[Federal Register Volume 62, Number 139 (Monday, July 21, 1997)]
[Notices]
[Pages 39027-39031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19130]
[[Page 39027]]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Application No. D-10310, et al.]
Proposed Exemptions; Bricklayers and Allied Crafts Local No. 74
of DuPage County
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 restriction 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
request 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. 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.
Pension Fund of the Bricklayers and Allied Crafts, Local No. 74 of
DuPage County, Illinois, a/k/a Masons' and Plasterers', Local No. 74 of
Dupage County, Illinois (the Pension Plan) and Bricklayers and Allied
Craftsmen Local No. 74 Apprenticeship, Education and Training Trust
Fund (the Apprenticeship Plan; Together, the Plans) Located in
Westmont, Illinois
[Application No. D-10310 and L-10311]
Proposed Exemption
The Department is considering granting an exemption under the
authority of section 408(a) of the Act 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 section 406(b)(2) of the Act shall not apply to the proposed sale of
certain real property (the Property) by the Apprenticeship Plan to the
Pension Plan, provided the following conditions are satisfied: (1) The
sale is a one-time transaction for cash; (2) no commissions or other
expenses are paid by the Plans in connection with the sale; (3) the
purchase price for the Property represents its fair market value as
determined by a qualified, independent appraiser; and (4) the Pension
Plan's independent fiduciary and the Apprenticeship Plan's trustees
have reviewed the proposed transaction and have determined that the
transaction is appropriate for each of the Plans and in the best
interest of the Plans' participants and beneficiaries.
Summary of Facts and Representations
1. The Apprenticeship Plan is a welfare plan providing
apprenticeship training services. It was formed as a result of a trust
agreement entered by the Southern DuPage County Contractors Association
and the Bricklayers and Allied Crafts, Local No. 74 of DuPage County,
Illinois, a/k/a Masons' and Plasterers' Local Union No. 74 of DuPage
County, Illinois (the Union). The Pension Plan was also formed as a
result of a trust agreement between these same two entities and is a
qualified pension plan. The Apprenticeship Plan has approximately 300
participants and assets of approximately $115,282. The Pension Plan has
approximately 400 participants and had assets with a fair market value
of approximately $14,459,758 as of December 1, 1995. The Plans have
three common management trustees and one common Union trustee.
2. The Plans each currently own adjoining condominiums located at
6422 South Cass Avenue and 6424 South Cass Avenue in Westmont,
Illinois. The condominium at 6422 South Cass Avenue has been owned by
the Pension Plan, while the condominium at 6424 South Cass Avenue
(i.e., the Property) has been owned by the Apprenticeship Plan.
Pursuant to cost-sharing arrangements, the Pension Plan currently acts
as a lessor in the condominium it owns at 6422 South Cass Avenue to the
Union and to the Bricklayers and Allied Craftsmen Local Union No. 74 of
DuPage County, Illinois Welfare Plan (the Welfare Plan). The
Apprenticeship Plan acts as a lessor in the Property to the Union, the
Welfare Plan and the Pension Plan. The rental rates charged by the
Plans are based upon a survey of area rental property. These amounts
are contained in five year leases which are subject to cancellation
upon reasonably short notice and which permit annual increases based
upon increased costs of the owner of the real estate. The relevant
offices are occupied by no entities other than the Union and its
Pension, Apprenticeship and Welfare Plans. The applicants represent
that the leases are exempt from the prohibited transaction restrictions
under Prohibited Transaction Exemptions (PTEs) 76-1 (41
[[Page 39028]]
FR 12740, March 26, 1976) and 77-10 (42 FR 33918, July 1, 1977).
1
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\1\ In this proposed exemption, the Department expresses no
opinion as to whether the leases have been exempt under PTEs 76-1
and 77-10.
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3. Under the exemption proposed herein, the Apprenticeship Plan
will sell the Property to the Pension Plan. The purchase price for the
Property is to be $96,000. This price was established by an independent
appraisal of the Property performed by an independent appraiser, Mr.
Matthew R. Bulthuis, of Oak Brook, Illinois as of April 30, 1996. Mr.
Bulthuis has updated the appraisal as of April 30, 1997, and determined
that the Property still had a fair market value of $96,000 as of that
date. The applicants have requested relief from section 406(b)(2) of
the Act because all of the management trustees for both the Pension
Plan and the Apprenticeship Plan are identical, and one of the Union
trustees is common to both Plans.
4. Following the purchase of the Property by the Pension Plan, it
is anticipated that the usage of the Property will remain essentially
unchanged. The Union and the Welfare Plan will continue to act as
lessees of space in the Property under current leases, with the
identity of the lessor changed from the Apprenticeship Plan to the
Pension Plan. The Pension Plan will no longer lease space since it will
own the Property.
5. The Plans' motivation for entering into the proposed transaction
stems from the changing needs of the Plans and the Union. In previous
years, the Property was utilized as an apprenticeship training school
by the Apprenticeship Plan. These services are now provided at other
locations. The Apprenticeship Plan thus has little need for controlling
real estate at this location. In contrast, the Pension Plan and the
Union both have increasing needs for office space. In order to free the
Apprenticeship Plan to concentrate on the performance of services for
its participants, to simplify accounting procedures with respect to
office sharing arrangements, and to reflect the actual current patterns
of use of the Property, the Plans' have determined it to be in their
best interests to have the Apprenticeship Plan sell the Property to the
Pension Plan. While the Plans believe that they could continue to share
space pursuant to PTEs 76-1 and 77-10, 2 the Plans believe
it is in their best interests to centralize ownership in the Pension
Plan. In so doing, the number of leases can be reduced, the
Apprenticeship Plan can be freed from its role as landlord, and the
number of transactions involving transfers of rent from the Plans or
the Union to a landlord Plan minimized.
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\2\ See footnote 1, above.
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6. Union Labor Life Insurance Company, through its Director of Real
Estate Investments, Mr. David S. Glasner, has acted as an independent
fiduciary for the Pension Plan with respect to the proposed
transaction. Mr. Glasner has reviewed the proposed transaction and
determined that it is appropriate for the Pension Plan and in the
Pension Plan's best interests. While there are numerous alternative
locations which the Pension Plan could acquire or lease for the purpose
of conducting its business, Mr. Glasner states that the Property is
clearly the most suitable. The Property is adjacent to a condominium
unit owned by the Pension Plan which it utilizes for administrative
purposes. The Pension Plan is in need of additional working space, and
acquisition of the Property will save the Pension Plan significant
relocation costs and eliminate potential business disruptions. In view
of these factors, as well as having reviewed the appraisal prepared by
Mr. Bulthuis and considered that the Property will represent a small
percentage of the assets of the Pension Plan (approximately 0.66
percent), it is Mr. Glasner's opinion that the proposed acquisition is
appropriate for the Pension Plan and in the best interests of its
participants and beneficiaries.
7. In summary, the applicants represent that the proposed
transaction satisfies the criteria contained in section 408(a) of the
Act because: (a) The sale is a one-time transaction for cash, and no
commissions or other expenses will be paid in connection with the
transaction; (b) the Property represents less than 1% of the assets of
the Pension Plan; (c) the purchase price for the Property was
determined by an appraisal performed by Mr. Bulthuis, a qualified
independent appraiser; and (d) the trustees of the Apprenticeship Plan
and Mr. Glasner of Union Labor Life Insurance Company, the independent
fiduciary for the Pension Plan, have determined that the proposed
transaction is appropriate for their respective Plans and in the best
interest of the Plans' participants and beneficiaries.
For Further Information Contact: Gary H. Lefkowitz of the
Department, telephone (202) 219-8881. (This is not a toll-free number.)
H. Weiss & Company, Incorporated Defined Benefit Pension Plan (The
Plan) Located in New York, New York [Application No. D-10402]
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 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 a certain
condominium unit (the Property) located in New York, New York, to Hanna
Weiss, a party in interest with respect to the Plan, provided that the
following conditions are satisfied:
(A) All terms of the transaction are at least as favorable to the
Plan as those which the Plan could obtain in an arm's-length
transaction with an unrelated party;
(B) The sale is a one-time transaction for cash;
(C) The Plan pays no commissions nor other expenses relating to the
sale;
(D) The purchase price is the greater of: (1) The fair market value
of the Property as determined by a qualified, independent appraiser, or
(2) the original acquisition price; 3
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\3\ The original acquisition cost is determined as follows:
(original purchase price + aggregate real estate taxes + aggregate
condominium association fees)-aggregate rental income = original
acquisition cost.
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(E) Before the transaction is consummated, the Plan has received
rental payments of no less than the Property's fair market rental value
for each month of the Plan's ownership of the Property during which it
was occupied by Hanna Weiss, a party in interest with respect to the
Plan; and
(F) Within 60 days of the publication in the Federal Register of a
notice granting the exemption proposed herein, if granted, Weiss makes
final payment to the Internal Revenue Service of any remaining unpaid
excise taxes which are applicable under section 4975(a) of the Code by
reason of the Plan's rental of the Property to a party in interest.
Summary of Facts and Representations
1. The Plan is a defined benefit plan with five (5) participants
and total assets of $479,934 as of September 30, 1995. As of the same
date, the present value of accrued benefits under the Plan was
[[Page 39029]]
$466,384. The Plan is sponsored by H. Weiss & Company, Incorporated
(the Company), an Ohio Corporation, with its principal office in New
York, which is engaged in the business of gold wholesaling. The Company
is in the process of terminating the Plan. The Plan's address is 579
Fifth Avenue, Suite 840, New York, New York. Ms. Hanna Weiss (Weiss) is
the Plan trustee and the sole shareholder of the Company. It is
represented that Weiss makes investment decisions for the Plan.
2. Among the assets of the Plan is the Property, a condomimium unit
in Trump Parc, a Trump Corporation development located at 106 Central
Park South in New York City. The Plan purchased the Property for
$190,000 on March 28, 1988, in a one-time transaction for cash, from
Park South Associates, an unrelated party.4
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\4\ The Department notes that the decisions to acquire and hold
the Property are governed by the fiduciary responsibility
requirements of Part 4, Subtitle B, Title I of the Act. In this
regard, the Department herein is not proposing relief for any
violations of Part 4 of the Act which may have arisen as a result of
the acquisition and holding of the Property.
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3. After the Plan purchased the Property, Weiss in her capacity as
Plan trustee attempted to rent the Property. Weiss listed the Property
for rental with the Trump Corporation (Trump), which owns and leases
similar units in the Trump Parc development. Weiss secured a tenant
(Tenant) through Trump for September 1, 1988 and the Property was
continuously occupied by the Tenant until May 31, 1989 at a monthly
rental rate of $1,300. During June and July of 1989 the Tenant failed
to remit the full amount of the rent and made payments of $650.00 per
month. At the end of July of 1989, the Tenant vacated the Property and
it was not rented for August, September and October of 1989. It is
represented that Weiss was unable to find another unrelated person to
rent the Property after July of 1989, and therefore she decided to rent
the Property.
On November 1, 1989, Weiss entered into a rental arrangement
(Rental Arrangement) with the Plan and began to occupy the Property and
pay rent to the Plan at a monthly rental rate of $1,300. Weiss
presently continues to rent the Property and the rent has never been
increased during her occupancy. From November 1, 1989 through November
30, 1996, Weiss paid $110,700 in rent to the Plan.
4. Between March 28, 1988, the date on which the Property was
purchased, and November 30, 1996, the Plan collected a total of
$123,500 in income attributable to the rental of the Property. During
the same period, the Plan paid real estate taxes of $20,242.92, and
condominium associate fees of $27,984.54 on the Property. In this
regard, the Plan recognized net rental income of $75,272.54.
5. Weiss represents that after she was advised by the Plan's
actuary that the Rental Arrangement may constitute a prohibited
transaction under the Act, she met with legal counsel to discuss the
alternatives available to address the issue. Weiss determined that the
Plan should liquidate the Property. Weiss is proposing to purchase the
Property from the Plan and is requesting an exemption for the purchase
transaction under the terms and conditions described herein.
Weiss proposes to purchase the Property from the Plan in a one-time
transaction for cash. It is represented that Weiss will pay the greater
of: (a) The Property's fair market value on the date of the sale, or
(b) the Plan's original acquisition cost. For purposes of the sale, the
original acquisition cost is determined as follows: (original purchase
price + aggregate real estate taxes + aggregate condominium association
fees) - aggregate rental income = original acquisition cost.
6. The Property was appraised by Lewis Tonks (Tonks), an
independent real estate appraiser certified by the State of New York,
on August 15, 1996. Tonks relied on the comparable sales method and
estimates that the fair market value of the Property is $155,000. In
the appraisal, Tonks indicates that the fair market value of the
Property would be $165,000 if the Property was not obsolete because it
did not have a kitchen. It is represented that Weiss removed the
kitchen from the Property in 1990, at her own expense. Weiss represents
that fair market value of the Property for the purposes of the sale
will be no less than $165,000.
7. Weiss states that she recently became aware that she may have
paid less that fair market rental value for the rental of the Property,
during the entire period of her occupancy. Weiss sought an assessment
of the Property's fair market rental value, on March 24, 1997, in order
to establish that the Plan received rent equal to fair market value
over the period that she has rented the Property. The assessment
(Assessment) was performed by Nancy Packes (Packes) of Feathered Nest,
a New York based residential brokerage company. It is represented that
Feathered Nest is Manhattan's largest rental company, and it produces
an extensive report on Manhattan rental values which has been published
in the New York Times and is relied upon by real estate professional,
developers and financial institutions. Packes is a real estate broker
licenced by the State of New York and the president of Feathered Nest.
Packes states that during the period of 1989 through 1996 the Property
should have rented for between $1,400 and $1,600 a month. Weiss
represents that she will remit to the Plan the difference between the
fair market rent and the rent actually paid, plus reasonable interest.
As a condition of this exemption proposed herein, Weiss is required to
pay the Plan the difference between the rent actually paid through the
sale date and the total rents due with interest.
8. The Department is not proposing exemptive relief for Weiss'
rental of the Property from the Plan. Weiss recognizes that her rental
of the Property since November of 1989 constitutes a prohibited
transaction under the Act and Code for which no exemptive relief is
proposed herein. Weiss represents that on or about March 13, 1997, she
paid the Internal Revenue Service (the Service) all applicable excise
taxes arising under section 4975(a) of the Code through December 31,
1996. Weiss has agreed that within 60 days of the publication in the
Federal Register of a notice granting the exemption proposed herein,
she will make final payment to the Service of any remaining unpaid
excise taxes applicable under section 4975(a) of the Code by reason of
the Rental Arrangement through the date of the sale.
9. Weiss represents that the sale transaction will occur as soon as
possible after the publication in the Federal Register of a notice
granting the exemption proposed herein, if granted. Weiss represents
that proposed transaction is favorable to the Plan because the sale
will be a one-time cash transaction and the Plan will incur no expenses
as a result of the sale. In addition, it is represented the sale is in
the best interests of the participants and beneficiaries because the
Plan is presently in the process of terminating and the sale will
provide liquidity to the Plan allowing it to pay benefits.
10. In summary, the applicant represents that the proposed
transaction satisfies the 408(a) of the Act for the following
reasons:(a) The transaction will enable the termination of an ongoing
prohibited transaction, the Rental Arrangement; (b) the Plan will
receive cash for the Property in the amount of no less than its
original acquisition cost and no less than its fair market value as of
the sale date; (c) the sale will be a one-time cash transaction and the
Plan will incur no expenses
[[Page 39030]]
related to the sale; (d) as a part of the transaction, the Plan will
receive the difference between the rents actually paid under the Rental
Arrangement and the rents due, with interest, in accordance with the
Assessment; and (e) Weiss will have paid all applicable excise taxes
under section 4975(a) of the Code with respect to the Rental
Arrangement which remain unpaid at the time of the sale transaction.
For Further Information Contact: Ms. Janet L. Schmidt of the
Department, telephone (202) 219-8883. (This is not a toll-free number.)
Martin D. Ross Individual Retirement Account (the IRA) Located in Boca
Raton, Florida
[Application No. D-10451]
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 CFR 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 March 4, 1996 sale by the IRA of certain debentures (the
Debentures) to Mr. Martin D. Ross (Mr. Ross), a disqualified person
with respect to the IRA, provided the following conditions were
satisfied: (1) The sale of the Debentures by the IRA was a one-time
transaction for cash; (2) the IRA received no less than the fair market
value of the Debentures as of the time of the sale; and (3) as soon as
Mr. Ross became aware that the transaction was prohibited, he reversed
the transaction.5
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\5\ Pursuant to 29 CFR 2510.3-2(d), the IRA is not within the
jurisdiction of 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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Effective Date: If the proposed exemption is granted, the exemption
will be effective March 4, 1996.
Summary of Facts and Representations
1. Mr. Ross is the only participant in the IRA, and has sole
investment responsibility under the IRA. His wife, Bonnie P. Ross, is
his currently designated beneficiary. The IRA is sponsored by Mesirow
Financial, Inc. (Mesirow) of Chicago, Illinois. The total value of
assets of the IRA as of December 31, 1996 was approximately $704,000.
2. The Debentures were originally purchased by the IRA on April 7,
1994 at their fair market value of $200,000. In early March, 1996, the
Debentures, which were 7% convertible subordinate debentures of BLC
Financial Services, Inc. (BLC), accounted for almost 50% of the IRA's
assets. Mr. Ross wished to diversify the IRA's assets and instructed
Mr. Berkson, his broker at Mesirow, to sell the Debentures at their
fair market value to his personal account at Mesirow. The applicant
represents that had Mr. Ross been aware that such a sale was a
prohibited transaction under section 4975 of the Code, he would not
have instructed the sale of the Debentures to himself.
3. However, on March 4, 1996, Mr. Ross sold the Debentures from the
IRA to his personal account for the fair market value of the
Debentures, $200,000. The fair market value of the Debentures,
$200,000, was based on a letter from BLC to Mesirow dated February 27,
1996. The applicant represents that the parties first became aware in
late 1996 that the sale was a prohibited transaction. In mid-December,
1996, Mesirow's compliance department distributed a memorandum from the
New York Stock Exchange (NYSE) outlining the requirements for ``sales''
between related parties, and Mr. Berkson asked the compliance
department whether the sale from the IRA to Mr. Ross met the
requirements for a ``sale'' under the NYSE's rules, not knowing that
the sale was a prohibited transaction. When Mesirow's compliance
department became aware of the March 4, 1996 sale, it determined that
the sale was a prohibited transaction.
4. The Debentures were converted into 740,742 shares of BLC common
stock (the Stock), and Mr. Ross received the Stock on June 13, 1996. On
December 31, 1996, the fair market value of the Stock was about
$509,000. Therefore, the appreciation in the value of the Stock
occurred between March 4, 1996 and December 31, 1996.
5. When Mr. Ross learned on December 29, 1996, that the March 4,
1996 sale of the Debentures by the IRA was a prohibited transaction, he
immediately instructed Mr. Berkson to cancel the March 4, 1996
transaction. At this point, Mesirow reversed the transaction. The
applicant represents that this December 29, 1996 reversal was a
``correction'' of the March 4, 1996 prohibited transaction within the
meaning of Treas. Reg. Section 53.4941(e)-1(c), and therefore does not
constitute a separate prohibited transaction. 6 The
applicant represents that since the sale of the Debentures on March 4,
1996 by the IRA was for their fair market value, and the December 29,
1996 cancellation reversed the transaction in its entirety, there was
no intent to benefit the IRA or Mr. Ross by canceling the transaction.
The applicant states that Mr. Ross did not cancel the March 4, 1996
transaction because the Stock had appreciated, but rather because he
was informed that the March 4 sale had been a prohibited transaction.
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\6\ The Department expresses no opinion herein as to whether the
December 29, 1996 sale of the Stock by Mr. Ross to the IRA
constituted a correction within the meaning of Treas. Reg. section
53.4941(e)-1(c).
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6. In summary, the applicant represents that the subject
transaction satisfied the criteria contained in section 4975(c)(2) of
the Code because: (a) The March 4, 1996 sale was a one-time transaction
for cash; (b) the IRA received no less than the fair market value of
the Debentures as of the time of the sale; (c) as soon as Mr. Ross
became aware that the transaction was prohibited, he reversed the
transaction; and (d) Mr. Ross is the only participant in his IRA, and
he determined that the subject transaction (and its subsequent
cancellation) were appropriate for and in the best interest of his IRA,
and he desired that the transactions be consummated with respect to his
IRA.
Notice to Interested Persons: Because Mr. Ross is the only
participant in his IRA, it has been determined that there is no need to
distribute the notice of proposed exemption to interested persons.
Comments and requests for a hearing are due 30 days after publication
of this notice in the Federal Register.
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 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
[[Page 39031]]
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 16th day of July, 1996.
Ivan Strasfeld,
Director of Exemption Determinations Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 97-19130 Filed 7-18-97; 8:45 am]
BILLING CODE 4510-29-P
