[Federal Register Volume 63, Number 118 (Friday, June 19, 1998)]
[Notices]
[Pages 33727-33732]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16337]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 98-28; Exemption Application No. D-
10396, et al.]
Grant of Individual Exemptions; Massachusetts Mutual Life
Insurance Company
AGENCY: Pension and Welfare Benefits Administration, Labor.
ACTION: Grant of individual exemptions.
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SUMMARY: This document contains exemptions issued by the Department of
Labor (the Department) 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).
Notices were published in the Federal Register of the pendency
before the Department of proposals to grant such exemptions. The
notices set forth a summary of facts and representations contained in
each application for exemption and referred interested persons to the
respective applications for a complete statement of the facts and
representations. The applications have been available for public
inspection at the Department in Washington, D.C. The notices also
invited interested persons to submit comments on the requested
exemptions to the Department. In addition the notices stated that any
interested person might submit a written request that a public hearing
be held (where appropriate). The applicants have represented that they
have complied with the requirements of the notification to interested
persons. No public comments and no requests for a hearing, unless
otherwise stated, were received by the Department.
The notices of proposed exemption were issued and the exemptions
are being granted solely by the Department because, 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 proposed to the Secretary
of Labor.
Statutory Findings: In accordance with section 408(a) of the Act
and/or section 4975(c)(2) of the Code and the procedures set forth in
29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990) and
based upon the entire record, the Department makes the following
findings:
(a) The exemptions are administratively feasible;
(b) They are in the interests of the plans and their participants
and beneficiaries; and
(c) They are protective of the rights of the participants and
beneficiaries of the plans.
Massachusetts Mutual Life Insurance Company (MM) Located in
Springfield, Massachusetts [Prohibited Transaction Exemption 98-28;
Exemption Application No. D-10396]
Exemption
Section I--Exemption for Certain Transactions Involving the Management
of Investments Shared by Two or More Accounts Maintained by MM
The restrictions of certain sections of the Act and the sanctions
resulting from the application of certain parts of section 4975 of the
Code shall not apply to the following transactions if the conditions
set forth in Section IV are met:
(a) Transfers Between Accounts
(1) The restrictions of section 406(b)(2) of the Act shall not
apply to
[[Page 33728]]
the sale or transfer of an interest in a shared investment (including a
shared joint venture interest) between two or more Accounts (except the
General Account), provided that each ERISA-Covered Account pays no
more, or receives no less, than fair market value for its interest in a
shared investment.
(2) The restrictions of sections 406(a), 406(b)(1) and 406(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 or transfer of an interest in a shared
investment (including a shared joint venture interest) between ERISA-
Covered Accounts and the General Account, provided that such transfer
is made pursuant to stalemate procedures, described in the notice of
proposed exemption, adopted by the independent fiduciary for the ERISA-
Covered Account, and provided further that the ERISA-Covered Account
pays no more or receives no less than fair market value for its
interest in a shared investment.
(b) Joint Sales of Property--The restrictions of sections 406(a),
406(b)(1) and 406(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 to a
third party of the entire interest in a shared investment (including a
shared joint venture interest) by two or more Accounts, provided that
each ERISA-Covered Account receives no less than fair market value for
its interest in the shared investment.
(c) Additional Capital Contributions--The restrictions of sections
406(a), 406(b)(1) and 406(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 either to the
making of a pro rata equity capital contribution by one or more of the
Accounts to a shared investment; or to the making of a Disproportionate
[as defined in Section V(e)] equity capital contribution by one or more
of such Accounts which results in an adjustment in the equity ownership
interests of the Accounts in the shared investment on the basis of the
fair market value of such interests subsequent to such contribution,
provided that each ERISA-Covered Account is given an opportunity to
make a pro rata contribution.
(d) Lending of Funds--The restrictions of sections 406(a),
406(b)(1) and 406(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 lending of
funds from the General Account to an ERISA-Covered Account to enable
the ERISA-Covered Account to make an additional pro rata contribution,
provided that such loan--
(A) is unsecured and non-recourse with respect to participating
plans,
(B) bears interest at a rate not to exceed the greater of the prime
rate plus two percentage points or the prevailing rate on 90-day
Treasury Bills,
(C) is not callable at any time by the General Account, and
(D) is prepayable at any time without penalty.
(e) Shared Debt Investments--In the case of a debt investment that
is shared between two or more Accounts, including one or more of the
ERISA-Covered Accounts, (1) the restrictions of sections 406(a) and
406(b)(1) and (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 any material
modification in the terms of the loan agreement resulting from a
request by the borrower, any decision regarding the action to be taken,
if any, on behalf of the Accounts in the event of a loan default by the
borrower, or any exercise of a right under the loan agreement in the
event of such default, and (2) the restrictions of section 406(b)(2) of
the Act shall not apply to any decision by MM thereof on behalf of two
or more ERISA-Covered Accounts: (A) not to modify a loan agreement as
requested by the borrower; or (B) to exercise any rights provided in
the loan agreement in the event of a loan default by the borrower, even
though the independent fiduciary for one (but not all) of such Accounts
has approved such modification or has not approved the exercise of such
rights.
Section II--Exemption for Certain Transactions Involving the Management
of Joint Venture Interests Shared by Two or More Accounts Maintained by
MM
The restrictions of certain sections of the Act and the sanctions
resulting from the application of certain parts of section 4975 of the
Code shall not apply to the following transactions resulting from the
sharing of an investment in a real estate joint venture between two or
more Accounts, if the conditions set forth in Section IV are met:
(a) Additional Capital Contributions--(1) The restrictions of
sections 406(a), 406(b)(1) and 406(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
making of additional pro rata equity capital contributions by one or
more Accounts participating in the joint venture.
(2) The restrictions of sections 406(a), 406(b)(1) and 406(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 lending of funds from the General Account
to an ERISA-Covered Account to enable the ERISA-Covered Account to make
an additional pro rata capital contribution, provided that such loan--
(A) is unsecured and non-recourse with respect to the participating
plans,
(B) bears interest at a rate not to exceed the greater of the prime
rate plus two percentage points or the prevailing rate on 90-day
Treasury Bills,
(C) is not callable at any time by the General Account, and
(D) is prepayable at any time without penalty.
(3) The restrictions of sections 406(a), 406(b)(1) and 406(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 making of Disproportionate [as defined in
section V(e)] additional equity capital contributions (or the failure
to make such additional contributions) in the joint venture by one or
more Accounts which result in an adjustment in the equity ownership
interests of the Accounts in the joint venture on the basis of the fair
market value of such joint venture interests subsequent to such
contributions, provided that each ERISA-Covered Account is given an
opportunity to provide its proportionate share of the additional equity
capital contributions; and
(4) In the event a co-venturer fails to provide all or any part of
its pro rata share of an additional equity capital contribution, the
restrictions of sections 406(a), 406(b)(1) and 406(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 making of Disproportionate additional equity capital
contributions to the joint venture by the General Account and an ERISA-
Covered Account up to the amount of such contribution not provided by
the co-venturer which result in an adjustment in the equity ownership
interests of the Accounts in the joint venture on the basis provided in
the joint venture agreement, provided that such ERISA-Covered Account
is given an opportunity to participate in all
[[Page 33729]]
additional equity capital contributions on a proportionate basis.
(b) Third Party Purchase Offers--(1) In the case of an offer by a
third party to purchase any property owned by the joint venture, the
restrictions of sections 406(a), 406(b)(1) and 406(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 acquisition by the Accounts, including one or more
ERISA-Covered Account[s], on either a proportionate or Disproportionate
basis of a co-venturer's interest in the joint venture in connection
with a decision on behalf of such Accounts to reject such purchase
offer, provided that each ERISA-Covered Account is first given an
opportunity to participate in the acquisition on a proportionate basis;
and
(2) The restrictions of section 406(b)(2) of the Act shall not
apply to any acceptance by MM on behalf of two or more Accounts,
including one or more ERISA-Covered Account[s], of an offer by a third
party to purchase a property owned by the joint venture even though the
independent fiduciary for one (but not all) of such ERISA-Covered
Account[s] has not approved the acceptance of the offer, provided that
such declining ERISA-Covered Account[s] are first afforded the
opportunity to buy out both the co-venturer and ``selling'' Account's
interests in the joint venture.
(c) Rights of First Refusal--(1) In the case of the right to
exercise a right of first refusal described in a joint venture
agreement to purchase a co-venturer's interest in the joint venture at
the price offered for such interest by a third party, the restrictions
of sections 406(a), 406(b)(1) and 406(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 acquisition by such Accounts, including one or more ERISA-
Covered Account[s], on either a proportionate or Disproportionate basis
of a co-venturer's interest in the joint venture in connection with the
exercise of such a right of first refusal, provided that each ERISA-
Covered Account is first given an opportunity to participate on a
proportionate basis; and
(2) The restrictions of section 406(b)(2) of the Act shall not
apply to any decision by MM on behalf of the Accounts not to exercise
such a right of first refusal even though the independent fiduciary for
one (but not all) of such ERISA-Covered Accounts has approved the
exercise of the right of first refusal, provided that none of the
ERISA-Covered Accounts that approved the exercise of the right of first
refusal decides to buy-out the co-venturer on its own.
(d) Buy-Sell Options--(1) In the case of the exercise of a buy-sell
option set forth in the joint venture agreement, the restrictions of
sections 406(a), 406(b)(1) and 406(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
acquisition by one or more of the Accounts on either a proportionate or
Disproportionate basis of a co-venturer's interest in the joint venture
in connection with the exercise of such a buy-sell option, provided
that each ERISA-Covered Account is first given the opportunity to
participate on a proportionate basis; and
(2) The restrictions of section 406(b)(2) of the Act shall not
apply to any decision by MM on behalf of two or more Accounts,
including one or more ERISA-Covered Account[s], to sell the interest of
such Accounts in the joint venture to a co-venturer even though the
independent fiduciary for one (but not all) of such ERISA-Covered
Account[s] has not approved such sale, provided that such disapproving
ERISA-Covered Account is first afforded the opportunity to purchase the
entire interest of the co-venturer.
Section III--Exemption for Transactions Involving a Joint Venture or
Persons Related to a Joint Venture
The restrictions of section 406(a) 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 (D) of the Code shall not apply, if the
conditions in Section IV are met, to any additional equity or debt
capital contributions to a joint venture by an ERISA-Covered Account
that is participating in an interest in the joint venture, or to any
material modification in the terms of, or action taken upon default
with respect to, a loan to the joint venture in which the ERISA-Covered
Account has an interest as a lender, where the joint venture is a party
in interest solely by reason of the ownership on behalf of the General
Account of a 50 percent or more interest in such joint venture.
Section IV--General Conditions
(a) The decision to participate in any ERISA-Covered Account that
shares real estate investments must be made by plan fiduciaries who are
totally unrelated to MM and its affiliates. This condition shall not
apply to plans covering employees of MM.
(b) Each contractholder or prospective contractholder in an ERISA-
Covered Account which shares or proposes to share real estate
investments that are structured as shared investments under this
exemption is provided with a written description of potential conflicts
of interest that may result from the sharing, a copy of the notice of
pendency, and a copy of the final exemption.
(c) An independent fiduciary must be appointed on behalf of each
ERISA-Covered Account participating in the sharing of investments. The
independent fiduciary shall be either
(1) a business organization which has at least five years of
experience with respect to commercial real estate investments,
(2) a committee composed of three to five individuals (who may be
investors or investor representatives approved by the plans
participating in the ERISA-Covered Account, and) who each have at least
five years of experience with respect to commercial real estate
investments, or
(3) the plan sponsor (or its designee) of a plan (or plans) that is
the sole participant in an ERISA-Covered Account.
(d) The independent fiduciary or independent fiduciary committee
member shall not be or consist of MM or any of its affiliates.
(e) No organization or individual may serve as an independent
fiduciary for an ERISA-Covered Account for any fiscal year if the gross
income (other than fixed, non-discretionary retirement income) received
by such organization or individual (or any partnership or corporation
of which such organization or individual is an officer, director, or
ten percent or more partner or shareholder) from MM, its affiliates and
the ERISA-Covered Accounts for that fiscal year exceeds five percent of
its or his or her annual gross income from all sources for the prior
fiscal year. If such organization or individual had no income for the
prior fiscal year, the five percent limitation shall be applied with
reference to the fiscal year in which such organization or individual
serves as an independent fiduciary. The income limitation shall not
include compensation for services rendered to a single-customer ERISA-
Covered Account by an independent fiduciary who is initially selected
by the Plan sponsor for that ERISA-Covered Account.
The income limitation will include income for services rendered to
the Accounts as independent fiduciary under any prohibited transaction
exemption(s) granted by the
[[Page 33730]]
Department. Notwithstanding the foregoing, such income limitation shall
not include any income for services rendered to a single customer
ERISA-Covered Account by an independent fiduciary selected by the Plan
sponsor to the extent determined by the Department in any subsequent
prohibited transaction exemption proceeding.
In addition, no organization or individual who is an independent
fiduciary, and no partnership or corporation of which such organization
or individual is an officer, director or ten percent or more partner or
shareholder, may acquire any property from, sell any property to, or
borrow any funds from, MM, its affiliates, or any Account maintained by
MM or its affiliates, during the period that such organization or
individual serves as an independent fiduciary and continuing for a
period of six months after such organization or individual ceases to be
an independent fiduciary, or negotiate any such transaction during the
period that such organization or individual serves as independent
fiduciary.
(f) The independent fiduciary acting on behalf of an ERISA-Covered
Account shall have the responsibility and authority to approve or
reject recommendations made by MM or its affiliates for each of the
transactions in this exemption. In the case of a possible transfer or
exchange of any interest in a shared investment between the General
Account and an ERISA-Covered Account, the independent fiduciary shall
also have full authority to negotiate the terms of the transfer. MM and
its affiliates shall involve the independent fiduciary in the
consideration of contemplated transactions prior to the making of any
decisions, and shall provide the independent fiduciary with whatever
information may be necessary in making its determinations.
In addition, the independent fiduciary shall review on an as-needed
basis, but not less than twice annually, the shared real estate
investments in the ERISA-Covered Account to determine whether the
shared real estate investments are held in the best interest of the
ERISA-Covered Account.
(g) MM maintains for a period of six years from the date of the
transaction the records necessary to enable the persons described in
paragraph (h) of this Section to determine whether the conditions of
this exemption have been met, except that a prohibited transaction will
not be considered to have occurred if, due to circumstances beyond the
control of MM or its affiliates, the records are lost or destroyed
prior to the end of the six-year period.
(h)(1) Except as provided in paragraph (2) of this subsection (h)
and notwithstanding any provisions of subsection (a)(2) and (b) of
section 504 of the Act, the records referred to in subsection (g) of
this Section are unconditionally available at their customary location
for examination during normal business hours by--
(A) Any duly authorized employee or representative of the
Department or the Internal Revenue Service,
(B) Any fiduciary of a plan participating in an ERISA-Covered
Account engaging in transactions structured as shared investments under
this exemption who has authority to acquire or dispose of the interests
of the plan, or any duly authorized employee or representative of such
fiduciary,
(C) Any contributing employer to any plan participating in an
ERISA-Covered Account engaging in transactions structured as shared
investments under this exemption or any duly authorized employee or
representative of such employer, and
(D) Any participant or beneficiary of any plan participating in an
ERISA-Covered Account engaging in transactions structured as shared
investments under this exemption, or any duly authorized employee or
representative of such participant or beneficiary.
(2) None of the persons described in subparagraphs (B) through (D)
of this subsection (h) shall be authorized to examine trade secrets of
MM, any of its affiliates, or commercial or financial information which
is privileged or confidential.
Section V--Definitions
For the purposes of this exemption:
(a) An ``affiliate'' of MM includes--
(1) Any person directly or indirectly through one or more
intermediaries, controlling, controlled by, or under common control
with MM,
(2) Any officer, director or employee of MM or person described in
section V(a)(1), and
(3) Any partnership in which MM is a partner.
(b) An ``Account'' means the General Account (including the general
accounts of MM affiliates which are managed by MM), any separate
account managed by MM, or any investment advisory account, trust,
limited partnership or other investment account or fund managed by MM.
(c) The ``General Account'' means the general asset account of MM
and any of its affiliates which are insurance companies licensed to do
business in at least one State as defined in section 3(10) of the Act.
(d) An ``ERISA-Covered Account'' means any Account (other than the
General Account) in which employee benefit plans subject to Title I or
Title II of the Act participate.
(e) ``Disproportionate'' means not in proportion to an Account's
existing equity ownership interest in an investment, joint venture or
joint venture interest.
For a more complete statement of the facts and representations
supporting the department's decision to grant this exemption, refer to
the notice of proposed exemption published on February 6, 1998 at 63 FR
6217.
Written Comments and Hearing Requests: The Department received no
hearing requests with respect to the proposed exemption. The only
written comments were submitted by MM in order to clarify certain of
the information contained in the summary of facts and representations
for the proposed exemption (the Summary).
First, MM states that with regard to the reference to health
insurance in Representation 1 of the Summary, Footnote 1 is intended to
indicate only the extent to which MM currently offers such health
insurance. The footnote states that MM sold its group life and health
subsidiary on March 31, 1996 and will no longer offer group life and
health insurance after the completion of a transition period under the
purchase and sale agreement relating thereto.
Second, with respect to the second paragraph of Representation 1 of
the Summary, MM wishes to clarify that the exemption will cover
Accounts (including ERISA-Covered Accounts) other than those currently
in existence, and which may invest in equity real estate and mortgage
investments.
Third, the last sentence of Representation 7 of the Summary
concerns those persons to whom MM must make certain disclosures
regarding its shared real estate investments. With respect to the
proposed exemption and other information to be contained in such
disclosures, MM seeks to clarify that it was only required to provide a
copy of the proposed exemption within 30 days of the publication of the
proposed exemption (i.e., March 8, 1998) to each current contractholder
in an ERISA-Covered Account that proposes to engage in transactions
which are structured as shared investments under the exemption. In
addition, MM states that it will provide a copy of this exemption (as
published in the Federal Register) before the Account begins to
participate in such investments.
[[Page 33731]]
Fourth, concerning the first sentence of Representation 8 of the
Summary, MM states that in order to more clearly define the persons to
whom certain disclosures must be made, the sentence should be rewritten
to read as follows:
With respect to new contractholders in an ERISA-Covered Account
that participates in the sharing of investments which are structured
as shared investments under this exemption, each such contractholder
must be provided with the description outlined above, a copy of the
notice of pendency and a copy of the exemption as granted, before
the Account begins to participate in the sharing of such
investments.
Fifth, with respect to Footnote 4 in Representation 12 of the
Summary, relating to the sophistication of investors participating in
MM's single customer and pooled closed-end real estate Accounts, MM
states that this footnote only refers to contractholders in its ERISA-
Covered Accounts which engage in transactions structured as shared
investments under this exemption.
Finally, the third sentence in Representation 18 of the Summary and
the fourth paragraph of Representation 21 of the Summary both refer to
the partition and sale of undivided and divided real estate investment
interests, respectively. In this regard, MM seeks to clarify that the
partition and sale of such interests is meant to establish a possible
resolution to the stalemates which are described in Representations 18
and 21 of the Summary. Such events would involve the partition of
property in which Accounts own a fractional undivided interest in the
whole, and the sale of one or more resulting divided interests,
including those interests which are co-owned by some of the Accounts.
The Department confirms that these scenarios are presented only as
examples of possible resolutions to the stalemates which are described
in Representations 18 and 21 of the Summary, and are not meant to
describe resolutions to other matters.
In addition, the Department acknowledges all of the above-described
clarifications by MM to the record which formed the basis for the
proposed exemption as published in the Federal Register.
Accordingly, after considering the entire record, including the
comments made by MM, the Department has determined to grant the
exemption as proposed.
For Further Information Contact: Gary H. Lefkowitz of the
Department, telephone (202) 219-8881. (This is not a toll-free number.)
Knoxville Surgical Group Qualified Retirement Plan (the Plan) Located
in Knoxville, Tennessee
[Prohibited Transaction Exemption 98-29; Exemption Application No: D-
10506]
Exemption
The restrictions of section 406(a) and 406(b) of the Act and the
sanctions resulting from the application of section 4975 of the Code,
by reason of sections 4975(c)(1)(A) through (E) of the Code shall not
apply to the sale (the Sale) of a medical office condominium (the
Property) by the Plan to Hugh C. Hyatt, M.D., Richard A. Brinner, M.D.,
Randal O. Graham, Michael D. Kropilak, M.D., and P. Kevin Zirkle, M.D.,
parties in interest with respect to the Plan provided the following
conditions are satisfied: (1) The Sale will be a one time transaction
for cash; (2) the Property will be sold at a price equal to the greater
of $780,000 or the fair market value of the Property on the date of the
Sale; and (3) the Plan will pay no commissions or expenses associated
with the Sale.
For a more complete statement of the summary of facts and
representations supporting the Department's decision to grant this
exemption, refer to the Notice of Proposed Exemption published on
February 6, 1998 at 63 FR 6216.
Written Comments: The Department received one comment from the
applicant. The applicant noted that during the Department's
consideration of the exemption application, the Knoxville Surgical
Group had originally planned to merge the Plan into the Premier
Surgical Plan. However, this merger did not occur. Rather, the Plan
will remain a dormant plan with all participants fully vested.
The Department has considered the entire record, including the
comment submitted by the applicant, and has determined to grant the
exemption as proposed.
For Further Information Contact: Allison Padams Lavigne, U. S.
Department of Labor, telephone (202) 219-8971. (This is not a toll-free
number.)
Jack Mayesh Wholesale Florist, Inc. Profit Sharing Plan (the Plan)
Located in Los Angeles, California
[Prohibited Transaction Exemption 98-30; Exemption Application No. D-
10524]
Exemption
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 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 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.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this exemption, refer to
the notice of proposed exemption published on April 22, 1998 at 63 FR
19950.
For Further Information Contact: Ms. Karin Weng of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Pipefitters Local Union No. 537 Pension Fund (the Plan) Located in
Boston, Massachusetts
[Prohibited Transaction Exemption No. 98-31; Application No. D-10577]
Exemption
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 exemption.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this
[[Page 33732]]
exemption, refer to the Notice of Proposed Exemption published on April
22, 1998, at 63 FR 19953.
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 or disqualified
person from certain other provisions to which the exemptions 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) These exemptions are supplemental to and not in derogation of,
any other provisions of the Act and/or the Code, including statutory or
administrative exemptions and transactional 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
(3) The availability of these exemptions is subject to the express
condition that the material facts and representations contained in each
application accurately describes all material terms of the transaction
which is the subject of the exemption.
Signed at Washington, D.C., this 16th day of June 1998.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 98-16337 Filed 6-18-98; 8:45 am]
BILLING CODE 4510-29-P
