[Federal Register Volume 63, Number 77 (Wednesday, April 22, 1998)]
[Notices]
[Pages 19950-19954]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10692]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Application No. D-10524, et al.]
Proposed Exemptions; Jack Mayesh Wholesale Florist, Inc.
AGENCY: Pension and Welfare Benefits Administration, Labor.
ACTION: Notice of proposed exemptions.
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SUMMARY: This document contains notices of pendency before the
Department of Labor (the Department) of proposed exemptions from
certain of the prohibited transaction restrictions of the Employee
Retirement Income Security Act of 1974 (the Act) and/or the Internal
Revenue Code of 1986 (the Code).
Written Comments and Hearing Requests
All interested persons are invited to submit written comments or
request for a hearing on the pending exemptions, unless otherwise
stated in the Notice of Proposed Exemption, within 45 days from the
date of publication of this Federal Register Notice. Comments and
requests for a hearing should state: (1) The name, address, and
telephone number of the person making the comment or request, and (2)
the nature of the person's interest in the exemption and the manner in
which the person would be adversely affected by the exemption. A
request for a hearing must also state the issues to be addressed and
include a general description of the evidence to be presented at the
hearing.
ADDRESSES: All written comments and request for a hearing (at least
three copies) should be sent to the Pension and Welfare Benefits
Administration, Office of Exemption Determinations, Room N-5649, U.S.
Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C.
20210. Attention: Application No. ______, stated in each Notice of
Proposed Exemption. The applications for exemption and the comments
received will be available for public inspection in the Public
Documents Room of Pension and Welfare Benefits Administration, U.S.
Department of Labor, Room N-5507, 200 Constitution Avenue, N.W.,
Washington, D.C. 20210.
Notice to Interested Persons
Notice of the proposed exemptions will be provided to all
interested persons in the manner agreed upon by the applicant and the
Department within 15 days of the date of publication in the Federal
Register. Such notice shall include a copy of the notice of proposed
exemption as published in the Federal Register and shall inform
interested persons of their right to comment and to request a hearing
(where appropriate).
SUPPLEMENTARY INFORMATION: The proposed exemptions were requested in
applications filed pursuant to section 408(a) of the Act and/or section
4975(c)(2) of the Code, and in accordance with procedures set forth in
29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990).
Effective December 31, 1978, section 102 of Reorganization Plan No. 4
of 1978 (43 FR 47713, October 17, 1978) transferred the authority of
the Secretary of the Treasury to issue exemptions of the type requested
to the Secretary of Labor. Therefore, these notices of proposed
exemption are issued solely by the Department.
The applications contain representations with regard to the
proposed exemptions which are summarized below. Interested persons are
referred to the applications on file with the Department for a complete
statement of the facts and representations.
Jack Mayesh Wholesale Florist, Inc., Profit Sharing Plan (the
Plan), Located in Los Angeles, California
[Application No. D-10524]
Proposed Exemption
The Department is considering granting an exemption under the
authority of section 408(a) of the Act and section 4975(c)(2) of the
Code and in accordance with the procedures set forth in 29 CFR Part
2570, Subpart B (55 FR 32836, 32847, August 10, 1990). If the exemption
is granted, the restrictions of sections 406(a), 406 (b)(1) and (b)(2)
of the Act and the sanctions resulting from the application of section
4975 of the Code, by reason of section 4975(c)(1) (A) through (E) of
the Code, shall not apply to the proposed sale by the Plan of certain
unimproved real property (the Property) to Roy Dahlson, a party in
interest with respect to the Plan, provided that the following
conditions are satisfied: (1) the sale is a one-time transaction for
cash; (2) the Plan pays no commissions nor other
[[Page 19951]]
expenses relating to the sale; and (3) the Plan receives an amount
which is the greater of either (a) the fair market value of the
Property as of the date of the sale, as determined by a qualified,
independent appraiser, or (b) the original acquisition cost of the
Property to the Plan, plus lost opportunity costs attributable to the
Property.
Summary of Facts and Representations
1. The Plan is a defined contribution plan sponsored by Jack Mayesh
Wholesale Florist, Inc. (the Employer) and has approximately 58
participants. Mr. Dahlson is an owner of the Employer and one of the
trustees of the Plan. The assets of the Plan, and of the Money Purchase
Plan also sponsored by the Employer, are held in a combined trust. As
of December 31, 1996, the fair market value of the assets of both plans
was $1,062,124.34.
2. The Property consists of two adjoining parcels of unimproved
real property located at Sunland Blvd., Los Angeles, California (mail
address at 12901 Harding St., Sylmar, California). The two parcels are
known as Parcel # 2544-010-002 (Lot 2) and Parcel # 2544-101-003 (Lot
3). Lot 2 consists of an area of 37,900 sq. ft., while Lot 3 consists
of an area of approximately 50,530 sq. ft. The other parcels adjacent
to Lot 2 and Lot 3 are owned by persons unrelated to the Plan, the
Employer, and Mr. Dahlson.
3. The Property was acquired by the Plan from Shadow Hills
Development Corp., an unrelated party, in March, 1993, for a total
purchase price of $101,808. The purchase was paid by the Plan in four
installments, as follows.
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Date of payment Amount paid
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1. March 12, 1993.......................................... $25,000.00
2. August 27, 1993......................................... 6,808.38
3. March 5, 1994........................................... 20,000.00
4. September 14, 1994...................................... 50,000.00
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101,808.38
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The applicant represents that all expenses relating to the Property
since its acquisition by the Plan, including taxes, insurance, and
fees, have been paid by Mr. Dahlson. However, the applicant states that
the Property has not been leased to, nor used by, any party in interest
with respect to the Plan, at any time since its acquisition by the
Plan. The Property has produced no income for the Plan.1
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\1\ The Department expresses no opinion herein as to whether the
acquisition and holding of the Property by the Plan violated any of
the provisions of Part 4 of Title I in the Act. However, the
Department notes that section 404(a) of the Act requires, among
other things, that a plan fiduciary act prudently and solely in the
interest of the plan and its participants and beneficiaries when
making investment decisions on behalf of the plan.
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4. The applicant has obtained two appraisals of the Property by
qualified, independent appraisers, both certified in the State of
California. The first appraiser, William G. Dyess, relying on the
market approach to valuation, concluded that the fair market value of
the Property (both parcels combined) was $44,000, as of June 8, 1997
(the Dyess Appraisal). The second appraiser, Terry T. Komatsu, of
Suburban Appraisal Service, also relying on the market approach,
estimated that the fair market value of the Property (both parcels
combined) was $30,000, as of July 7, 1997 (the Komatsu Appraisal).
Each appraiser examined three recent sales of comparable properties
in the local real estate area in making his determination of the fair
market value of the Property. The zoning of the Property is Ra-1&K--
Residential/agricultural. The Dyess Appraisal noted that Lot 2, which
has street frontage on Sunland Blvd., is land that rises up sharply
from the street and has value only to an adjoining lot. The Komatsu
Appraisal noted that Lot 3 has no street frontage or other direct
access from the street except through other parcels. Thus, by itself,
it would have no apparent value unless vehicular ingress/egress
easements could be obtained from adjoining parcels.
5. The applicant represents that the Plan has attempted to sell the
Property on the open market for several years, without success. Mr.
Dahlson therefore proposes to purchase the Property from the Plan for
an amount which is the greater of either (a) the fair market value of
the Property as of the date of the sale, based on an updated
independent appraisal, or (b) the original acquisition cost of the
Property to the Plan, plus lost opportunity costs attributable to the
Property. Since the Property has declined in value, based on the
conclusions of the Dyess Appraisal and the Komatsu Appraisal, Mr.
Dahlson will pay the Plan the latter amount.
Specifically, Mr. Dahlson will pay the Plan a total purchase price
of $145,922.64, which amount includes the Plan's original acquisition
cost of $101,803.38, as well as lost opportunity costs calculated at a
rate of 9%, compounded annually, or $44,114.27. As stated above, the
Plan paid for the Property in four installments, and the appropriate
purchase price to be paid by Mr. Dahlson was determined as follows.
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Interest
compounded
Date of payment Amount paid annually at
9% through
4/30/98
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March 12, 1993.................................................. $25,000.00 $13,898.34
August 27, 1993................................................. 6,808.38 3,378.84
March 5, 1994................................................... 20,000.00 8,443.37
September 14, 1994.............................................. 50,000.00 18,393.72
101,808.38 + 44,114.27 = $145,922.64
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The Plan will pay no commissions nor other expenses relating to the
sale.
The applicant represents that the exemption will be in the best
interests of the Plan because Mr. Dahlson is willing to pay more than
the Plan could receive for the Property on the open market based on the
current fair market value of the Property. In addition, the sale will
convert a non-income producing, illiquid asset that continues to
decline in value into more liquid assets that will achieve a higher
rate of return for the Plan. All costs relating to this exemption
application are being borne by the Employer.
6. In summary, the applicant represents that the proposed
transaction satisfies the statutory criteria for an exemption under
section 408(a) of the Act for the following reasons: (1) the sale will
be a one-time transaction for cash; (2) the Plan will pay no
commissions nor other expenses relating to the sale; (3) the Plan will
receive an amount which is the greater
[[Page 19952]]
of either (a) the fair market value of the Property as of the date of
the sale, as determined by a qualified, independent appraiser, or (b)
the original acquisition cost of the Property to the Plan, plus lost
opportunity costs attributable to the Property; and (4) the sale will
divest the Plan of a non-income producing, illiquid asset that
continues to decline in value and will allow the Plan to reinvest the
sale proceeds in assets that will achieve a higher rate of return.
For Further Information Contact: Ms. Karin Weng of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
James E. Jordan, Sr. Individual Retirement Account (the IRA)
Located in Phoenix, Arizona
[Application No. D-10550]
Proposed Exemption
The Department is considering granting an exemption under the
authority of section 4975(c)(2) of the Code and in accordance with the
procedures set forth in 29 C.F.R. Part 2570, Subpart B (55 FR 32836,
32847, August 10, 1990.) If the exemption is granted, the sanctions
resulting from the application of section 4975 of the Code, by reason
of section 4975(c)(1)(A) through (E) of the Code, shall not apply to
the proposed cash purchase by the IRA of a certain promissory note
issued by unrelated parties (the Martin Note) which is secured by a
first mortgage on certain residential property (the Property) from the
James E. Jordan Revocable Trust Agreement (the Trust), a disqualified
person with respect to the IRA; 2 provided that the
following conditions are met:
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\2\ Pursuant to CFR 2510.3-2(d), the Department has no
jurisdiction with respect to the IRA under Title I of the Act.
However, there is jurisdiction under Title II of the Act pursuant to
section 4975 of the Code.
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1. The purchase of the Martin Note will be a one-time cash
transaction;
2. The IRA will pay no commissions or other expenses associated
with the purchase;
3. The amount paid by the IRA for the Martin Note will be the
lesser of (i) $63,108.97, which is the current fair market value of the
Martin Note as determined by an independent, qualified appraiser, or
(ii) the fair market value of the Martin Note, as determined at the
time of the purchase by an independent, qualified appraiser;
4. Both the amount paid by the IRA for the Martin Note and the
outstanding principal balance on such Note will involve less than 25%
of the IRA's total assets;
5. Mr. Jordan, as the sole participant of the IRA, will be the only
individual affected by the proposed transaction; and
6. On the date the IRA purchases the Martin Note from the Trust,
the IRA will be named as loss payee under the homeowners insurance
policy on the Property.
Summary of Facts and Representations
1. The IRA is a self-directed individual retirement account. The
current custodian for the IRA is Fidelity National Bank located in
Atlanta, Georgia. James E. Jordan, Sr. (Mr. Jordan) is the sole
participant, a fiduciary and the owner of the IRA. As of January 31,
1998, the fair market value of the IRA's assets was $324,240.87. Thus,
the proposed purchase of the Martin Note would involve approximately 19
percent (19%) of the IRA's assets.
Both the amount paid by the IRA for the Martin Note and the
outstanding principal balance on such Note will involve less than 25%
of the IRA's total assets.
2. The Trust is the Jordan Revocable Trust Agreement dated August
18, 1993.3 The trustees of the Trust are Mr. Jordan and
Sheree G. D'Amico. Mr. Jordan is also the grantor and the primary
beneficial owner of the Trust. The Trust was created by Mr. Jordan as a
will substitute for the purpose of implementing Mr. Jordan's estate
plan. During his lifetime, Mr. Jordan is the primary beneficiary, and
after his death, the beneficiaries will be Sheree G. D'Amico, Lori D.
Jordan, James E. Jordan Jr. and Jay Jordan. The Trust is considered a
disqualified person, as defined in section 4975(e)(2) of the Code, due
to Mr. Jordan's relationship to both the IRA and the Trust.4
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\3\ The Trust is not an employee benefit plan or other plan
subject to the provisions of the Act or the Code.
\4\ In this regard, section 4975(e)(2)(G) of the Code states, in
relevant part, that a ``disqualified person'' includes a trust of
which (or in which) 50 percent or more of the beneficial interest of
such trust is owned, or held by, a person who is a fiduciary of a
plan.
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3. The Martin Note is currently between the Trust, as the original
lender, and John William Martin and Andreina Martin (the Martins), as
the original borrowers. The Martin Note and the accompanying mortgage
were created as seller financing when Mr. Jordan sold an investment
property to the Martins to be used as their primary residence. It is
represented that the Martins have no other relationship to Mr. Jordan,
the Trust and the IRA.
4. The Martin Note was appraised March 12, 1998, by F. Gregory
Rhodes (Mr. Rhodes), an independent qualified appraiser with the
Valuation Advisory Group, Inc. (the Appraisal) in Atlanta, Georgia. The
Appraisal stated that the original amount of the Martin Note, dated
December 28, 1994, was $66,000. The Martin Note has a fixed interest
rate of 8.75% per annum until maturity. The Martin Note has a 30-year
term and is scheduled to mature in December, 2024. However, the Martin
Note is subject to prepayment by the Martins prior to maturity. The
terms of the Martin Note call for monthly payments of principal and
interest, beginning January 29, 1995, equal to $519.23, with a final
payment of $268.89 at maturity.
The Martin Note is secured by a first mortgage on a residence
located in Volusia County, Florida (the Property). A recent appraisal
of the Property was performed by Michael F. Beckman (Mr. Beckman) of
Family Realty of Central Florida, Inc., which stated that the value of
the Property is between $72,000 and $74,000. In determining the fair
market value of the Martin Note, Mr. Rhodes reviewed Mr. Beckman's
appraisal of the Property. Mr. Rhodes states that this appraisal of the
Property indicates that the outstanding principal amount of the Martin
Note is adequately secured by the Property.
5. With respect to the fair market value of the Martin Note, the
Appraisal considered the following factors:
(a) The Martin Note is secured by a first mortgage on the Property;
(b) appraisal of the underlying property indicates that the Martin
Note is adequately secured;
(c) from the 1994 execution of the Martin Note, it appears that all
payments have been made in accordance with the terms of such Note; and
(d) there is a lack of marketability for the Martin Note.
The Appraisal states that because no organized market exists for an
instrument of this sort, a typical buyer of the Martin Note would
demand a rate of return in excess of what would be available for fixed
income securities of comparable duration in the public marketplace at
the time of the transaction. Therefore, the Appraisal applies an
appropriate discount rate to the remaining stream of payments of
principal and interest on the Martin Note to arrive at a required yield
of 8.86% per annum to account for the inherent lack of marketability of
the Martin Note. Therefore, based on this analysis, the Appraisal
concluded that the fair market value of the Martin Note was
approximately $63,108.97 as of March 12, 1998.
[[Page 19953]]
6. The applicant represents that the proposed transaction presents
a desirable investment opportunity for the IRA. For reasons discussed
above, the appraiser discounts (the Discount) the Martin Note. This
Discount of the Note in effect produces an enhanced yield to the IRA.
The transaction will be a one-time cash purchase by the IRA. The amount
paid by the IRA for the Martin Note will be the lesser of (i)
$63,108.97, which is the current fair market value of the Martin Note
as determined by an independent, qualified appraiser, or (ii) the fair
market value of the Martin Note, as determined at the time of the
purchase by an independent, qualified appraiser. The IRA will not bear
any commissions or expenses associated with the transaction.
In addition, the applicant represents that the acquisition of the
Martin Note will be consistent with the liquidity needs and investment
objectives of the IRA, which is currently heavily invested in equities.
The interests of the IRA will be protected because the Note is
adequately secured by the first mortgage on the Property. In a letter
of February 12, 1998, Fidelity National Bank, the IRA custodian, stated
that it would retain the Property as an IRA asset in the event the IRA
forecloses on the Property. Furthermore, the applicant states that on
the date the IRA purchases the Martin Note, the IRA will be named as
the loss payee under the homeowners insurance policy on the Property.
Thus, if the IRA becomes the owner of the Property, the IRA's
investment interests will be protected in the event that payments are
made to the loss payee on this insurance policy.
7. In summary, the applicant represents that the transaction
satisfies the statutory criteria of section 4975(c)(2) of the Code
because:
a. The purchase of the Martin Note will be a one-time cash
transaction;
b. The IRA will pay no commissions or other expenses associated
with the purchase;
c. The amount paid by the IRA for the Martin Note will be the
lesser of (i) $63,108.97, which is the current fair market value of the
Martin Note as determined by an independent, qualified appraiser, or
(ii) the fair market value of the Martin Note, as determined at the
time of the purchase by an independent, qualified appraiser;
d. Both the amount paid by the IRA for the Martin Note and the
outstanding principal balance on such Note will involve less than 25%
of the IRA's total assets;
e. On the date the IRA purchases the Martin Note, the IRA will be
named as loss payee under the homeowners insurance policy on the
Property; and
f. Mr. Jordan, as the sole participant of the IRA, will be the only
individual affected by the proposed transaction.
Notice to Interested Persons
Because Mr. Jordan is the sole participant of the IRA, it has been
determined that there is no need to distribute this notice of proposed
exemption to interested persons. Comments and requests for a hearing
are due 30 days from the date of publication of this notice in the
Federal Register.
FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan of the Department
at (202) 219-8883. (This is not a toll-free number.)
Pipefitters Local Union No. 537 Pension Fund (the Plan) Located in
Boston, Massachusetts
[Application No. D-10577]
Proposed Exemption
The Department of Labor is considering granting an exemption under
the authority of section 408(a) of the Act and section 4975(c)(2) of
the Code and in accordance with the procedures set forth in 29 CFR Part
2570, Subpart B (55 FR 32836, 32847, August 10, 1990). If the exemption
is granted, the restrictions of sections 406(a) and 406(b)(1) and
(b)(2) of the Act and the sanctions resulting from the application of
section 4975 of the Code, by reason of section 4975(c)(1)(A) through
(E) of the Code, shall not apply to the sale (the Sale) of certain real
property (the Property) to the Plan by Local Union 537 (the Union) of
the United Association of Journeymen and Apprentices of the Plumbing
and Pipefitting Industry of the United States and Canada, a party in
interest with respect to the Plan; provided the following conditions
are satisfied:
(A) The terms and conditions of the transaction are no less
favorable to the Plan than those which the Plan would receive in an
arm's-length transaction with an unrelated party;
(B) The Sale is a one-time transaction for cash;
(C) The Plan incurs no expenses from the Sale;
(D) The Plan pays as consideration for the Property no more than
the fair market value of the Property as determined by a qualified,
independent appraiser on the date of the Sale; and
(E) The independent fiduciary for the Plan will undertake to
monitor and enforce the terms of the proposed exemption, if granted.
Summary of Facts and Representations
1. Two employer associations represent the contributing employers
to the Plan and serve as their collective bargaining agents with the
Union. These two associations are the Air Conditioning and
Refrigeration Contractors of Boston, Inc. (ARCA) and the New England
Mechanical Contractors Association, Inc. (NEMCA). ARCA represents
employers in eastern Massachusetts and surrounding areas who erect,
install, and service all types of food cases, refrigeration, and air
conditioning equipment. NEMCA represents employers throughout most of
New England who erect, service, and install and maintain all types of
heating, pipe laying, piping, refrigeration and air conditioning
systems and equipment.
The Union is the sole collective bargaining agency for employees
covered by applicable collective bargaining agreements who are employed
by members of ARCA and NEMCA.
2. The Plan is a jointly administered Taft-Hartley trust fund
established pursuant section 302(c)(5) of the Labor Management
Relations Act that maintains a defined benefit plan which is intended
to qualify under section 401(a) of the Code. The Plan is for employees
covered by collective bargaining agreements between the participating
employers and the Union, and for certain employees of the Plan and the
Union.
The Plan is administered by a six member Board of Trustees (the
Trustees) of whom three members are appointed by the two employers'
associations, ARCA and NEMCA, and three members are appointed by the
Union. The Trustees of the Plan, who have investment discretion over
the assets of the Plan, are represented by the applicant to include
Messrs. Leo Reed, Charles L. Grinnell, and Ron Ledoux, who were
appointed by the employers associations and Messrs. Michael Benullo,
President of the Union, Robert O'Toole, Business Manager of the Union,
and Thomas MacKay, Business for the Union, who are appointed by the
Union.
The applicant represents that, as of January 30, 1998, the Plan had
approximately total assets of $237,300,000, and approximately 1990
participants.
3. The Property is a condominium unit, designated as Unit 1,
consisting of 2,536 square feet of floor area located in the lower
(basement) level of a two story office building, with a non-exclusive
right to use parking spaces at the site location. The Property is 47.5
percent of
[[Page 19954]]
the total condominium area in the office building, and the remaining
condominium area in the office building, designated as Unit 2, is
occupied and used by the Union, the owner of the office building since
December 17, 1996. The office building has approximately 6,560 square
feet of gross building area situated on a 21,090 square foot parcel of
land located at 35 Travis Street, Boston (Allston), Massachusetts.
The Property was appraised by Peter L. Lane, Certified Gen. R. E.
Appraiser, with the Robert P. Wood & Co., Inc., located in Milton,
Massachusetts, who determined that the Property had a fair market value
of $151,000, as of November 28, 1997.
4. The Union proposes to sell the Property to the Plan for cash in
a one-time transaction with no expenses incurred by the Plan. The
applicant represents that the Union will receive, as consideration from
the Sale, no more than the fair market value of the Property as
determined on the date of the Sale by a qualified, independent
appraiser.
The Plan is prompted to take this action because of the need for an
improved location and increased office space and storage facilities
that will provide more and better facilities than its current location
of 1,400 square feet floor area on the fourth floor of an office
building located in an undesirable neighborhood. The applicant
represents that the current location of the Plan's offices fails to
provide parking facilities, accessibility for handicapped persons, and
lacks cleanliness and security.
The applicant represents that the Trustees for the Plan have
determined that the proposed acquisition of the Property will be in the
best interests of the Plan and the rights of its participants and
beneficiaries will be protected because the Property will provide the
Plan with a desirable combination of improved and increased office and
storage facilities, handicapped accessibility, on-site parking space,
increased security, and a proximity to major thoroughfares and public
transportation. Also, the applicant represents that the Property will
provide the Plan and its participants and beneficiaries with a close
proximity to the offices of the Union, and thus facilitate the
processing of applications for benefits from the Plan, minimizing
inconveniences to participants and beneficiaries and personnel of the
Plan and enhancing administrative efficiencies. 5
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\5\ The applicant represents that it is contemplated that the
Pipefitters Local Union No. 537 Health and Welfare Fund and the
Pipefitters Local Union No. 537 Deferred Income Annuity Fund will
occupy a portion of the Property; and these two Funds will share
space and reimburse the Plan for reasonable costs and expenses in
accordance PTE 76-1 and PTE 77-10 (41 FR 12740, March 26, 1976 and
42 FR 33918, respectively). The Department expresses no opinion
herein as to whether or not the occupancy of a portion of the
Property by the two Funds as described satisfies the terms and
conditions of PTE 76-1 and PTE 77-10.
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The applicant also represents that compliance with the terms and
conditions of the requested exemption will be monitored and enforced by
an independent fiduciary, Edward K. Wadsworth, MAI, president of The
Boston Valuation Group, Inc. located in Weymouth, Massachusetts. Mr.
Wadsworth represents that he has extensive experience in the field of
market, financial, and real estate analysis, serving as a leader of
professional organizations in these fields and serving as a qualified
expert witness in a number of court proceedings. In addition, Mr.
Wadsworth represents that he is on the teaching faculty of the
Appraisal Institute and has instructed courses in the Standards of
Professional Practice and Income Capitalization.
Mr. Wadsworth represents that the proposed Sale is in the best
interests of the Plan and is protective of the rights of the
participants and beneficiaries of the Plan; and that he has the power,
authority, and responsibility to take the necessary action in the
proposed transaction so that the Plan will not pay more than the fair
market value as determined by the independent appraiser, Peter L. Lane
of Robert Wood & Co., Inc., on the date of the Sale.
5. In summary, the applicant represents that the proposed
transaction satisfies the criteria of section 408(a) of the Act because
(a) the Sale is a one-time transaction for cash; (b) the Plan will not
incur any expenses from the transaction; (c) the Plan will pay no more
than the fair market value of the Property as determined on the date of
the Sale by a qualified, independent appraiser; and (d) the proposed
transaction will be monitored and enforced by a qualified, independent
fiduciary.
For Further Information Contact: Mr. C. E. Beaver of the
Department, telephone (202) 219-8881. (This is not a toll-free number.)
General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption
under section 408(a) of the Act and/or section 4975(c)(2) of the Code
does not relieve a fiduciary or other party in interest of disqualified
person from certain other provisions of the Act and/or the Code,
including any prohibited transaction provisions to which the exemption
does not apply and the general fiduciary responsibility provisions of
section 404 of the Act, which among other things require a fiduciary to
discharge his duties respecting the plan solely in the interest of the
participants and beneficiaries of the plan and in a prudent fashion in
accordance with section 404(a)(1)(b) of the act; nor does it affect the
requirement of section 401(a) of the Code that the plan must operate
for the exclusive benefit of the employees of the employer maintaining
the plan and their beneficiaries;
(2) Before an exemption may be granted under section 408(a) of the
Act and/or section 4975(c)(2) of the Code, the Department must find
that the exemption is administratively feasible, in the interests of
the plan and of its participants and beneficiaries and protective of
the rights of participants and beneficiaries of the plan;
(3) The proposed exemptions, if granted, will be supplemental to,
and not in derogation of, any other provisions of the Act and/or the
Code, including statutory or administrative exemptions and transitional
rules. Furthermore, the fact that a transaction is subject to an
administrative or statutory exemption is not dispositive of whether the
transaction is in fact a prohibited transaction; and
(4) The proposed exemptions, if granted, will be subject to the
express condition that the material facts and representations contained
in each application are true and complete, and that each application
accurately describes all material terms of the transaction which is the
subject of the exemption.
Signed at Washington, DC, this 17th day of April 1998.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 98-10692 Filed 4-21-98; 8:45 am]
BILLING CODE 4510-29-P
