[Federal Register Volume 59, Number 194 (Friday, October 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24874]
[[Page Unknown]]
[Federal Register: October 7, 1994]
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
[Prohibited Transaction Exemption 94-71; Application No. D-9484]
Grant of Class Exemption to Permit Certain Transactions
Authorized Pursuant to Settlement Agreements Between the U.S.
Department of Labor and Plans
AGENCY: Pension and Welfare Benefits Administration (PWBA), Department
of Labor.
ACTION: Grant of Class Exemption.
-----------------------------------------------------------------------
SUMMARY: This document contains a final exemption from certain
prohibited transaction restrictions of the Employee Retirement Income
Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986 (the
Code). The class exemption applies to certain prospective transactions
involving employee benefit plans where such transactions are
specifically authorized by the Department pursuant to a settlement
agreement. The exemption affects plans, participants and beneficiaries
of such plans, and certain individuals engaging in such transactions or
activities.
FOR FURTHER INFORMATION CONTACT: Eric Berger, Office of Exemption
Determinations, Pension and Welfare Benefits Administration, U.S.
Department of Labor (202) 219-8971 (not a toll-free number); or Vicki
Shteir-Dunn, Plan Benefits Security Division, Office of the Solicitor,
U.S. Department of Labor (202) 219-8610 (not a toll-free number).
SUPPLEMENTARY INFORMATION: On May 27, 1994, the Department of Labor
(the Department) published a notice in the Federal Register (59 FR
27581) of the pendency of a proposed class exemption from the
restrictions of sections 406(a)(1) (A) through (D), 406(a)(2),
406(b)(1) and 406(b)(2) of ERISA and from the taxes imposed by section
4975 (a) and (b) of the Code, by reason of section 4975(c)(1) (A)
through (E) of the Code.
The Department proposed the class exemption on its own motion
pursuant to section 408(a) of ERISA 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 32836, August 10, 1990).\1\
---------------------------------------------------------------------------
\1\Section 102 of Reorganization Plan No. 4 of 1978 (43 FR
47713, October 17, 1978) generally transferred the authority of the
Secretary of the Treasury to issue administrative exemptions under
section 4975(c)(2) of the Code to the Secretary of Labor.
---------------------------------------------------------------------------
The notice gave interested persons an opportunity to submit written
comments or requests for a hearing on the proposed exemption to the
Department. No public comments and no requests for a public hearing
with respect to the proposed class exemption were received by the
Department. Upon consideration of the record as a whole, the Department
has determined to grant the class exemption as proposed.\2\
---------------------------------------------------------------------------
\2\The Department notes that the exemption will not affect the
liability of any person for the civil penalties imposed on
applicable recovery amounts under section 502(l) of ERISA.
---------------------------------------------------------------------------
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 ERISA and section 4975(c)(2) of the Code does
not relieve a fiduciary or other party in interest or disqualified
person with respect to a plan from certain other provisions of ERISA
and the Code, including any prohibited transaction provisions to which
the exemption does not expressly apply and the general fiduciary
responsibility provisions of section 404 of ERISA. Section 404
requires, in part, that a fiduciary discharge his or her duties
respecting the plan solely in the interests of the participants and
beneficiaries of the plan and in a prudent fashion in accordance with
section 404(a)(1)(B) of ERISA. This exemption does not affect the
requirement of section 401(a) of the Code that a plan must operate for
the exclusive benefit of the employees of the employer maintaining the
plan and their beneficiaries.
(2) The exemption will not extend to transactions prohibited under
section 406(b)(3) of ERISA and section 4975(c)(1)(F) of the Code.
(3) In accordance with section 408(a) of the Act and section
4975(c)(2) of the Code, and based upon the entire record, the
Department finds that the exemption is administratively feasible, in
the interests of plans and of their participants and beneficiaries and
protective of the rights of the participants and beneficiaries of such
plans.
(4) The exemption is supplemental to, and not in derogation of
other provisions of ERISA and 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.
(5) The exemption is applicable to a transaction only if the
conditions specified in the class exemption are satisfied.
Exemption
Accordingly, the following exemption is granted 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 32836, August 10, 1990).
Effective as of October 7, 1994, the restrictions of sections
406(a)(1) (A) through (D), 406(b)(1) and 406(b)(2) of ERISA and the
taxes imposed by sections 4975(a) and 4975(b) of the Code, by reason of
section 4975(c)(1) (A) through (E) of the Code, shall not apply to a
transaction or activity which is authorized, prior to the occurrence of
such transaction or activity, by a settlement agreement resulting from
an investigation of an employee benefit plan conducted by the
Department under the authority of section 504(a) of ERISA, provided
that:
(A) The nature of such transaction or activity is specifically
described in writing, by the terms of such settlement agreement.
(B) The Department of Labor is a party to the settlement agreement.
(C) A party who will be engaging in the transaction or activity has
provided written notice to the affected participants and beneficiaries
in a manner that is reasonably calculated to result in the receipt of
such notice at least 30 days prior to entry into the settlement
agreement.
(D) A copy of the notice and the method of distribution is approved
in advance by the area or district office of the Department which
negotiated the settlement.
(E) The notice includes an objective description of the transaction
or activity, the approximate date on which the transaction will occur,
the address of the area or district office of the Department which
negotiated the settlement agreement, and a statement apprising
participants and beneficiaries of their right to forward their comments
to such office.
Signed at Washington, DC, this 30th day of September 1994.
Alan D. Lebowitz,
Deputy Assistant Secretary of Program Operations, Pension and Welfare
Benefits Administration, Department of Labor.
[FR Doc. 94-24874 Filed 10-6-94; 8:45 am]
BILLING CODE 4510-29-P