ERISA Clauses for Private Equity Fund
(Limited Partnership Agreement)

Summary

Use these clauses in a limited partnership agreement (LPA) for a private equity fund to address issues arising due to the regulation of retirement plan investments under the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code, and other laws. This template includes practical guidance, drafting notes, an alternate clause, and an optional clause. These provisions help structure the fund to qualify for one or more of the exceptions to the look-through rule for ERISA plan assets under 29 C.F.R. § 2510.3-101 (the Plan Asset Regulation). Under this rule, unless an exception applies, investments in the fund made by certain retirement plans will cause an allocable portion of the fund's assets to be deemed to be plan assets of the investing plan. As a result, the fund's management may become subject to ERISA fiduciary responsibility, and the prohibited transaction rules under ERISA and the Internal Revenue Code may apply. Many funds choose to operate under one of the exceptions to the look-through rule provided by the Plan Asset Regulation—the venture capital operating company exception, the real estate operating company exception, or the 25% (significant participation) test exception. This template contains drafting notes and an alternate clause. Use this template in conjunction with the Limited Partnership Agreement for a Private Equity Fund, available in Practical Guidance's Corporate and M&A module, which contains all provisions of the limited partnership agreement. The article and section numbering provided in this template correspond to the article and section numbering in the Limited Partnership Agreement for a Private Equity Fund. For detailed information on the Plan Asset Regulation and the three exceptions, see Plan Asset Regulation and the Look-Through Rule under ERISA. For ERISA clauses in other fund-related documents, see ERISA Clauses for Private Equity Fund (Private Placement Memorandum), ERISA Clauses for Private Equity Fund (Subscription Agreement), Benefit Plan Investor Side Letter Agreement (Fund Deemed to Hold Plan Assets) and Benefit Plan Investor Side Letter Agreement (Private Equity Fund Meeting 25% Test). For additional related materials, see the Private Equity Fund ERISA Assets Resource Kit. For a full listing of key content covering ERISA retirement plan investments, see ERISA Retirement Plan Investment Resource Kit.