[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]


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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.

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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\
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    \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.
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    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\
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    \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.
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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