Final answer:
The permitted transaction according to Section 406 of ERISA is loans to plan participants subject to certain restrictions. This is in place while leasing, sale, or credit extension with a party-in-interest are generally prohibited to protect employee benefit plans from conflicts of interest.
Step-by-step explanation:
The question you've asked relates to Section 406 of the Employee Retirement Income Security Act (ERISA), which outlines prohibited transactions to protect employee benefit plans from conflicts of interest. Specifically, this section of the law generally disallows transactions between a plan and a party-in-interest to avoid self-dealing and imprudent investments.
Among the options presented:
- Leasing of plan property to a party-in-interest other than the employer is typically prohibited.
- Sale of plan property to a party-in-interest is generally prohibited.
- An extension of credit from a party-in-interest to the plan is usually prohibited.
- Loans to plan participants subject to certain restrictions are allowed. This is because ERISA permits loans to participants as long as they are available to all participants on a nondiscriminatory basis and meet other regulatory requirements.
Pension insurance and other types of insurance such as deposit insurance and workman's compensation insurance are distinct from ERISA prohibitions; they provide safety nets for pension benefits, bank deposits, and on-the-job injuries, respectively.