The U.S. Department of Labor has granted a federal exemption allowing the Hawai‘i Pacific Health Retirement Plan to sell a Honolulu property to Straub Clinic & Hospital for at least $16.247 million, following a review designed to protect the pension plan and its participants.
The exemption, known as Prohibited Transaction Exemption 2026-05, took effect August 21, 2026. It permits the retirement plan to sell property at 888 South King Street to Straub, a wholly controlled subsidiary of Hawai‘i Pacific Health whose employees participate in the pension plan.
Ordinarily, a retirement plan selling an asset to a closely related party can run afoul of prohibited-transaction provisions under the Employee Retirement Income Security Act, or ERISA. The Labor Department determined that the transaction could proceed if extensive conditions intended to safeguard the retirement plan are satisfied.
The Sale Must Bring the Retirement Plan at Least $16.247 Million
Under the exemption, Straub cannot simply purchase the property for a predetermined $16.247 million.
The purchase price must be the greater of $16,247,000 or 110% of the property’s appraised value on the date of the sale. The independent fiduciary can also negotiate an even higher price if necessary to determine that the transaction is in the best interest of the retirement plan and its participants.
That appraisal must consider the greater of the property’s fair market value or its “investment value.” Investment value is important in this case because Straub owns adjoining real estate and therefore could derive particular value from acquiring the parcel.
The property currently contains portions of a parking structure and hospital building and is associated with Straub’s plans for development of its medical campus.
An Independent Fiduciary Must Protect the Pension Plan
The exemption gives Central Pacific Bank, serving as the qualified independent fiduciary, significant responsibility for protecting retirement-plan participants.
Central Pacific Bank has sole authority to approve the sale and must determine whether proceeding is prudent. It must review the independent appraisal, approve the valuation methodology, oversee the transaction and negotiate a higher price if necessary.
The plan also cannot pay the costs associated with the transaction, including brokerage commissions, appraisal expenses and other sale-related fees.
Additionally, the terms must be at least as favorable to the retirement plan as those it could obtain through an arm’s-length transaction with an unrelated party.
Those safeguards are particularly important because Straub isn’t an unrelated buyer—it is controlled by the same health system that sponsors the retirement plan.
The Deal Has a Longer History Than the $16 Million Sale
The property relationship stretches back decades.
The retirement plan purchased approximately 31,498 square feet of unimproved land in 1969 and entered into a 75-year lease with Straub. A parking garage was subsequently built partly on the retirement plan’s property and partly on Straub’s adjoining land, followed by construction of a hospital building in the 1970s.
Federal records also show that the plan erroneously paid certain property expenses that Straub was responsible for under the lease.
The proposed exemption stated that plan assets were used to pay $496,217 in expenses from 2006 through 2022. Straub previously repaid $315,056 covering expenses and lost earnings for the years then considered within the applicable statute of limitations, and Hawai‘i Pacific Health paid $80,099 in related IRS excise taxes.
Additional Money Must Be Repaid Before the Sale
The final exemption adds an important protection for retirement-plan participants: unresolved property expenses must be addressed before Central Pacific Bank approves the transaction.
Hawai‘i Pacific Health, on behalf of Straub, must repay expenses that the retirement plan erroneously paid from 2006 through 2014, including applicable lost interest. The exemption also requires legally required IRS excise taxes connected with prohibited transactions involving those expenses.
Central Pacific Bank must review the calculations and confirm in writing that the required repayment has been made before approving the sale.
It must then submit a report to the Labor Department explaining whether the sale was in the best interest of participants and beneficiaries and confirming whether the exemption’s conditions were satisfied.
Public Comments Questioned Whether the Property Should Be Sold on the Open Market
The Labor Department’s decision followed a public-comment process after the proposed exemption was published in November 2025.
One significant issue raised during the process was whether putting the property on the open market could generate more money for the retirement plan. The property’s unusual characteristics complicate that question because Straub owns adjoining land and portions of existing facilities cross the property boundaries.
The final exemption nevertheless requires an updated appraisal at the time of sale rather than relying solely on an older valuation. It also preserves Central Pacific Bank’s ability—and responsibility—to demand more than $16.247 million if the updated valuation warrants it.
What Retirement Plan Participants Should Know
The exemption does not mean individual participants’ pension checks are being reduced or that they need to take action to preserve their benefits. Instead, it establishes the conditions under which a pension-plan asset can be sold to a related company.
The Labor Department determined that the exemption is administratively feasible, in the interests of the plan and its participants and beneficiaries, and protective of their rights, provided all of its conditions are followed.
Federal records identify the Hawai‘i Pacific Health Retirement Plan as a defined-benefit plan providing retirement benefits to Hawai‘i Pacific Health and Straub employees. The 2025 proposed exemption reported 8,513 participants and approximately $451.9 million in net assets as of December 31, 2023.
Participants with questions about the exemption can contact the Labor Department’s Employee Benefits Security Administration. The agency lists Nicholas Schroth of the Office of Exemption Determinations at 202-693-8540 as the contact for the matter.
What to Read Next
IRS Proposes New Funding Rules for Traditional Employer Pension Plans
Your Medicare Plan Will Send an Important Letter This Fall — Don’t Throw It Away
90% of Americans Don’t Plan to Wait Until 70 to Claim Social Security
Amanda Blankenship is Chief Editor at District Media, Inc., leading content strategy, quality assurance, and editorial operations across high-traffic personal finance sites like SavingAdvice.com and CleverDude.com. A Wingate University graduate with a BA in Communications (Journalism focus), she brings over a decade of experience in digital publishing, writing, and team leadership in the personal finance space.
Read More
For millions of retirees, Medicare Advantage plans seem like the perfect solution–affordable premiums, bundled benefits,…
For some people, New Year’s Day is just another day to make promises they probably…
We never really value our health until it fails us. And then we find out…
If the company that you work for has a 401k, you should take advantage of…
Retirement law is supposed to protect people. It’s meant to ensure that, after decades of…
Dear Dave, My husband recently opened his own commercial painting company. We know he will…
Comments