Company is terminating an overfunded DB plan. Plan assets will be used to purchase paid-up annuities for all participants, balance of assets revert to Company. Query: Do all the Prohibited Transaction rules apply to commissions paid on the annuity purchase ?? --- I'm thinking 'the Company is actually paying since the commission merely reduces the reversion amount.' Thanks for any assistance.

I'm not clear on your question. You start by asking about prohibited transactions but you end up referring to a reduction in the reversion amount. Are you concerned that the IRS might come back asking for a larger excise tax? In my experience they have always accepted the 5330 as filed.

Maybe more importantly, a pure reversion is probably the least cost effective way of dealing with excess assets. Are they aware that there are alternatives ?

Try looking at ERISA Sec. 408(B)(9) which provides for an exemption from the prohibited transaction rules for a plan termination distribution of assets that follow the ERISA asset allocation provisions.

Thanks for the responses....Guess I need be more specific....
If the annuity is purchased from an affiliate of the Plan fiduciary, do all the requirements of PTE 84-24 apply? Can the problem be avoided simply by the Company paying commission expenses directly to affiliated broker?
Thanks, again.