38 defines a collective investment fund as one maintained by a:

bank or trust company.^[2]

DOL advisory opinions show that the concept is functional and regulatory.

The Department has looked at:

• banking or trust powers
• state or federal supervision
• responsibility for operation
• authority over delegated advisers
• continuing fiduciary responsibility.^[5][6][7]

A marketing label that says:

bank-sponsored CIT

does not by itself establish the legal facts.

A Trust Company Can Qualify

In Advisory Opinion 1996-15A, DOL addressed a trust company subject to state banking supervision that retained an affiliate to manage the fund.^[7]

The Department treated the regulatory status and retained responsibility as central.

The opinion is useful because it rejects a simplistic assumption:

the entity that picks every security must be the bank maintaining the fund.

Investment functions can be delegated.

The maintaining institution still needs to remain the responsible regulated fiduciary under the represented structure.

Delegating Day-to-Day Management Does Not Automatically Break the Exemption

Advisory Opinion 2006-07A involved Chevy Chase Trust Company and an affiliated adviser.^[5]

DOL emphasized that the trust company:

• remained responsible for management and operation
• was subject to banking supervision
• had authority to terminate the adviser
• remained liable for the investment decisions under the represented arrangement.^[5]

DOL concluded the funds would be considered maintained by a bank for PTE purposes under those facts.

That is a useful distinction between:

delegating investment implementation

and:

outsourcing the fund itself.

A U.S. Branch of a Foreign Bank Can Qualify Under the Right Facts

Advisory Opinion 2007-03A addressed a Connecticut-licensed U.S. branch of Bank of Ireland.^[6]

The branch was not a separately incorporated U.S. bank.

DOL focused on whether it was:

• licensed for banking and trust activity
• subject to state regulatory oversight comparable to domestic banks
• subject to federal supervision
• responsible for the collective funds.^[6]

The Department concluded that the branch could be treated as a bank or trust company for Section 408(b)(8) and PTE 91-38 under the represented facts.^[6]

Charter form is relevant.

Regulatory substance is more important.

Section 408(b)(8) Uses a Supervision Requirement Explicitly

The statutory exemption requires the bank or trust company maintaining the fund to be supervised by a:

State or Federal agency.^[8]

That language explains why DOL advisory opinions spend so much time on regulatory status.

The protection is not built merely on manager sophistication.

It assumes a regulated bank-fiduciary structure.

This also differentiates a CIT from an ordinary private fund managed by a registered investment adviser.

OCC Regulation 9.18 Adds a Banking Governance Layer

For national banks, 12 CFR 9.18 imposes a detailed operating framework.^[11]

Among other requirements:

• written fund plan
• board or authorized committee approval
• investment policies
• allocation of income, gains and losses
• fee and expense provisions
• admission and withdrawal rules
• valuation methodology
• proportionate interests
• periodic valuation
• annual audit
• financial reporting
• management-fee limits
• restrictions on bank self-interest.^[11]

These rules help explain why DOL historically tied PTE relief to supervised bank funds.

Proportionate Interests Are Not Just an ERISA Concept

OCC Regulation 9.18 requires each participating account to have a proportionate interest in all fund assets.^[11]

PTE 91-38 separately attributes proportionate ownership to plans for exemption purposes.^[2]

Those two frameworks point in the same direction:

a CIT is pooled.

One participant is not supposed to receive a cherry-picked subset of portfolio assets while others receive a different economic pool unless the legal structure uses separate investment accounts.

That helps distinguish:

• one pooled CIT
• multiple legally distinct sleeves
• a dedicated mandate.

CIT Admission and Withdrawal Need Valuation Discipline

OCC rules generally tie admissions and withdrawals to fund valuation procedures.^[11]

For readily marketable assets, national-bank CIFs must determine value at least quarterly; assets not readily marketable must be valued at least annually, with more detailed rules for specific short-term funds and withdrawal structures.^[11]

A modern daily-valued retirement CIT can operate more frequently.

The key point is governance:

entry and exit are based on defined valuation rules.

That matters to plan fiduciaries comparing a CIT with a mutual fund's statutory NAV process.

A CIT Is Not a Mutual Fund Without a Ticker

Both vehicles pool investor money.

The legal systems differ.

The absence of SEC registration is not evidence of weak regulation.

It means the regulatory framework is different.

PTE 91-38 vs. PTE 90-1

INV-160 covered the insurance-company counterpart.

The similarities are intentional.

DOL raised the bank-fund threshold to 10% after the insurance pooled-account exemption had moved to the same level.^[2][15]

PTE 91-38 vs. QPAM Relief

PTE 84-14 follows a qualifying independent professional asset manager.

PTE 91-38 follows the bank-pooled vehicle.

PTE 91-38 asks

• Is this a bank-maintained collective investment fund?
• Is the counterparty excluded because it is the bank or affiliate?
• Does the sponsor group fit the percentage condition or another PTE route?
• Are transaction terms arm's length?

PTE 84-14 asks

• Does the manager satisfy QPAM status?
• Did the QPAM independently negotiate or decide the transaction?
• Is the counterparty related to the QPAM?
• Are the plan-sponsor and other QPAM conditions met?

A bank CIT does not need QPAM status as a condition of PTE 91-38.

A manager can sometimes have more than one available exemption.

The file should identify which one is actually being used.

PTE 91-38 Does Not Exempt the Bank's Decision to Hire Its Affiliate Automatically

Advisory Opinion 2006-07A is useful for what DOL did not decide.^[5]

The Department concluded the trust company could be treated as maintaining the fund despite delegating investment functions to an affiliate.

It expressly did not opine on whether:

• selecting the affiliate
• paying the affiliate
• related transactions

violated Section 406 or satisfied another exemption.^[5]

That boundary is important.

Maintained by a bank answers vehicle status.

It does not cleanse every affiliate arrangement inside the management chain.

The 1991 Correction Was Narrow

The November 1991 correction changed two cross-references in Section IV(f), the definition of multiple employer plan.^[3]

It did not rewrite:

• the 10% threshold
• the bank-affiliate exclusion
• the arm's-length condition
• the six-year records rule.

A current article should cite the correction because it is part of the exemption's formal history.

It should not imply that 1991 produced two materially different economic versions.

The 2002 Amendment Clarified Which Plans Are Included

PTE 2002-13 clarified references to:

employee benefit plan

and:

plan

across several class exemptions, including PTE 91-38, to include plans described under ERISA and/or Code Section 4975 as applicable.^[6][12]

That matters for:

• IRAs
• Keogh arrangements
• other Code-covered plans

when the relevant exemption language reaches them.

It does not mean every investment vehicle accepts every type of account.

Fund eligibility remains separate.

PTE 91-38 Was Not Rewritten by the 2016 or 2024 Advice Packages

The recent fiduciary-advice rulemakings created difficult current-law questions for exemptions such as:

• PTE 77-4
• PTE 80-83
• PTE 83-1
• PTE 84-24
• PTE 86-128.

PTE 91-38 was not part of those mass advice-amendment lists.

Its modern framework remains centered on:

• PTE 80-51
• the 1991 amendment/redesignation
• the technical correction
• the 2002 plan clarification
• later DOL advisory interpretations.^{[1][2][3][12]}

That makes its current legal baseline comparatively stable.

The Current Information Collection Is Active Through May 2028

OIRA lists:

Bank Collective Investment Funds; Prohibited Transaction Class Exemption 1991-38

under OMB Control Number:

1210-0082.^[4]

Status:

Active.

OIRA approved the latest extension without change on:

May 1, 2025.

Current expiration:

May 31, 2028.^[4]

The abstract describes the same 10% structure and recordkeeping requirement used in the exemption.^[4]

May 31, 2028 Is Not the Exemption's Expiration Date

That date applies to the Paperwork Reduction Act approval for the information collection.

It does not state that PTE 91-38 terminates in May 2028.

DOL can renew the collection.

Track separately:

• legal status of exemption
• OMB approval of compliance paperwork.

Conflating them creates false deadlines.

Common/Collective Trusts Can Be Direct Filing Entities

DOL reporting guidance recognizes common/collective trusts as Direct Filing Entities for Form 5500 purposes.^[14]

That can reduce duplicative reporting for participating plans where the applicable filing rules are followed.

The reporting concept is consistent with the economic structure:

• many plans
• one pooled vehicle
• one underlying portfolio.

A CCT's DFE status does not itself prove PTE 91-38 eligibility.

Reporting law and prohibited-transaction relief ask different questions.

Passing the PTE Does Not Make the CIT Prudent

ERISA Section 404 remains separate.^[10]

A plan fiduciary selecting a CIT should still evaluate:

• investment mandate
• benchmark
• fees
• manager
• performance
• risk
• liquidity
• valuation
• securities lending
• derivatives
• withdrawal terms
• operational controls
• portability
• conflicts.^[11]

PTE 91-38 solves specific legal friction created by pooled plan assets.

It does not turn a weak fund into a good investment.

A Low-Cost CIT Can Still Be the Wrong Vehicle

Suppose CIT fee:

0.08%.

Comparable mutual fund:

0.14%.

Savings:

6 basis points.

On:

$100 million

that is:

$60,000 per year.

The fee advantage is real.

But the plan should also evaluate:

• recordkeeper compatibility
• trading cutoff
• withdrawal notice
• valuation
• participant communications
• manager transition risk
• fund portability.

A six-basis-point saving can be outweighed by a costly or restrictive implementation.

A PTE 91-38 File Should Have Three Layers

1. Vehicle file

Document:

• bank/trust-company status
• regulatory supervision
• governing trust/fund plan
• bank responsibility
• delegated adviser structure
• Section 408(b)(8) authorization.

2. Transaction file

Document:

• counterparty
• party-in-interest relationship
• bank/affiliate exclusion
• sponsor-group percentage
• alternate short-term or special route
• pricing evidence
• Section I(b) conditions where used
• employer-security/property analysis
• records.

3. Fiduciary file

Document:

• reason for selecting CIT
• fees
• investment quality
• risk
• liquidity
• alternatives
• ongoing monitoring.

One legal memo rarely does all three jobs well.

The ROIStreet CIT Exemption Map

Plan wants to invest in CIT → Is the fund maintained by a qualifying supervised bank/trust company? → Is the purchase of the fund interest permitted by plan terms or an independent authorized fiduciary? → Is bank compensation reasonable? → Apply Section 408(b)(8) to the entry transaction → Identify underlying CIT transaction → Is counterparty a party in interest to any participating plan? → Is counterparty the maintaining bank, its affiliate or another fund maintained by the bank? → If yes, general PTE 91-38 route is unavailable → If no, aggregate interests of plans maintained by same sponsor group → Test 10% of relevant collective-fund assets → If 10% route fails, test specialized short-term, multiple-employer, employer-asset or Section I(b) route → For a multi-sleeve trust, determine whether the relevant sleeve has separate-fund status under Section IV(e)(2) → For nested CITs, multiply indirect ownership through each layer → Benchmark terms against unrelated-party arm's-length economics → Preserve six-year records → Re-test fiduciary prudence independently

The controlling question is not:

"Is this a CIT?"

It is:

"Which exemption gets the plan into the vehicle, which exemption covers the transaction inside it, and does the bank have the structural and economic evidence to prove the exact route it used?"

Frequently Asked Questions

What does PTE 91-38 cover?

It provides class relief for specified transactions between bank collective investment funds holding plan assets and parties in interest to participating plans, plus specified employer-security and employer-real-property matters, subject to its conditions.^[1][2]

Is it the exemption that allows a 401(k) to invest in a CIT?

Not by itself. ERISA Section 408(b)(8) supplies the statutory route for buying or selling an interest in a qualifying bank or trust-company pool when its conditions are met.^[8]

What does Section 408(b)(8) require?

The transaction must involve purchase or sale of a fund interest, the bank or trust company must receive no more than reasonable compensation, and the investment must be expressly permitted by the plan instrument or an independent authorized fiduciary.^[8]

What is the current general percentage limit?

For transactions on or after July 1, 1990, the ordinary route generally uses a 10% limit measured against total assets of the relevant collective investment fund.^[2]

Are plans sponsored by the same employer aggregated?

Yes. The calculation combines the investing plan with other plans tied to the same sponsoring employer or employee organization.^[2]

Can the CIT transact freely with the bank maintaining it?

Not under the ordinary general route. The maintaining bank, its affiliates and other collective funds maintained by that bank are excluded counterparties.^[2]

Does the exemption cover Section 406(b)(1)?

The general Section I(a) relief does not provide blanket Section 406(b)(1) self-dealing relief.^[2][9] Certain targeted Section I(b) provisions have different coverage.

Is there a short-term-fund alternative?

Yes. A specialized collective fund that has a policy of investing, and actually invests, substantially all assets in qualifying one-year-or-less obligations can use the alternative described in Section I(a)(1)(B).^[2]

Can a five-year note qualify because the manager plans to sell it in three months?

Expected holding period alone does not satisfy the exemption's maturity framework.

What is the real-property transaction threshold?

For the specified goods and lease provision, compare $25,000 with 0.5% of the collective fund's fair market value; the larger amount is the applicable annual threshold for the covered counterparty group.^[2]

Can the bank manage CIT-owned real estate for a profit?

The specific Section I(b)(3) relief caps compensation for the maintaining bank or affiliate at the cost of those services.^[2]

Are participants treated as owning underlying CIT assets?

For PTE 91-38, each participating plan is attributed a proportionate undivided interest in each underlying asset based on its proportionate fund interest on the most recent preceding valuation date.^[2]

How are nested CITs treated?

The plan's indirect percentage in the second fund is calculated by multiplying its percentage in the first fund by the first fund's percentage in the second. The calculation continues through additional collective-fund layers.^[2]

Is a multi-sleeve CIT tested at the umbrella level?

Not always. When the bank trust contains separate investment accounts, Section IV(e)(2) can treat each sleeve as its own fund for exemption testing.^[2]

Can a trust company qualify as the maintaining bank?

Potentially. DOL advisory opinions focus on regulatory supervision, banking/trust authority, responsibility for the fund and the facts of any delegation.^[5][6][7]

Can a bank delegate portfolio management?

Yes under appropriate facts. DOL has concluded that delegation does not necessarily prevent the regulated trustee from maintaining the fund when the trustee retains supervisory responsibility, termination authority and responsibility for the fund.^[5][6]

Can a U.S. branch of a foreign bank qualify?

DOL concluded in Advisory Opinion 2007-03A that a properly licensed and supervised U.S. branch could qualify under the represented facts.^[6]

Does OCC Regulation 9.18 replace PTE 91-38?

No. Regulation 9.18 governs national-bank administration of collective investment funds. PTE 91-38 addresses specified ERISA prohibited transactions. Both can apply to the same vehicle.^[2][11]

What is the difference from PTE 90-1?

PTE 91-38 covers bank collective investment funds. PTE 90-1 is the parallel exemption for insurance company pooled separate accounts.^[1][15]

Is QPAM status required?

No. PTE 91-38 is a separate vehicle-based exemption. A bank or manager may have other available exemption routes, but QPAM status is not a condition of PTE 91-38 itself.

Was the exemption corrected after 1991?

Yes. A November 1991 notice corrected two cross-references in the multiple-employer-plan definition.^[3]

Was it clarified in 2002?

Yes. PTE 2002-13 clarified plan terminology across this and other class exemptions.^[12]

Is the exemption still active?

DOL currently lists PTE 1991-38, and OIRA shows its information collection under OMB Control No. 1210-0082 as active through May 31, 2028.^[1][4]

Does May 31, 2028 mean the exemption expires?

No. That date concerns the current OMB approval of the information collection, not automatic termination of the substantive exemption.^[4]

Does satisfying PTE 91-38 prove the CIT is prudent?

No. ERISA Section 404 fiduciary duties remain separate.^[10]

Sources & References

1. U.S. Department of Labor — Employee Benefits Security Administration: Class Exemptions — Bank Collective Investment Funds, PTE 1991-38 — https://www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/exemptions/class
2. U.S. Department of Labor / Federal Register: PTE 91-38 — Amendment to PTE 80-51 Involving Bank Collective Investment Funds, 56 FR 31966 (July 12, 1991) — https://archives.federalregister.gov/issue_slice/1991/7/12/31965-31970.pdf
3. U.S. Department of Labor / Federal Register: PTE 91-38 Technical Correction, 56 FR 59299 (November 25, 1991) — https://archives.federalregister.gov/issue_slice/1991/11/25/59298-59301.pdf
4. Office of Information and Regulatory Affairs: Bank Collective Investment Funds — PTE 91-38, OMB Control No. 1210-0082, approved May 1, 2025 — https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202411-1210-004
5. U.S. Department of Labor — Employee Benefits Security Administration: Advisory Opinion 2006-07A — PTE 91-38 — https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/2006-07a
6. U.S. Department of Labor — Employee Benefits Security Administration: Advisory Opinion 2007-03A — ERISA Section 408(b)(8) and PTE 91-38 — https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/2007-03a
7. U.S. Department of Labor — Employee Benefits Security Administration: Advisory Opinion 1996-15A — https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/1996-15a
8. Legal Information Institute / U.S. Code: 29 U.S.C. §1108 — Exemptions From Prohibited Transactions — https://www.law.cornell.edu/uscode/text/29/1108
9. Legal Information Institute / U.S. Code: 29 U.S.C. §1106 — Prohibited Transactions — https://www.law.cornell.edu/uscode/text/29/1106
10. Legal Information Institute / U.S. Code: 29 U.S.C. §1104 — Fiduciary Duties — https://www.law.cornell.edu/uscode/text/29/1104
11. Electronic Code of Federal Regulations / Legal Information Institute: 12 CFR §9.18 — Collective Investment Funds — https://www.law.cornell.edu/cfr/text/12/9.18
12. U.S. Department of Labor / Federal Register: PTE 2002-13 — Amendment Clarifying the Term Plan, 67 FR 9483 (March 1, 2002) — https://www.govinfo.gov/content/pkg/FR-2002-03-01/pdf/FR-2002-03-01.pdf
13. Electronic Code of Federal Regulations / Legal Information Institute: 29 CFR §2510.3-101 — Definition of Plan Assets—Plan Investments — https://www.law.cornell.edu/cfr/text/29/2510.3-101
14. U.S. Department of Labor — Employee Benefits Security Administration: Reporting and Disclosure Guide for Employee Benefit Plans — Direct Filing Entities — https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/publications/reporting-and-disclosure-guide-for-employee-benefit-plans
15. U.S. Department of Labor / Federal Register: PTE 90-1 — Insurance Company Pooled Separate Accounts, 55 FR 2891 (January 29, 1990) — https://archives.federalregister.gov/issue_slice/1990/1/29/2889-2894.pdf

Educational Disclaimer

ROIStreet publishes educational content about retirement-plan fiduciary duties, collective investment trusts, bank pooled funds and ERISA prohibited-transaction exemptions. This article is not legal, fiduciary, banking, securities, tax, investment or plan-administration advice. PTE 91-38 is highly fact-specific. Availability depends on the legal vehicle, maintaining institution, regulatory supervision, participating-plan relationships, sponsor-group concentration, counterparty identity, bank affiliations, short-term-fund status, employer securities or real property, pricing, delegated management, nested-fund structure, valuation timing and records. Satisfying a prohibited-transaction exemption does not establish that a CIT or any underlying transaction is prudent, loyal, reasonably priced or appropriate for a retirement plan.

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