What Is PTE 95-60 for a 401(k) Plan?

PTE 95-60 is the class exemption for insurance company general accounts when retirement plans have contract interests in those accounts. Its most important calculation is frequently misunderstood. The 10% test does not ask what percentage of the insurer's investment portfolio a plan owns. It compares the insurance liabilities associated with a sponsor group's contracts against a denominator built from the insurer's general-account liabilities and surplus, with separate-account liabilities carved out.^[1][2]

That difference separates PTE 95-60 from the pooled-vehicle exemptions covered in INV-160 and INV-161.

A pooled separate account has participant ownership in a defined pool.

A bank CIT has proportionate interests in a defined fund.

A general account is the insurer's broader balance-sheet pool.

The legal analysis therefore starts earlier:

Are the underlying general-account assets plan assets at all?

Plan-Asset Status Comes Before Exemption Analysis

A prohibited-transaction exemption matters only when ERISA's prohibited-transaction rules reach the transaction.

For an insurance contract, that often depends on whether the plan owns:

only a contractual policy right

or is treated as having an ERISA interest in underlying insurer assets.

ERISA Section 401(b)(2) gives special treatment to a:

guaranteed benefit policy.^[4]

To the extent a qualifying policy provides genuinely guaranteed benefits, the plan's assets include the policy but do not, solely because of that policy, include the insurer's underlying assets.^[4]

If the underlying general-account assets are not plan assets, many transaction-level Section 406 issues never arise in the first place.

The broader plan-asset regulation reinforces the same sequencing principle: the legal wrapper does not answer plan-asset status without applying the governing rule and exception.^[11]

PTE 95-60 is therefore not step one.

Calling a Contract "Guaranteed" Does Not Decide the Question

ERISA defines a guaranteed benefit policy by substance.

The Supreme Court made that clear in *John Hancock Mutual Life Insurance Co. v. Harris Trust & Savings Bank*.^[3]

The contract before the Court was a participating group annuity.

Some benefits were guaranteed.

Other money sat in what the decision called:

free funds.

Those free funds did not carry the kind of genuine benefit guarantee necessary to fit the statutory exclusion.

The Court held that the free funds were plan assets and that the insurer's management of them was subject to ERISA fiduciary standards.^[3]

The product label did not control.

The allocation of investment risk did.

Harris Trust Is Why General-Account Plan Assets Became a Major Issue

The practical problem after *Harris Trust* was significant.

Insurance general accounts combine premiums and other funds supporting many obligations.

An insurer can have:

• pension contracts
• life insurance obligations
• disability contracts
• individual annuities
• corporate liabilities
• shareholder interests

supported by one general account.

If assets attributable to one ERISA contract are plan assets, ordinary insurer transactions can become transactions involving ERISA fiduciary duties and parties in interest.

PTE 95-60, granted in 1995, addressed the prohibited-transaction side of that problem.^[1][2][3]

Congress then addressed part of the plan-asset problem separately.

ERISA Section 401(c) Solves a Different Problem

In 1996, Congress added ERISA Section 401(c).^[4]

It directed DOL to issue rules clarifying when insurer general-account assets supporting certain older policies would be treated as plan assets.

DOL's regulation is now at:

29 CFR 2550.401c-1.^[5]

The rule is historically limited.

Its core general-account framework applies to qualifying:

Transition Policies

issued on or before:

December 31, 1998.^[4][5]

That date matters.

A fiduciary should not take a rule written for legacy policies and apply it casually to a contract issued in 2026.

What Does the Transition Policy Regulation Do?

For a qualifying Transition Policy, the regulation can provide that the plan's assets include the policy but not the insurer's underlying general-account assets if the insurer satisfies specified requirements.^[5]

Those requirements include protections involving:

• independent fiduciary authorization
• policyholder disclosures
• allocation of income and expenses
• actual returns
• information about separate-account alternatives
• description of differing risks
• prudent insurer management of general-account assets.^[4][5]

The regulation is not another name for PTE 95-60.

It is a plan-asset rule.

Three Questions Should Be Kept Separate

Question 1: Is the policy a guaranteed benefit policy?

If yes, the statutory exclusion in Section 401(b)(2) can apply to the guaranteed component.^[4]

Question 2: Is this a qualifying Transition Policy?

If so, Section 401(c) and 29 CFR 2550.401c-1 can affect whether underlying general-account assets are plan assets.^[4][5]

Question 3: If ERISA reaches the general-account assets, is the transaction exempt?

That is where PTE 95-60 can matter.^[1][2]

Mixing those three questions produces weak analysis.

A General Account Is the Insurer's Non-Separate-Account Asset Pool

PTE 95-60 defines an insurance company general account as:

all assets of the insurance company that are not legally segregated and allocated to separate accounts under applicable state law.^[2]

That definition is balance-sheet based.

A general account is not created for one plan.

It can support many insurance obligations and ordinary insurer business.

The DOL general-account regulation explains that premiums from multiple lines of business can be commingled and invested together, while separate-account assets are legally segregated.^[5]

That is the core economic distinction.

General-Account Investors Do Not Own Pro Rata Slices Like CIT Investors

In INV-161, a plan holding 6% of a CIT can be attributed a 6% interest in each underlying fund asset for PTE purposes.

PTE 95-60 works differently.

The plan's general-account exposure is measured through the insurer's:

reserve-and-liability amounts attributable to the contracts.

It is not ordinarily described as:

Plan A owns 6% of every corporate bond in the insurer's general account.

The insurer owns the portfolio.

The plan holds contractual rights whose reserve and liability values enter the PTE calculation.

That is why copying a CIT compliance worksheet into a general-account transaction is a category error.

The Ordinary 10% Test Uses the NAIC Annual Statement

Section I(a) uses values defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners.^[2]

The numerator includes reserves and liabilities for the general-account contracts held by or on behalf of:

• the plan
• other plans maintained by the same employer
• plans maintained by qualifying employer affiliates
• plans maintained by the same employee organization.^[2]

The denominator is:

total reserves and liabilities of the general account minus separate-account liabilities plus surplus.^[2]

The result must not exceed:

10%.

The Formula

A practical representation is:

Sponsor-group reserve/liability amount ÷ (eligible general-account liabilities + surplus) ≤ 10%

The numerator and denominator are insurance-accounting quantities.

Not market value of selected securities.

Not contract premium paid.

Not total plan assets.

Not the insurer's total consolidated assets.

Example: $10 Billion General Account

Assume the insurer's NAIC Annual Statement shows:

Eligible general-account liabilities after removing separate-account liabilities:

$9.2 billion

Surplus:

$800 million

Denominator:

$10.0 billion

Reserve/liability amount attributable to Employer A's 401(k) contract:

$600 million

Corresponding amount for Employer A's pension contract:

$250 million

Combined sponsor-group amount:

$850 million

Percentage:

$850M ÷ $10.0B = 8.5%

The ordinary Section I(a) percentage condition is satisfied.

That does not finish the PTE analysis.

It gets through one gate.

Related Plans Cannot Be Tested in Isolation

Change the example.

Employer A 401(k):

$650 million

Employer A pension plan:

$500 million

Denominator:

$10 billion

Each contract looked at separately:

• 401(k): 6.5%
• pension: 5.0%.

Combined:

11.5%.

The sponsor group exceeds the general 10% condition.^[2]

Splitting one employer's insurance exposure among several plans does not reduce the relationship the exemption is measuring.

Employer Affiliates Matter Too

PTE 95-60 does not stop aggregation at plans sponsored by the exact same legal entity.

Section I(a) also reaches plans maintained by an:

affiliate

of the employer as defined by the exemption.^[2]

That is important in corporate groups.

A parent, subsidiary or controlled entity can sponsor a separate retirement plan while still being part of the aggregation analysis.

The compliance file should identify the employer family before calculating the percentage.

The Denominator Is Not "General Account Assets"

This deserves emphasis.

PTE 90-1 says:

pooled separate-account assets.

PTE 91-38 says:

collective-fund assets.

The general-account exemption instead uses an NAIC-based liability-and-surplus denominator, with separate-account liabilities removed.^[2][13][14]

Those are not interchangeable denominators.

A transaction team using a source-of-funds representation should confirm that the number came from the insurer's NAIC statement and reflects the PTE's accounting definition.

Separate-Account Liabilities Are Removed

An insurer can have billions of dollars in separate accounts.

Those liabilities do not belong in the ordinary PTE 95-60 denominator.^[2]

That makes sense.

Separate accounts have their own segregated asset structures and can be governed by different ERISA rules and exemptions.

Including them would make the general account appear artificially larger for the 10% test.

The exemption keeps the structures separate.

Surplus Is Added

The denominator includes:

surplus

shown in the NAIC Annual Statement.^[2]

Suppose:

General-account reserves and liabilities:

$18 billion

Separate-account liabilities already excluded.

Surplus:

$2 billion

Relevant denominator:

$20 billion

not $18 billion.

If sponsor-group contract reserves equal $1.9 billion:

• against $18B: 10.56%
• against $20B: 9.5%.

Using the correct denominator can change the result.

Coinsurance Reinsurance Does Not Shrink the Numerator

The exemption contains a specific accounting rule.

For the percentage calculation, reserves and liabilities for the plan contracts are determined:

before reduction for credits attributable to reinsurance ceded on a coinsurance basis.^[2]

That prevents the insurer from lowering the sponsor-group numerator simply by shifting part of the insurance obligation through a coinsurance arrangement.

The relevant economic exposure is measured before that credit.

Example: Reinsurance Credit

Plan-related gross reserve and liability amount:

$1.0 billion

Coinsurance reinsurance credit:

$300 million

Net accounting amount after credit might appear:

$700 million

For PTE 95-60's percentage calculation, the relevant amount remains:

$1.0 billion

under the stated rule.^[2]

If denominator is $9 billion:

Gross basis:

11.11%

Net basis:

7.78%

Using the net figure could wrongly move the transaction from outside to inside the ordinary exemption.

The Modern Percentage Test Dates to July 12, 1995

For the percentage condition, the exemption draws the line at transactions occurring on or after:

July 12, 1995.^[2]

The exemption has a broader effective-date history reaching back to January 1, 1975 for covered transactions and holdings.^[2]

For current work, the practical point is simpler:

the modern Section I(a) general route uses the 10% test.

Historical pre-1995 transactions can require reading the transition language directly.

What Does Section I(a) Exempt?

The basic exemption provides relief from specified restrictions in:

• ERISA Section 406(a)
• Section 407(a)
• corresponding Code prohibited-transaction taxes

for qualifying general-account transactions with parties in interest and for specified acquisitions or holdings of employer securities or employer real property.^[2][7][9]

It is broad party-in-interest relief.

It is not unlimited fiduciary self-dealing relief.

The statutory provisions covered matter.

The Insurer Is Not an Ordinary Covered Counterparty

Section IV imposes three general conditions.^[2]

The third is a major boundary.

The party in interest cannot be:

• the insurance company
• a pooled separate account of that insurer
• an affiliate of the insurer.^[2]

That means the exemption does not turn the general account into a free internal-trading vehicle.

A transaction between the general account and an insurer affiliate needs another legal route if ERISA prohibits it.

Example: External Issuer vs. Insurer Affiliate

External transaction

General account buys debt issued by Company X.

Company X has party-in-interest status because of services it provides to one plan contractholder.

The insurer is unrelated to Company X.

The sponsor-group reserve percentage is 6%.

PTE 95-60 can be relevant.

Internal transaction

General account buys assets from the insurer's wholly owned finance subsidiary.

The affiliate exclusion blocks reliance on the ordinary general conditions for that counterparty.^[2]

A 2% sponsor-group percentage does not cure the affiliate problem.

Arm's-Length Economics Are Mandatory

At transaction entry and any later renewal requiring insurer consent, terms must be at least as favorable to the general account as those generally available in arm's-length transactions between unrelated parties.^[2]

That condition should be tested using asset-specific evidence.

Bond

• price
• spread
• comparable issues
• liquidity.

Loan

• coupon
• fees
• collateral
• covenants
• maturity.

Real estate

• rent
• cap rate
• tenant concessions
• market appraisal.

Service contract

• scope
• fee
• termination rights.

The fact that a counterparty is permitted does not make its economics acceptable.

The Anti-Benefit-Arrangement Condition Is More Important Than It Looks

Section IV(b) says the transaction cannot be part of an:

agreement, arrangement or understanding whose design is to favor a party in interest.^[2]

This prevents mechanical compliance.

Imagine the sponsor-group percentage is:

4%.

The insurer buys a weak private note from the plan sponsor because the sponsor needs liquidity and the insurer wants to preserve the commercial relationship.

The percentage is below 10%.

Pricing might even be defensible.

If the transaction is part of an arrangement designed to benefit the party in interest, the general condition fails.

The exemption is not a permission slip for relationship lending.

A Source-of-Funds Representation Is Not the Entire PTE

Private note and credit agreements often ask an insurance-company lender to represent that its source is a PTE 95-60 general account and that no plan group exceeds 10%.

That representation is useful.

It often captures only one part of the exemption.

The insurer still needs to consider:

• party-in-interest identity
• affiliate exclusion
• arm's-length terms
• anti-benefit arrangement
• transaction type
• other applicable conditions.

A contract clause is evidence.

It is not legal analysis by itself.

Section I(b) Handles Excess Employer-Asset Holdings Outside the General Account

Section I(b) addresses a technical aggregation problem.^[2]

A plan can directly own:

• qualifying employer securities
• qualifying employer real property.

The insurer general account can also hold employer securities or employer real property.

ERISA Section 407 can require aggregation.^[9]

The plan's direct holding might exceed a statutory limit solely because its general-account interest causes attributed employer assets to count against it.

PTE 95-60 provides targeted relief where:

• the violation exists solely because of that aggregation
• the Section I(a) percentage limitation is satisfied.^[2]

This Is Not a General Employer-Stock Exemption

Suppose a 401(k) directly holds an excessive amount of employer stock for reasons unrelated to its general-account contract.

Section I(b) does not rescue that ordinary concentration problem.

The relief is aimed at an excess that exists:

solely because

direct holdings are aggregated with employer assets in the insurance company general account.^[2]

Causation is part of the exemption.

Section II(a) Addresses Certain General-Account Service Providers

A vendor can acquire party-in-interest status through services to the insurer's general account in which a plan has a contract interest, or through a specified relationship to that vendor.^[2]

Section II(a) gives relief from specified Section 406(a) restrictions for transactions that otherwise become prohibited solely because of that status, subject to the general conditions.^[2]

This recognizes a practical reality.

A large insurer general account uses many professional and operational vendors.

If every vendor relationship automatically contaminated every ordinary general-account transaction, operating the portfolio would be difficult.

The exemption narrows that effect.

Service-Provider Relief Is Not Blanket Self-Dealing Relief

Section II(a) relieves specified Section 406(a)(1)(A)-(D) restrictions.^[2]

It does not say:

all fiduciary conflicts are exempt.

If the service provider:

• controls the investment decision
• receives undisclosed compensation
• acts for itself
• uses its role to favor another party

other prohibited-transaction rules can remain relevant.^[7]

The reason a person is a party in interest matters.

So does the capacity in which it acts.

Section II(b) Covers Public Accommodations

A general account can own real estate used as a public business:

• hotel
• parking facility
• recreational facility
• other accommodation.

Section II(b) provides relief when the facility furnishes services, facilities and incidental goods to a party in interest on terms comparable to the general public.^[2]

The rule prevents absurd results.

An employee of a plan sponsor should not have to avoid a hotel merely because the insurer's general account owns it.

Parity is the protection.

Example: Hotel Owned by the General Account

Public rate:

$325 per night.

Executive of a company whose plan holds an insurer contract pays:

$325

under normal reservation terms.

That fits the structure of the exemption.

Now change the facts.

The insurer provides:

• free presidential suite
• complimentary event space
• private services

because the employer is a major plan customer.

Comparable-public-treatment logic disappears.

The relationship becomes the point of the benefit.

Section III Is the Most Specialized Part of PTE 95-60

Section III covers transactions connected with:

• servicing
• management
• operation

of qualifying asset pool investment trusts in which the general account owns certificates.^[2]

The trust must be described in:

• PTE 83-1, or
• one of the Underwriter Exemptions defined by PTE 95-60.^[2]

This section reflects the securitization market.

An insurance general account can invest in certificates backed by pools of financial assets, and the underlying trust can contain plan assets for ERISA purposes.

The operating relationships then need prohibited-transaction relief.

Section III Imports Another Exemption's Architecture

A useful way to read the section is:

Start with PTE 83-1 or whichever Underwriter Exemption governs the trust.

Then apply its conditions.

PTE 95-60 makes specific exceptions for the class acquired by the general account.^[2]

That is different from saying:

PTE 95-60 independently defines every eligible securitization.

The general-account exemption piggybacks on a specialized securitization framework.

General Accounts Can Hold a Subordinated Certificate Under Section III

One explicit exception is the requirement that certificates acquired by the general account:

not be subordinated

to other certificates of the same trust.^[2]

Section III says the relevant PTE 83-1 or Underwriter Exemption conditions are met:

except for

that non-subordination requirement as applied to the general-account certificate.^[2]

That is important.

INV-158 explained that ordinary PTE 83-1 acquisition relief is built around non-subordinated plan-held certificates.

PTE 95-60 Section III creates a different route for an insurance general account.

Why Would DOL Permit Subordinated General-Account Classes?

A general account is a diversified insurer balance sheet governed by:

• state insurance regulation
• capital and reserve requirements
• insurer investment rules
• portfolio management
• contract obligations.

DOL designed Section III to allow general accounts to participate in securitization structures with certificate classes that would not necessarily satisfy the ordinary plan-investor architecture of PTE 83-1.

That does not make subordinate bonds low risk.

It means the prohibited-transaction exemption recognizes a different institutional investor.

Credit analysis remains separate.

The 2022 Amendment Is Easy to Misread

Before 2022, Section III referred to a credit-rating requirement drawn from the applicable securitization exemption.

DOL amended the text as part of a broader project removing regulatory references to credit ratings.^[2]

Effective:

May 9, 2022

the clause refers instead to:

the credit quality specified by the governing Underwriter Exemption.^[2]

The wording changed.

The architecture did not.

The Credit-Quality Clause Is Inside an Exception

This is the key drafting detail.

Section III(a)(2) starts with the conditions of PTE 83-1 or whichever Underwriter Exemption applies to the trust:

except for the requirements that

the general-account certificates:

1. are not subordinated
2. satisfy the credit-quality condition that the applicable Underwriter Exemption would otherwise impose.^[2]

So the 2022 amendment should not be summarized as:

"PTE 95-60 now requires general-account certificates to satisfy a new credit-quality test."

The updated phrase describes a condition that Section III expressly excepts for the general-account certificate.

That distinction is easy to lose when reading the amendment in isolation.

2022 Did Not Declare Lower-Quality Certificates Prudent

Even though Section III can provide prohibited-transaction relief without the general-account certificate satisfying the referenced credit-quality condition, Section 404 analysis remains separate.^[8][10]

An insurer investment team still has to evaluate:

• expected loss
• subordination
• enhancement
• liquidity
• structure
• collateral
• duration
• prepayment
• recovery
• concentration.

PTE relief solves conflict law.

It does not upgrade credit.

Section III Can Protect Trust Operations, Not Just the Initial Purchase

The language reaches transactions connected with:

• servicing
• management
• operation

of the trust.^[2]

That matters because asset-pool trusts create ongoing relationships involving:

• servicers
• trustees
• originators
• swap counterparties
• liquidity providers
• insurers
• other service providers.

The initial certificate trade may be only the first ERISA issue.

Section III is designed around the life of the securitization.

Section III(b) Addresses Plan-Level Service-Provider Status

A plan can itself own certificates issued by a trust that satisfies Section III(a).

A service relationship to that plan—or one of the specified related-person relationships—can then create party-in-interest status.

Section III(b) supplies specified Section 406(a) relief where the prohibited status arises merely from that service-provider relationship and the trust qualifies.^[2]

This is another example of the exemption separating:

incidental relationship

from:

substantive self-dealing.

PTE 95-60 Has a Continuing-Transaction Rule

The definitions section addresses when transactions and holdings are tested.^[2]

If the exemption conditions are satisfied when a transaction is:

• entered into
• renewed with insurer consent
• acquired

the protection can continue for the transaction or holding.

That prevents routine later accounting movement from automatically destroying an exemption.

But there is an important limit tied to the 10% test.

Additional Plan Allocations Can End Relief

For a transaction or holding relying on Section I(a) or I(b), the exemption can cease to apply when the plan's interest exceeds the percentage limit and some of the excess results from an increase in assets allocated to the general account by the plan.^[2]

Reinvestment of general-account earnings is excluded from the definition of new allocated assets for that purpose.^[2]

This makes funding activity important.

A sponsor group cannot lock in an 8% status forever and then keep adding contract value without monitoring the ratio.

Example: Sponsor Group Crosses 10%

Initial denominator:

$20 billion

Sponsor-group reserves and liabilities:

$1.8 billion

Percentage:

9%.

Plan makes additional allocations that increase its relevant reserves and liabilities by:

$400 million

while denominator rises only to:

$20.4 billion.

New percentage:

$2.2B ÷ $20.4B = 10.78%.

The insurer needs to revisit continuing reliance on the percentage-based relief.

The timing rule should be part of compliance monitoring.

The 2002 Amendment Expanded the Plan Definition

PTE 2002-13 amended several class exemptions, including PTE 95-60, to clarify that relevant references to:

employee benefit plan

and:

plan

include plans described in Code Section 4975(e)(1) where applicable.^[6]

That matters for arrangements outside ordinary Title I corporate plans.

A source-of-funds representation should therefore not assume:

ERISA-covered 401(k) only.

The Code prohibited-transaction regime can reach other plan types.

PTE 95-60 Was Not Rewritten by the Fiduciary-Advice Packages

Several exemptions in this RFPP sequence had to be reconstructed after the 2016 and 2024 fiduciary-advice rulemakings were vacated.

PTE 95-60 was not part of those mass amendment lists.

Its current structure is better understood through:

• the 1995 exemption
• the 2002 plan-definition clarification
• the 2022 credit-rating-reference amendment.^[1][2][6]

That makes its current-law status cleaner than PTE 84-24 or PTE 77-4.

The 2022 Amendment Is the Current Textual Update

DOL's class-exemption page identifies:

Final Amendment: 87 FR 12985.^[1]

The 2022 Federal Register notice reprints the amended PTE 95-60 text.^[2]

The relevant change in this exemption concerned the asset-pool trust section and the removal of obsolete ratings-based wording.

No new sponsor-group percentage was introduced.

The 10% formula remained.

The OMB Number Requires Careful Explanation

DOL's 2022 amendment materials associated PTE 95-60 with:

OMB Control No. 1210-0114.^[2]

OIRA currently lists that control number as:

Disclosures by Insurers to General Account Policyholders.^[12]

Status:

Active.

Latest approval:

October 22, 2024.

Expiration:

October 31, 2027.^[12]

The current OIRA abstract centers on Section 401(c) and Transition Policy disclosures.

That is a reminder that the paperwork history and the PTE's substantive transaction rules overlap institutionally but are not the same legal question.

October 31, 2027 Is Not a PTE Sunset

The OMB date is the expiration of the current information-collection approval.^[12]

It does not say:

PTE 95-60 expires October 31, 2027.

The Department can renew an information collection.

A legal-status calendar should track separately:

• PTE amendments
• Section 401(c) regulation
• OMB paperwork approval.

This is the same discipline used in earlier RFPPs.

PTE 95-60 vs. PTE 90-1

Both involve insurance companies.

They use different legal structures.

One cannot be substituted for the other because the insurer happens to manage both.

PTE 95-60 vs. PTE 91-38

PTE 91-38 is a bank collective-fund exemption.

Its 10% denominator is:

collective-fund assets.^[14]

The insurance general-account route uses the NAIC liability base for the general account, removes separate-account liabilities and adds surplus.^[2]

The distinction matters in financing documents.

A lender source-of-funds schedule often offers several alternatives:

• QPAM
• insurance pooled separate account
• bank CIT
• insurance general account.

Each alternative has its own legal measurement.

They are not stylistic choices.

PTE 95-60 vs. QPAM

PTE 84-14 follows a qualified professional asset manager.

PTE 95-60 follows the insurance general account.

General-account route

Ask:

• Is the source an insurance company general account?
• Does the sponsor-group reserve ratio fit the applicable route?
• Is the counterparty insurer-related?
• Are terms arm's length?
• Was the transaction structured to confer a benefit on a party in interest?

QPAM route

Ask:

• Does the manager qualify?
• Did it independently decide the transaction?
• Is the counterparty related to the QPAM?
• Are the QPAM's sponsor and other conditions met?

An insurer might have more than one available route.

The file should identify the one actually relied on.

A General Account Is Not Automatically Safer Than a Separate Account

General-account contracts can provide insurer guarantees.

That can shift investment risk from the plan to the insurer.

But the plan takes:

insurer credit risk.

The DOL general-account regulation expressly discusses differences between general and separate accounts, including insolvency consequences.^[5]

General-account assets can be available to satisfy claims across the insurer's obligations.

Separate-account assets may receive different legal protection depending on policy terms and state law.

The fiduciary should identify which risk is being exchanged for which guarantee.

A Guarantee Is Only as Strong as the Insurer

Suppose a contract promises:

4.5%

for five years.

Comparable market yield:

4.1%.

The extra 40 basis points can look attractive.

The plan still needs to evaluate:

• insurer financial strength
• statutory capital
• asset quality
• duration mismatch
• liquidity
• rating trends
• state guaranty limits where relevant
• contract termination rights.

PTE 95-60 says nothing about whether 4.5% adequately compensates for insurer credit risk.

Contract Liquidity Can Matter More Than Portfolio Liquidity

A plan investing in a CIT often asks:

Can the fund sell its assets?

A plan entering a general-account contract should also ask:

Can the plan exit the contract?

Relevant terms can include:

• book-value withdrawal rules
• market-value adjustments
• installment payouts
• surrender charges
• competing-fund restrictions
• transfer limitations
• benefit-responsive features.

The general account may own highly liquid securities while the plan's contract is economically illiquid.

Vehicle liquidity and contract liquidity are different.

A Strong PTE File Should Have Four Layers

1. Plan-asset file

Determine:

• guaranteed benefit policy?
• Transition Policy?
• modern non-guaranteed general-account interest?
• which underlying assets, if any, are plan assets?

2. Percentage file

Document:

• NAIC Annual Statement
• sponsor-group plans
• employer affiliates
• numerator reserves/liabilities
• reinsurance treatment
• denominator
• surplus
• percentage.

3. Transaction file

Document:

• counterparty
• party-in-interest relationship
• insurer-affiliate check
• pricing
• anti-benefit analysis
• Section I, II or III route
• securitization exemption where relevant.

4. Fiduciary file

Evaluate:

• insurer
• contract
• guarantee
• fees
• liquidity
• alternatives
• expected return
• participant impact.

Each layer answers a different question.

The ROIStreet General-Account Decision Map

Identify the insurance contract → Determine whether benefits are genuinely guaranteed under Section 401(b)(2) → If relevant, determine whether it is a pre-1999 Transition Policy under Section 401(c) → Determine whether underlying general-account assets are plan assets → If prohibited-transaction relief is needed, identify PTE 95-60 transaction route → Pull the insurer's NAIC Annual Statement → Aggregate reserves/liabilities for the plan and qualifying related plans → Use gross amount before coinsurance reinsurance credits → Calculate the NAIC denominator after removing separate-account liabilities and adding surplus → Test 10% where Section I(a) applies → Identify counterparty → Exclude insurer, insurer pooled separate account and insurer affiliate from ordinary general relief → Benchmark economics against unrelated-party terms → Confirm the transaction was not structured to favor a party in interest → Test employer-security/property relief if relevant → Test Section II service-provider or public-accommodation relief if relevant → For asset-pool trusts, map PTE 83-1 or relevant Underwriter Exemption and Section III exceptions → Apply the 2022 credit-language correctly → Monitor later plan allocations that could move the sponsor group above 10% → Document Section 404 prudence and insurer-credit analysis separately

The controlling question is not:

"Does the insurer qualify for PTE 95-60?"

It is:

"Do ERISA's plan-asset rules reach this general-account exposure, does this exact transaction fit the PTE's accounting and counterparty conditions, and would the fiduciary still choose the contract if the prohibited-transaction issue did not exist?"

Frequently Asked Questions

What does PTE 95-60 cover?

It provides class relief for specified transactions between an insurance company general account and parties in interest to plans that hold interests in general-account contracts, as well as specified employer-security, employer-real-property and asset-pool trust transactions.^[1][2]

What is an insurance company general account?

The exemption defines it as insurer assets that are not legally segregated and allocated to separate accounts under applicable state law.^[2]

Is a general account the same as a pooled separate account?

No. A separate account is legally segregated from the insurer's general assets. PTE 90-1 addresses qualifying pooled separate accounts.^[5][13]

Does a plan own a percentage of every general-account asset?

PTE 95-60 does not use the fractional ownership framework used by pooled separate accounts or CITs. Its general percentage test is based on insurance reserves and liabilities.^[2]

What is the 10% formula?

Add the reserve-and-liability amounts attributable to the relevant sponsor group's contracts, then divide by the PTE's NAIC denominator: eligible general-account liabilities plus surplus.^[2]

Are related employer plans aggregated?

Yes. Contracts held by qualifying plans maintained by the same employer or applicable affiliate are combined, as are plans maintained by the same employee organization.^[2]

Does reinsurance reduce the numerator?

Not for coinsurance credits covered by the rule. The relevant reserves and liabilities are measured before reduction for those reinsurance credits.^[2]

When did the current 10% limit begin to apply?

The modern 10% condition applies to transactions on or after July 12, 1995.^[2]

Are general-account assets always ERISA plan assets?

No. The analysis depends on the contract and applicable law. Guaranteed benefit policies receive statutory treatment under Section 401(b)(2), and qualifying older Transition Policies are subject to Section 401(c) and its regulation.^[4][5]

What did Harris Trust decide?

The Supreme Court held that the non-guaranteed free funds under the contract before it were plan assets, making the insurer subject to ERISA fiduciary standards with respect to those funds.^[3]

Does the Section 401(c) regulation apply to new policies?

Its Transition Policy framework is limited to qualifying policies issued on or before December 31, 1998.^[4][5]

Can the general account transact freely with the insurer itself?

Not under the ordinary Section IV conditions. The counterparty cannot be the insurer, an insurer pooled separate account or an insurer affiliate.^[2]

Is being below 10% enough?

No. The transaction must also satisfy other applicable conditions, including arm's-length economics and the anti-favoritism condition in Section IV(b).^[2]

What does Section II cover?

It provides targeted relief for specified service-provider party-in-interest relationships and public accommodations owned by the general account.^[2]

Can employees of a plan sponsor use a hotel owned by the general account?

Section II(b) can apply when services, facilities and incidental goods are furnished on a basis comparable to those available to the general public.^[2]

What does Section III cover?

It provides specified relief for servicing, management and operation of qualifying asset pool investment trusts in which the general account owns certificates.^[2]

Must a Section III certificate be senior?

Not necessarily. Section III expressly excepts the non-subordination requirement for the certificate class acquired by the general account when the other applicable conditions are met.^[2]

What changed in 2022?

DOL replaced the old credit-rating reference in Section III with language tied to the credit-quality condition in the applicable Underwriter Exemption.^[1][2]

Does that mean PTE 95-60 now requires investment-grade certificates?

No. The revised credit-quality language is part of the list of requirements that Section III excepts for the general-account certificate. Prudence and insurer investment standards remain separate.^[2][8]

Was PTE 95-60 amended in 2002?

Yes. PTE 2002-13 clarified plan terminology to include Code Section 4975(e)(1) plans where applicable.^[6]

Was it rewritten in the 2016 or 2024 fiduciary-advice packages?

No. The current DOL class-exemption history identifies the 2022 final amendment rather than those advice-rule packages.^[1]

What is OMB Control No. 1210-0114?

OIRA currently uses it for disclosures by insurers to general-account policyholders, including the Section 401(c) Transition Policy framework. It is active through October 31, 2027.^[12]

Does October 31, 2027 mean PTE 95-60 expires?

No. That date applies to the current information-collection approval, not automatic expiration of the class exemption.^[12]

Does satisfying PTE 95-60 prove the insurance contract is prudent?

No. ERISA Section 404 duties and insurer/contract analysis remain separate.^[8]

Sources & References

1. U.S. Department of Labor — Employee Benefits Security Administration: Class Exemptions — Insurance Company General Accounts, PTE 1995-60 — https://www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/exemptions/class
2. U.S. Department of Labor / Federal Register: Final Amendments Removing Credit Rating References — Consolidated PTE 95-60 Text, 87 FR 12985 (March 8, 2022) — https://www.govinfo.gov/content/pkg/FR-2022-03-08/pdf/2022-04866.pdf
3. Supreme Court of the United States / Legal Information Institute: John Hancock Mutual Life Insurance Co. v. Harris Trust & Savings Bank, 510 U.S. 86 (1993) — https://www.law.cornell.edu/supremecourt/text/510/86
4. Legal Information Institute / U.S. Code: 29 U.S.C. §1101 — Coverage and Insurance General Account Rules — https://www.law.cornell.edu/uscode/text/29/1101
5. Electronic Code of Federal Regulations / Legal Information Institute: 29 CFR §2550.401c-1 — Definition of Plan Assets—Insurance Company General Accounts — https://www.law.cornell.edu/cfr/text/29/2550.401c-1
6. 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/02-4872.pdf
7. Legal Information Institute / U.S. Code: 29 U.S.C. §1106 — Prohibited Transactions — https://www.law.cornell.edu/uscode/text/29/1106
8. Legal Information Institute / U.S. Code: 29 U.S.C. §1104 — Fiduciary Duties — https://www.law.cornell.edu/uscode/text/29/1104
9. Legal Information Institute / U.S. Code: 29 U.S.C. §1107 — Employer Securities and Employer Real Property — https://www.law.cornell.edu/uscode/text/29/1107
10. Legal Information Institute / U.S. Code: 29 U.S.C. §1108 — Exemptions From Prohibited Transactions — https://www.law.cornell.edu/uscode/text/29/1108
11. 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
12. Office of Information and Regulatory Affairs: Disclosures by Insurers to General Account Policyholders — OMB Control No. 1210-0114, approved October 22, 2024 — https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202406-1210-001
13. 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
14. U.S. Department of Labor / Federal Register: PTE 91-38 — Bank Collective Investment Funds, 56 FR 31966 (July 12, 1991) — https://archives.federalregister.gov/issue_slice/1991/7/12/31965-31970.pdf

Educational Disclaimer

ROIStreet publishes educational content about retirement-plan fiduciary duties, insurance company general accounts, annuity contracts, plan assets and ERISA prohibited-transaction exemptions. This article is not legal, fiduciary, insurance, securities, tax, investment or plan-administration advice. PTE 95-60 is highly fact-specific. Availability depends on the contract, plan-asset status, guarantee structure, policy date, insurer, related plans, NAIC reserves and liabilities, surplus, reinsurance, counterparty, insurer affiliations, transaction purpose, pricing, employer securities or real property, securitization structure and current law. An exempt transaction can still involve an imprudent contract, weak insurer credit, poor liquidity or a fiduciary decision that does not satisfy ERISA Section 404.

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