[Federal Register Volume 59, Number 133 (Wednesday, July 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16979]
[[Page Unknown]]
[Federal Register: July 13, 1994]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 94-53; Exemption Application No. D-
9486, et al.]
Grant of Individual Exemptions; Knoxville Surgical Group Profit
Sharing Plan, et al.
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.
Knoxville Surgical Group Profit Sharing Plan (the Plan) Located in
Knoxville, Tennessee
[Prohibited Transaction Exemption 94-53; Exemption Application No. D-
9486]
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: (1) the lease (the Lease) of certain real
property (the Condominium) by the Plan to Knoxville Surgical Group,
P.C. (the Employer), the Plan sponsor and a party in interest with
respect to the Plan, following the exchange (the Swap) of real property
owned by the Plan for the Condominium owned by Fort Sanders Medical
Center, an unrelated party; and (2) a future exercise of (a) a certain
indemnity agreement (the Indemnity Agreement) between the Employer and
the Plan; and (b) a certain guarantee (the Guarantee) of Lease payments
to the Plan by the principals of the Employer; provided that the
following conditions are satisfied:
(1) all terms and conditions of the Swap, the Lease, the Indemnity
Agreement, and the Guarantee are at least as favorable to the Plan as
those the Plan could obtain in an arm's-length transaction with an
unrelated party;
(2) the fair market value of the Condominium will be determined by
an independent qualified appraiser at the time the Swap transaction is
consummated;
(3) with respect to the Lease, the fair market rental amount has
been determined by an independent qualified appraiser, and will never
be below the initial fair market annual rental amount of $75,000;
(4) the Condominium will be appraised by an independent qualified
appraiser each time that the Renewal option (the Renewal) on the Lease
is exercised.
(5) the fair market value of the Condominium will at no time exceed
25% of the Plan's total assets;
(6) the Lease is a triple net lease under which the Employer is
obligated for all costs of maintenance and repair, and all taxes,
insurance, utilities and condominium fees related to the Condominium;
(7) the fees received by the independent fiduciary for serving in
such capacity, combined with any other fees derived from the Employer
or related parties, will not exceed 1% of his annual income for each
fiscal year that he continues to serve in the independent fiduciary
capacity with respect to the transactions described herein;
(8) the independent fiduciary evaluated the transactions described
herein and deemed them to be administratively feasible, protective and
in the interest of the Plan;
(9) the independent fiduciary will monitor the terms and the
conditions of the exemption and the Lease throughout its initial term
plus the two Renewal terms and will take whatever action is necessary
to protect the Plan's rights;
(10) the Plan will bear no costs or expenses with respect to the
transactions described herein; and
(11) the Employer will file form 5330 and pay the appropriate
excise taxes for the period beginning June 9, 1989, to the date this
exemption, if granted, is published in the Federal Register, within
ninety (90) days of the publication date.
For a more complete statement of facts and representations
supporting the Department's decision to grant this exemption refer to
the notice of proposed exemption published on April 22, 1994 at 59 FR
24739/24741.
FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan, U.S. Department
of Labor, telephone (202) 219-8883. (This is not a toll-free number).
Radiation Medical Group Inc. Profit Sharing--401(k) Salary Savings Plan
(the Original Plan), and Radiology Medical Group, Inc. 401(k) Salary
Savings Plan (the New Plan; together, the Plans) Located in San Diego,
California
[Prohibited Transaction Exemption 94-54; Exemption Application Nos. D-
9343 & D-9344]
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 (1) the transfer by the Original Plan of a 57
percent interest (the Interest) in certain real property (the
Property), including a 57 percent lessor's interest, to the New Plan;
and (2) the leases of the Property (the New Leases) by the Original
Plan and the New Plan to Radiology Medical Group, Inc., and Radiation
Medical Group, Inc. (together, the Employers), the sponsors of the
Plans; provided the following conditions are satisfied:
(A) All terms of the transactions are no less favorable to the
Plans than those which the Plans could obtain in arms-length
transactions with unrelated parties;
(B) The interests of the Plans under the New Leases are represented
by an independent fiduciary, the Union Bank of San Diego, California
(the Fiduciary), which will monitor the Employers' performance of
obligations under the New Leases and compliance with the conditions of
this exemption, including all actions necessary to enforce such
obligations and conditions;
(C) At all times under the New Leases, the Plans receive rent which
is no less than the fair market rental value of the Property and which
is net of all real estate taxes and costs of repair, maintenance and
insurance;
(D) At all times under the New Leases, each Plan's interest in the
Property constitutes less than twenty-five percent of the total value
of all assets held by the Plan; and
(E) Any extension or renewal of the New Leases beyond the initial
terms is expressly approved by the Fiduciary.
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 May 12, 1994 at 59 FR
24736.
FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Hartford Life Insurance Company (Hartford Life) and Hartford Investment
Management Company (HIMCO) Located in Hartford, Connecticut
[Prohibited Transaction Exemption 94-55; Exemption Application Nos.
D-9458 and D-9459]
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 sales and transfers of assets of employee benefit
plans (the Plans) to Hartford Life pursuant to the terms of a synthetic
guaranteed investment contract (Synthetic GIC) entered into by the Plan
with Hartford Life and HIMCO, provided the following conditions have
been met: (a) prior to the execution of such Synthetic GIC, an
independent fiduciary of such Plan receives a full and detailed written
disclosure of all material features of the Synthetic GIC, including all
applicable fees and charges; (b) following receipt of such disclosure,
the Plan's independent fiduciary approves in writing the execution of
the Synthetic GIC on behalf of the Plan; (c) all fees and charges
imposed under such Synthetic GIC are reasonable; (d) each Synthetic GIC
will specifically provide for an objective means for determining the
fair market value of the securities owned by the Plan pursuant to the
Synthetic GIC; (e) Hartford Life will maintain books and records of all
transactions which will be subject to annual audit by independent
certified public accountants selected by and responsible solely to the
Plan; and (f) the Synthetic GIC will be offered only in principal
amounts of $50 million or more.
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 May 12, 1994 at 59 FR
24731.
FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz 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 are true and complete and accurately describe all material
terms of the transaction which is the subject of the exemption. In the
case of continuing exemption transactions, if any of the material facts
or representations described in the application change after the
exemption is granted, the exemption will cease to apply as of the date
of such change. In the event of any such change, application for a new
exemption may be made to the Department.
Signed at Washington, D.C., this 8th day of July, 1994.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 94-16979 Filed 7-12-94; 8:45 am]
BILLING CODE 4510-29-P
