E6-15922. Prohibited Transaction Exemption 2006-13; Grant of Individual Exemptions

AGENCY:

Employee Benefits Security Administration, Labor.

ACTION:

Grant of individual exemption.

SUMMARY:

This document contains an exemption 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).

A notice was published in the Federal Register of the pendency before the Department of a proposal to grant such exemption. The notice set forth a summary of facts and representations contained in the application for exemption and referred interested persons to the application for a complete statement of the facts and representations. The application has been available for public inspection at the Department in Washington, DC. The notice also invited interested persons to submit comments on the requested exemption to the Department. In addition the notice stated that any interested person might submit a written request that a public hearing be held (where appropriate). The applicant has represented that it has complied with the requirements of the notification to interested persons. No requests for a hearing were received by the Department. Public comments were received by the Department as described in the granted exemption.

The notice of proposed exemption was issued and the exemption is being granted solely by the Department because, effective December 31, 1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 (1996), 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 exemption is administratively feasible;

(b) The exemption is in the interests of the plan and its participants and beneficiaries; and

(c) The exemption is protective of the rights of the participants and beneficiaries of the plan.

The Young Men's Christian Association Retirement Fund—Retirement Plan (the Plan), Located in New York, NY

Exemption

Transactions and Conditions

(a) 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, effective July 1, 2006, to:

(1) Any arrangement, agreement or understanding between The Young Men's Christian Association Retirement Fund Retirement Plan (the Plan) and any participating employer whose employees are covered by the Plan, whereby the time is extended for the making of a contribution by such a participating employer to such Plan, if the following conditions are met:

(i) Prior to entering into such arrangement, agreement or understanding, the Plan has made, or has caused to be made, such reasonable, diligent and systematic efforts as are appropriate under the circumstances to collect such contribution;

(ii) The terms of such arrangement, agreement or understanding are set forth in writing and are reasonable under the circumstances based on the likelihood of collecting such contribution or the approximate expenses that would be incurred if the Plan continued to attempt to collect such contribution through means other than such arrangement, agreement or understanding;

(iii) Such arrangement, agreement or understanding is entered into or renewed by the Plan in connection with the collection of such contribution and for the exclusive purpose of facilitating the collection of such contribution;

(iv) The Plan's procedures and the guidelines to be followed in undertaking to collect such contributions are described in a notice provided to all the employers participating in the Plan. This notice details the Plan's standard operating guidelines for the collection of late employer contributions (the Notice). The Notice provided to all participating employers contains the methodology of the Plan that applies with respect to the determination to extend the time period for the making of such delinquent contribution or to permit such delinquent contribution to be made in periodic payments. New participating employers will receive the Notice within 30 days of signing the written participation agreement; and

(v) The extension of time does not apply to any failure of an employer to timely remit participant contributions to the Plan.

(2) A determination by the Plan to consider a contribution due to the Plan from any participating employer any of whose employees are covered by the Plan as uncollectible and to terminate efforts to collect such contribution, if the following conditions are met:

(i) Prior to making such determination, the Plan has made, or has caused to be made, such reasonable, diligent and systematic efforts as are appropriate under the circumstances to collect such contribution or any part thereof;

(ii) Such determination is set forth in writing and is reasonable and appropriate based on the likelihood of collecting such contribution or the approximate expenses that would be incurred if the Plan continued to attempt to collect such contribution or any part thereof;

(iii) The Notice provided to all participating employers, which is described in section (a)(1)(iv) above, must also contain the methodology used by the Plan with respect to the determination that the delinquent contribution is uncollectible and in deciding to terminate efforts to collect such contribution; and

(iv) The determination that the contribution is uncollectible and the decision to terminate efforts to collect such contribution do not apply to any failure of an employer to timely remit participant contributions to the Plan.

(b) If an employer any of whose employees are covered by the Plan enters into an arrangement, agreement or understanding with the Plan as described in subparagraph (a)(1) with respect to the payment of such contribution, or if the Plan makes a determination described in subparagraph (a)(2), such employer shall not be subject to the civil penalty which may be assessed under section 502(i) of the Act, or to the taxes imposed by section 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(A) through (D) of the Code, except in the case of an arrangement, agreement or understanding described in subparagraph (a)(1), where the terms thereof are clearly unreasonable under the circumstances based on the likelihood of collecting such contribution or the approximate expenses that would be incurred if the Plan continued to attempt to collect such contribution through means other than such arrangement, agreement or understanding.

(c) The Plan maintains for a period of six years the records necessary to enable the persons described in paragraph (d) below to determine whether the conditions of this exemption have been met, except that:

(1) A prohibited transaction will not be considered to have occurred if, due to circumstances beyond the control of the Plan, the records are lost or destroyed prior to the end of the six-year period, and

(2) No party in interest other than the Plan's fiduciaries shall be subject to the civil penalty that may be assessed under section 502(i) of ERISA or to the taxes imposed by section 4975(a) and (b) of the Code if the records are not maintained or not available for examination as required by paragraph (d) below.

(d)(1) Except as provided in subparagraph (d)(2) below and notwithstanding any provisions of section 504(a)(2) and (b) of ERISA, the records referred to in paragraph (c) above are unconditionally available at their customary location for examination during normal business hours by:

(i) Any duly authorized employee or representative of the Department of Labor or the Internal Revenue Service;

(ii) Any fiduciary of the Plan or any duly authorized employee or representative of such fiduciary;

(iii) Any participating employer of the Plan; and

(iv) Any participant or beneficiary of the Plan or duly authorized employee or representative of such participant or beneficiary.

(2) None of the persons described in subparagraph (d)(1)(ii), (iii) and (iv) above shall be authorized to examine commercial or financial information which is privileged or confidential, or records that are unrelated to the Plan.

Comments: The Notice in the Federal Register, at 71 FR 41470 (July 21, 2006) (the Proposed Exemption), invited interested persons to submit comments on the Proposed Exemption and/or to request that a public hearing be held. In response to the solicitation of comments from interested persons, the Department received one written comment from an interested person. The comment was in full agreement with the Proposed Exemption and stated that the overall quality of the Fund will be greatly improved. The Department received one negative comment by telephone from an interested person. The Department determined that this comment did not relate to the transactions described in the Proposed Exemption. The Department received no request that a public hearing be held on the Proposed Exemption.

The Department has considered the entire record and has determined to grant the exemption. For a complete statement of the facts and representations supporting the Department's decision to grant this exemption, refer to the Notice of the Proposed Exemption.

FOR FURTHER INFORMATION CONTACT:

Wendy M. McColough of the Department, telephone [phone]. (This is not a toll-free number.)

Little Rock Diagnostic Clinic, P.A. Profit Sharing Plan (the Plan), Located in Little Rock, AR

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 proposed cash sale by the Plan of a leased fee interest (the Leased Fee Interest) in certain real property (the Property) to LRDC Real Estate, LLC, a party in interest with respect to the Plan.

This exemption is subject to the following conditions:

(a) The sale is a one-time transaction for cash.

(b) The sales price for the Leased Fee Interest is based on its fair market value as established by a qualified, independent appraiser, who updates the appraisal on the date of the sale is consummated.

(c) The terms of the proposed transaction are at least as favorable to the Plan as those obtainable in an arm's length transaction with an unrelated party.

(d) The Plan does not pay any real estate fees or commissions in connection with the sale.

(e) An independent fiduciary is appointed to approve and monitor the sale transaction on behalf of the Plan.

(f) Within 90 days of the date the notice granting this exemption is published in the Federal Register, the Little Rock Diagnostic Clinic, P.A., the Plan sponsor, files a Form 5330 with the Internal Revenue Service and pays all applicable excise taxes that are attributed to the past and continued leasing arrangement between the Plan and the LRDC Land Company, of certain land comprising part of 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 July 21, 2006 at 71 FR 41475.

FOR FURTHER INFORMATION CONTACT:

Ekaterina A. Uzlyan of the Department at [phone]. (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 exemption does not apply and the general fiduciary responsibility provisions of section 404 of the Act, which among other things require a fiduciary to discharge his duties respecting the plan solely in the interest of the participants and beneficiaries of the plan and in a prudent fashion in accordance with section 404(a)(1)(B) of the Act; nor does it affect the requirement of section 401(a) of the Code that the plan must operate for the exclusive benefit of the employees of the employer maintaining the plan and their beneficiaries;

(2) This exemption is 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 this exemption is subject to the express condition that the material facts and representations contained in the application accurately describes all material terms of the transaction which is the subject of the exemption.

Ivan Strasfeld,

Director of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor.