What is one requirement for an employee benefit plan to permit prohibited transactions?

For an employee benefit plan to permit prohibited transactions, obtaining approval by the Trust Committee is a fundamental requirement. The Trust Committee plays a crucial role in overseeing the management and operations of the trust that holds the plan's assets. Their approval is necessary to ensure that any transactions that might otherwise be considered prohibited under the Employee Retirement Income Security Act (ERISA) comply with the plan’s trust documents and fiduciary standards.

This oversight is essential to protect the interests of plan participants and beneficiaries, ensuring that transactions are conducted in a manner that is transparent, fair, and beneficial to all parties involved. The approval process involves careful consideration of the potential implications of the transactions on the overall health and integrity of the benefit plan, aligning with fiduciary responsibilities.

While other options like annual audits or approvals by external entities certainly have their significance in maintaining the integrity of the plan, they do not directly address the specific requirement for permitting prohibited transactions as stipulated under ERISA. Therefore, the Trust Committee's approval is pivotal in this context.