What authorizes a plan to offer participant loans under ERISA?

The authority for a plan to offer participant loans under the Employee Retirement Income Security Act (ERISA) is primarily grounded in the statutory exemption provided in section 408 of ERISA. This section outlines specific instances where transactions that might normally be prohibited can be permissible, provided they meet certain conditions designed to protect participants' interests.

Section 408 allows for certain transactions involving plan assets that would otherwise be deemed as prohibited transactions under the act, thereby enabling plans to facilitate loans to their participants. These loans can help participants address short-term financial needs while maintaining their retirement savings.

The other options or exemptions, while relevant to certain transactions or advisory interpretations, do not specifically authorize plans to offer loans in the same direct manner as section 408. For instance, while a Prohibited Transaction Class Exemption could allow for certain activities that would normally be prohibited, it does not serve to specifically authorize participant loans under ERISA. Understanding the clear legislative framework established by section 408 makes it the correct reference point for this question.