[Federal Register Volume 61, Number 182 (Wednesday, September 18, 1996)]
[Notices]
[Pages 49171-49176]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23927]
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DEPARTMENT OF LABOR
[Prohibited Transaction Exemption 96-69; Exemption Application No. D-
10189, et al.]
Grant of Individual Exemptions; Westinghouse Savannah River
Company/Bechtel Savannah River, Inc. Pension 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
[[Page 49172]]
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.
Westinghouse Savannah River Company/Bechtel Savannah River, Inc.
Pension Plan (the Plan), Located in Aiken, South Carolina
[Prohibited Transaction Exemption 96-69; Exemption Application No. D-
10189]
Exemption
The restrictions of section 406(a)(1)(A), 406(a)(1)(D), 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), 4975(c)(1)(D), and 4975(c)(1)(E) of the Code shall not
apply,1 effective October 15, 1994, to the past and future use by
the U. S. Department of Energy (DOE) 2, acting on behalf of
Westinghouse Savannah River Company (WSRC) and Bechtel Savannah River,
Inc. (BSRI), parties in interest with respect to the Plan, of portions
of DOE's interest in Group Annuity Contract GR-409 (GR-409) issued by
Connecticut General Life Insurance Company (CGLIC), an insurance
company headquartered in Hartford, Connecticut, to purchase interests
for the Plan in CGLIC Group Annuity Contract IN-16111 (IN-16111) for
the purpose of funding the benefits under the Plan; provided that:
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1 For purposes of this exemption, references to specific
provisions of Title I of the Act, unless otherwise specified, refer
also to the corresponding provisions of the Code.
2 References to DOE include, where applicable, DOE's
predecessors, the Energy Research and Development Administration and
the Atomic Energy Commission.
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(1) The use by DOE, acting on behalf of WSRC and BSRI, of portions
of DOE's interests in GR-409 to purchase additional interests in IN-
16111 on behalf of the Plan has benefited and will benefit the Plan to
the same extent, as contributions of cash by DOE to such Plan;
(2) The fair market value of the debits to GR-409 that have
occurred or will occur, as a result of the use of portions of GR-409 by
DOE to purchase additional interest in IN-16111 on behalf of the Plan,
has exactly matched and will exactly match the fair market value of the
credits to IN-16111 acquired by the Plan as a result of such purchase
transactions;
(3) The Plan has received and will receive interests in IN-16111
that have a fair market value equal to the fair market value of the
interests the Plan would have received had DOE or WSRC acquired
additional interests in IN-16111 for the Plan for cash;
(4) The value of the expected earnings received by the Plan from
the interests in IN-16111 purchased by DOE with portions of GR-409 has
been and will be the same, as if those interests were or are purchased
with cash;
(5) The named fiduciary of the Plan has determined that the
transactions have been and will be prudent, feasible, and in the
interest of and protective of the Plan;
(6) CGLIC, an independent, qualified third party, has determined
and will continue to determine the fair market value of the interests
in GR-409, as of the date of each purchase transaction;
(7) The actuary for the Plan has determined and will continue to
determine the minimum funding requirement of the Plan and has
determined and will continue to determine the extent to which the
amount credited to the Plan's funding standard account by virtue of the
use of the interest in GR-409 satisfies the minimum funding
requirement;
(8) The actuary of the Plan has monitored and will continue to
monitor the transactions on behalf of the Plan, as well as the terms
and conditions of the exemption at all times;
(9) No more than 25% of the assets of the Plan has been or will be
involved in the transactions;
(10) The Plan has not, nor will the Plan in the future, incur any
fees, costs, or other charges or expenses as a result of the
transactions; and
(11) If, by the required filing date of the Form 5500 (including
extensions) for any year, the aggregate book value 3 of the
interests in IN-16111 purchased for the Plan is less than the aggregate
amount credited to the Plan's funding standard account as a result of
such purchases, DOE will (by the filing date of the Form 5500 for such
year) purchase an additional interest in IN-16111 for the Plan that has
a book value equal to the shortfall or contribute to the Plan cash in
the amount of such shortfall.
\3\ It is represented that the book value of an annuity contract
represents the amount contributed to such contract, plus accumulated
interest credited to date, less amounts withdrawn from such
contract. Fair market value, on the other hand, represents the
market value of the general account assets in which a contract is
deemed to be invested for accounting purposes.
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EFFECTIVE DATE: The exemption is effective, as of October 15, 1994, the
date DOE first used, on behalf of WSRC and BSRI, portions of its
interests in GR-409 to acquire additional interests in IN-16111 for the
Plan.
Written Comments
In the Notice of Proposed Exemption (the Notice), the Department
invited all interested persons to submit written comments and requests
for a hearing on the exemption. All comments and requests for hearing
were due by September 4, 1996.
The Department received 24 letters from interested persons
commenting on the exemption. In addition, a number of interested
persons telephoned the Department. These individuals were assisted with
their questions by members of the staff of the Office of Exemption
Determinations of the Department. With respect to all the written
comments submitted by
[[Page 49173]]
interested persons, the Department forwarded copies to the applicants
and requested that the applicants address the various concerns raised
by the commentators in writing. In this regard, it is noted that the
number of comments discussed below exceeds the total number of letters
from commentators, because numerous letters contained more than one
concern. A description of the comments and the applicants' responses
are summarized below.
Sixteen (16) commentators neither opposed nor supported the
proposed exemption. Rather, these commentators expressed a lack of
understanding of the nature of the exemption and asked for a simple and
brief explanation. In response to these commentators, the applicants
state that, as permitted under the Act, WSRC has elected to satisfy its
funding obligations with respect to the Plan over the next several
years by permitting DOE to purchase, on behalf of WSRC, interests in a
group annuity contract for the Plan. In this regard, the exemption
would permit DOE to purchase such group annuity contract interests for
the Plan with interests in another annuity contract owned by DOE,
rather than with cash.
Other commentators opposed the exemption and raised questions and
concerns regarding the transactions described in the Notice. The
concerns expressed by these commentators generally related to: (a) The
impact of the exemption on the benefits provided under the Plan; (b)
the possible detrimental effect of the exemption on the funding of the
Plan; and (c) the decline in the book value of IN-16111.
The following summarizes the applicants' responses to these
concerns raised by commentators. With respect to (a) above, ten (10)
commentators expressed concern that the exemption in some way would
eliminate, diminish, or otherwise adversely affect the pensions payable
under the Plan.
In response, the applicants state that the exemption pertains only
to the funding of the Plan and does not change or affect in any way the
pension benefits payable under the Plan. As a result, the applicants
represent that the exemption will not affect a participant's
eligibility to receive a pension benefit or the amount of pension
benefit checks.
With respect to (b) above, nine (9) commentators expressed concern
that the exemption would have a detrimental effect on the level of Plan
funding or had other questions related to funding. In this regard, one
of the commentators expressed a general concern that funding would be
reduced. Another opposed the exemption because, ``it reduces the net
worth of the fund by moving assets from one part of the plan to another
and really does not provide payments into the plan.'' Two (2)
commentators stated concerns that the contributed assets were riskier
or could lose their value. Another commentator asked how the minimum
funding would be determined. Another commentator expressed a belief
that any surplus funding in the Plan should be preserved for the
benefit of participants. In the opinion of that same commentator the
transactions which are the subject of this exemption would reduce the
Plan to the minimum legal funding level. Finally, a single commentator
asked a number of questions related to the effect of the transactions
on funding.
In response to these comments, the applicants state that the Act
expressly permits the sponsor of a pension plan to satisfy its funding
obligations to such plan by purchasing interests in one or more annuity
contracts. In this regard, the applicants maintain that the exemption
does not relate to whether WSRC may fund the Plan by purchasing
interests in a group annuity contract instead of purchasing, for
example stocks and bonds, but rather, relates to whether such purchases
may be made using interests in another annuity contract owned by DOE.
The applicants state that the contributions which are the subject
of this exemption are expected to increase, and are expected to
maintain, the value of the assets of the Plan to the same extent as if
the additional interests in the Plan's annuity contract had been
purchased with cash. In this regard, the fair market value of each
contribution will be determined by CGLIC, an independent third party.
Further, Buck Consultants (Buck), the Plan's actuary, will ensure each
year that such contributions satisfy the minimum funding requirements
of the Plan.
With respect to the funding level of the Plan, the applicants
represent that the Plan is well-funded, with the value of the current
assets and receivables exceeding current liabilities by $73,846,957 as
of the end of 1995, and the Plan's portfolio is well-diversified, with
approximately 52 percent (52%) of the assets invested in a broad range
of equity securities, 34 percent (34%) in IN-16111, 8 percent (8%) in a
variety of fixed income securities, and 6 percent (6%) in cash and cash
equivalents.
In addition, the applicants state that although there is no reason
to expect that the subject transactions will endanger adequate funding
of the Plan, additional safeguards exist for participants and
beneficiaries under the Act. In this regard, if the value of the Plan's
assets becomes inadequate to meet the liabilities of the Plan, WSRC and
DOE would be required to contribute additional amounts to the extent
necessary to pay all benefits.
With respect to (c) above, one commentator expressed concern that
the book value of IN-16111 had decreased between 1990 and 1994. In
addition, the same commentator alleged that in the past DuPont has
refused to agree to a proposal similar to the one which is the subject
of this exemption.
In response to these comments, the applicants explain that the book
value of IN-16111 decreased between 1990 and 1994, because the Plan
exercised its option to cash out approximately 16 percent (16%) of the
value of that contract each year and reinvested the proceeds in
equities and other assets. Furthermore, the applicants represent that
the value of the remaining portion of IN-16111 has increased every year
and has proven to be a sound investment for the Plan. In response to
this commentator's other concern, the applicants represent that they
are not aware of any similar transactions with respect to the Plan
proposed in the past and rejected by DuPont.
In addition to the comments discussed above, the commentators
requested answers to various questions. The questions and the
applicants' answers are discussed in the paragraphs below.
First, at least one commentator asked why the Benefits Committee
could not be the trustee for all funds. In answer to this question, the
applicants state that the role of the Benefits Committee is to serve as
the Plan Administrator and named fiduciary with respect to the Plan.
The applicants maintain that NationsBank, as a financial institution
with significant experience holding and managing assets for its
clients, is better qualified to be the Plan's trustee than the Benefits
Committee.
Second, a commentator suggested that the Department supervise all
exempted transactions. In response, the applicant notes that it may not
be administratively feasible for the Department to monitor transactions
with respect to which a prohibited transaction exemption is granted.
However, the exemption includes several safeguards to protect the Plan
and its participants and beneficiaries. For example, CGLIC, an
independent third party insurance company, will determine the fair
market value of each contribution, ensuring that the contributions will
be equal in value to the amount that otherwise would have been paid in
cash. Further, Buck, the Plan's actuary, will ensure that the
contributions satisfy the minimum
[[Page 49174]]
funding requirement of the Plan each year.
Third, another commentator questioned whether the comment period
was of sufficient duration. In response to this question, the
applicants state that as a general matter applicants for exemption are
permitted fifteen (15) days after publication of a proposed exemption
in the Federal Register to post and/or to mail the notice of such
proposed exemption to all interested persons. Thereafter, all
interested persons have not less than thirty (30) days to comment on
the proposed exemption and, in certain circumstances, to request a
hearing. With regard to the subject exemption, the applicants agreed to
post and to mail the Notice more quickly, so that all interested
persons would see or receive the Notice not later than thirty (30) days
before the end of the comment period.
Fourth, a commentator asked what would happen if the exemption were
denied. In response, the applicants state that if the exemption were
denied, WSRC or DOE would be required to purchase the annuity interests
with cash, to contribute cash directly to the Plan, or to fund the Plan
under any other method permitted by the Act.
Seven (7) individual commentators requested a hearing with respect
to the exemption. Most of these commentators appear to have requested a
hearing because of their belief that the transaction would reduce their
retirement benefits. In addition, several commentators requested a
hearing but did not state a reason for such request.
In response the applicants believe that given the number of
participants and beneficiaries receiving the Notice, the number of
requests for hearing is de minimis. Moreover, the applicants maintain
that none of the few requests for a hearing presents a compelling
reason why a hearing should be held. Accordingly, the applicants
suggest that a hearing would be counterproductive and unnecessary.
The Department has considered the concerns expressed by the
individuals who have requested a hearing and the applicant's written
response addressing such concerns. After consideration of the materials
provided, the Department does not believe that any issues have been
raised which would require the convening of a hearing.
In addition to comments, questions, and requests for hearing from
commentators, the Department also received a comment letter, dated
August 30, 1996, from the applicants. In this letter, the applicants
requested certain modifications to the operant language of the
exemption, as proposed, and certain amendments which, according to the
applicants, should have been reflected in the language of the Summary
of Facts and Representations (SFR), as published in the Notice in the
Federal Register. The applicants' comments on the requested changes to
the conditions of the exemption and some of the suggested changes to
the SFR are discussed below in an order that corresponds to the
appearance of the relevant language in the Notice. The Department
acknowledges all other clarifications made by the applicant to the
information contained in the SFR. For further information regarding the
applicants' comments or other matters discussed herein, interested
persons are encouraged to obtain a copy of the exemption application
file (D-9915) which is available in the Public Documents Room of the
Pension and Welfare Benefits Administration, U.S. Department of Labor,
Room N-5638, 200 Constitution Avenue, N.W., Washington, D.C. 20210.
In their comment letter, the applicants point out that, as
described in their application for exemption, the Plan has acquired and
will acquire interests in IN-16111 that are equal or greater in value
to the additional interests the Plan would have received and will
receive had DOE purchased the interests with cash. Because the value of
an asset is equal to the present value of expected future returns, the
value of the expected earnings stream from the transferred interests
will be the same as from the interests DOE otherwise would have
purchased with cash. However, because the general account assets
underlying the interests purchased for the Plan have been and will be
different than if the interests were or are purchased with cash, the
applicants cannot guarantee that earnings have been and will be
precisely the same as if the interests were or are purchased with cash.
Accordingly, the applicants request that the language of condition 4,
as set forth in the Notice in column 3 on page 40006, should be
amended. In this regard, in the quotation below the changes requested
by the applicants have been underlined. Accordingly, the amendment
should read as follows: ``(4) the value of the expected earnings
received by the Plan from the interests in IN-16111 purchased by DOE
with portions of GR-409 has been and will be the same, as if those
interests were or are purchased with cash.'' In addition, the
applicants suggest that a conforming change also should have been made
to similar language, as set forth in paragraph (d) of section 21 of the
SFR in column 3 on page 40010 of the Notice. The Department concurs.
In addition to the change in the operant language of the exemption,
the applicants suggest that the SFR should have reflected the following
modifications in order to more accurately reflect the record. In this
regard, the underlined words or phrases in the passages from the
Notice, which are quoted below, contain the applicants' suggested
additions to the language of the SFR. Where omissions or substitutions
have occurred, the underlined words or phrases in the passages from the
Notice, which are quoted below, reflect the applicants' requested
changes to the language of the SFR. For the original wording of the
SFR, please refer to the Notice, as published in the Federal Register.
The Department concurs with all of the applicants' requested
modifications to the SFR.
In their comment letter, the applicants expressed concern that the
transactions which are the subject of this exemption may be viewed as
direct transfers of interests in GR-409 to the Plan by DOE, on behalf
of WSRC and BSRI. In order to clarify their position, the applicants
requested amendment to the language, as reflected in section 14 of the
SFR. Accordingly, the last sentence of the second paragraph of section
14 (column 2, page 40008 of the Notice) should have read: ``The
applicants are concerned that these transactions may be viewed as
contributions by DOE, on behalf of WSRC and BSRI, of interests in GR-
409 directly to the Plan or in consideration of the purchase of
interests in IN-16111 for the Plan.''
In the third sentence of the third paragraph of section 14 of the
SFR, it is represented that on July 17, 1995, $4,323,800 of interests
at book value in GR-409 were used as consideration to purchase
additional interests in IN-16111 for the Plan. The applicants have
clarified that the corresponding fair market value of such interests in
GR-409 at that time was $4,365,598. Accordingly, the following
footnote, ``The fair market value of the interest was $4,365,598,''
should have been inserted in the SFR in the third sentence of the third
paragraph of section 14 (column 3, on page 40008 of the Notice).
In section 14 of the SFR, it is represented that if the exemption
were granted, GR-409 would be exhausted over the next two (2) years
(projected to be toward the end of 1997). However, in their comment the
applicants indicate that GR-409 may not be exhausted until 1999.
Accordingly, the first sentence of the fourth paragraph of section 14
(column 3, on page 40008 of the Notice)
[[Page 49175]]
should have read: ``DOE wishes to continue, over the next three (3)
years until GR-409 is exhausted (projected to be towards the beginning
of 1999), to use GR-409 to satisfy its obligations under the Prime
Contract to reimburse WSRC for the cost of funding the Plan.''
The applicants have clarified that CGLIC is at all times obligated
to pay retirement benefits provided under the Plans, rather than to the
Plan. Accordingly, the second sentence of footnote 4 (column 3, on page
40008 of the Notice) should have read: ``Thus, CGLIC is at all times
obligated to pay retirement benefits provided under the Plan, as
contractholder of IN-16111, to the extent requested by the Trustee, up
to an aggregate amount not to exceed the book value of IN-16111.''
In the first sentence of the first paragraph of section 15, it is
represented that the applicants did not enter into the transactions
knowing that such actions might be prohibited. The applicants maintain
that a change in tense is necessary to this sentence in order to make
that representation consistent with other representations in that same
section. Accordingly, the first sentence of the first paragraph of
section 15 (column 1, on page 40009 of the Notice) should have read:
``It is represented that neither DOE nor any of the parties on behalf
of whom the exemption is sought participated in the past transactions
knowing that such were prohibited under the Act or under the Code.''
In section 17 of the SFR, it is represented that the total
percentage of the Plans assets anticipated to be involved in the
transactions would be approximately 24 percent (24%). The applicants
have clarified that, if the exemption is granted, no more than about 17
percent of the assets of the Plan will be invested in IN-16111, if the
portion of IN-16111 that was transferred to the Plan on December 30,
1990 in the trust-to-trust transfer is ignored. Accordingly, the
penultimate sentence of section 17 (column 3, on page 40009 of the
Notice) should have read, ``In this regard, it is anticipated that
future uses by DOE of portions of GR-409 will increase the total
percentage of Plan assets that have been or will be involved in the
transactions to approximately 17 percent (17%).'' Further, the
applicants suggest that at the end of the sentence quoted above the
following footnote should have been inserted, ``i.e., it is anticipated
that no more than about 17 percent of the Plan's assets will be
invested in IN-16111, disregarding the portion of IN-16111 that was
transferred to the Plan on December 30, 1990, from the Du Pont Plan in
a trust-to-trust transfer.'' In addition, the applicants suggest that a
conforming change should also have been made in paragraph (i) of
section 21 (column 3, on page 40010 of the Notice).
Accordingly, after giving full consideration to the record,
including the comments by commentators and the comments and responses
of the applicants, the Department has determined to grant the
exemption, as described and amended herein. In this regard, the
comments submitted to the Department have been included as part of the
public record of the exemption application. The complete application
file, including all supplemental submissions received by the
Department, is made available for public inspection in the Public
Documents Room of the Pension Welfare Benefits Administration, Room N-
5507, U.S. Department of Labor, 200 Constitution Avenue N.W.,
Washington, D.C. 20210.
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 Wednesday, July 31, 1996
at 61 FR 40005.
FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc of the
Department, telephone (202) 219-8883 (This is not a toll-free number.
Dillard's Marine & Sports Center, Inc. Profit Sharing Plan (the Plan),
Located in Anderson, South Carolina
[Prohibited Transaction Exemption 96-70; Exemption Application No. D-
10214]
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 loan of $47,962.50 (the Loan) by the
Plan from the individual account of Willard M. Dillard, Jr. to
Dillard's Marine & Sports Center, Inc., the sponsoring employer of the
Plan and a party in interest with respect to the Plan; provided that
(1) The terms and conditions of the Loan are no less favorable to the
Plan than those obtainable in an arm's-length transaction with an
unrelated third-party at the time the Loan is consummated; (2) the Loan
will at all times be secured by collateral having a value that exceeds
150 percent of its outstanding principal; (3) the Loan will be at all
times less than 25 percent of the balance in the individual account
maintained in the Plan for William M. Dillard, Jr.; and (4) an
independent fiduciary will approve and monitor the transaction and take
whatever actions are necessary to protect the interests of the Plan.
For a 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 July 22, 1996, at 61 FR
37926.
FOR FURTHER INFORMATION CONTACT: Mr. C. E. Beaver of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Normike Industries, Inc. Profit Sharing Plan (the Plan), Located in
Plainville, Connecticut
[Prohibited Transaction Exemption 96-71; Exemption Application No. D-
10239]
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 improved real
property located in Plainville, Connecticut to Norman and Diane Stoll
(the Stolls), parties 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 Plan incurs no costs or expenses related to the
transaction;
(C) The Plan receives a cash purchase price for the Property in the
amount of no less than the greater of (1) The Property's fair market
value as of the date of the sale, or (2) $57,500;
(D) 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 in which the
Property was occupied by Normike Industries, Inc. (the Employer), the
sponsor of the Plan; and
(E) Within 60 days of the publication in the Federal Register of
this Notice granting the exemption, the Employer 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
Employer's lease of the Property from the Plan.
EFFECTIVE DATE: This exemption is effective as of August 20, 1996.
Written Comments
The Department received one written comment and no requests for a
hearing with respect to the proposed exemption.
[[Page 49176]]
The comment was submitted by the Stolls, who requested that the
exemption be effective as of August 20, 1996, the date on which the
Stolls consummated the purchase of the Property from the Plan. The
Stolls explain that they chose to proceed with the purchase transaction
on that date in order to terminate as soon as possible the ongoing
lease between the Plan and the Employer. Accordingly, the Department
has determined to grant the exemption with an effective date of August
20, 1996.
For a more complete statement of the facts and representations
supporting this exemption, refer to the notice of proposed exemption
published on July 22, 1996 at 61 FR 37926.
FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Mei Technology Corporation 401(k) Plan (the Plan), Located in
Lexington, Massachusetts
[Prohibited Transaction Exemption 96-72; Exemption Application No. D-
10281]
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 cash sale (the Sale) of Guaranteed
Annuity Contract No. GA-7192, Certificate Nos. 0001-0004 (collectively,
the GAC), issued by Mutual Benefit Life Insurance Company, by the Plan
to Mei Technology, the sponsoring employer of the Plan and a party in
interest with respect to the Plan; provided that (1) The Sale is a one-
time transaction for cash; (2) the Plan experiences no loss nor incurs
any expenses from the Sale; and (3) the Plan receives as consideration
from the Sale an amount that is equal to the book value of the GAC as
of the date of the Sale, as specified in paragraph 5 of the notice of
proposed exemption published on July 22, 1996, at FR 37931.
For a 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 July 22, 1996, at FR
37931.
FOR FURTHER INFORMATION CONTACT: Ms. Marianne H. Cole 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 13th day of September, 1996.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 96-23927 Filed 9-17-96; 8:45 am]
BILLING CODE 4510-29-P
