[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