[Federal Register Volume 62, Number 179 (Tuesday, September 16, 1997)]
[Notices]
[Pages 48672-48673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24462]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 97-49; Exemption Application No. D-
10310, et al.]
Grant of Individual Exemptions; Bricklayers and Allied Crafts,
Local No. 74 of DuPage County
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, DC. 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.
Pension Fund of the Bricklayers and Allied Crafts, Local No. 74 of
DuPage County, Illinois, a/k/a Masons' and Plasterers', Local No. 74 of
DuPage County, Illinois (the Pension Plan) and Bricklayers and Allied
Craftsmen Local No. 74 Apprenticeship, Education and Training Trust
Fund (the Apprenticeship Plan; together, the Plans), Located in
Westmont, Illinois
[Prohibited Transaction Exemption 97-49; Exemption Application Nos. D-
10310 and L-10311]
Exemption
The restrictions of section 406(b)(2) of the Act shall not apply to
the sale of certain real property (the Property) by the Apprenticeship
Plan to the Pension Plan, provided the following conditions are
satisfied: (1) The sale is a one-time transaction for cash; (2) no
commissions or other expenses are paid by the Plans in connection with
the sale; (3) the purchase price for the Property represents its fair
market value as determined by a qualified, independent appraiser; and
(4) the Pension Plan's independent fiduciary and the Apprenticeship
Plan's trustees have reviewed the transaction and have determined that
the transaction is appropriate for each of the Plans and in the best
interest of the Plans' participants and beneficiaries.
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, 1997 at 62 FR
39027.
FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
McLane Company, Inc. Profit Sharing Plan and Trust (the Plan), Located
in Temple, Texas
[Prohibited Transaction Exemption 97-50; Exemption Application No. D-
10340]
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
(a) and (b) of the Code, by reason of section 4975(c)(1) (A) through
(E) of the Code, shall not apply to the past sale (the Sale) by the
Plan of two parcels of unimproved real property located in Temple,
Texas and Goodyear, Arizona (the Properties) to McLane Company, Inc.
(McLane), the Plan sponsor and a party in interest with respect to the
Plan, provided that the following conditions were satisfied: (a) The
Sale was a one time transaction for a lump sum cash payment; (b) the
purchase prices were the fair market values of the Properties as of the
date of the Sale; (c) the Properties have been appraised by qualified
independent real estate appraisers; (d) a qualified, independent
fiduciary determined that the Sale was in the best interests of the
Plan; and (e) the Plan paid no commissions or other expenses relating
to the Sale.
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 20, 1997 at 62 FR
27625.
EFFECTIVE DATE: The effective date of this exemption is April 21, 1993.
Written Comments
The Department received no requests for a public hearing on the
proposed exemption. The Department received one written comment which
was submitted by Sarofim Realty Advisors (the Applicant). The
Applicant's comment, and the Department's response thereto, is
summarized below.
First, the Applicant requests that the words ``the IMA'' should be
inserted in the first sentence of Paragraph 7 of the Summary of Facts
and Representations (SFR) at page 27627 in lieu of the phrase
``Investment Management Agreement'' (as such words are set forth in
quotations). The Department concurs.
The third paragraph in Paragraph 9 of the SFR at page 27628 states:
McLane also represents that, if McLane had treated the excess of
the purchase price for the properties over their fair market values
as a Plan contribution in 1993, the resulting allocations would not
have violated the limitations of Internal Revenue Code section 415.
The Applicant requests that the paragraph be deleted in its
entirety and replaced by a new paragraph that provides as follows:
The Applicant represents that McLane's motives for consummating
the Sale were not relevant to the process employed by the Applicant
in evaluating whether or not, in the professional opinion of the
Applicant, it would be prudent and in the best interest of Plan
participants for the Applicant to direct the Trustee to consummate
the Sale. The Applicant further represents that in connection with
its negotiations with McLane, the Applicant sought and obtained for
the Plan what the Applicant determined was the highest possible
sales price for the
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subject Properties. Such price, coupled with the Applicant's
determination that continued holding of the Properties would likely
result in further lost opportunities for the Plan to provide
enhanced benefits from alternative investments, resulted in the
Applicant's decision to direct the Trustee to consummate the Sale.
Although the Department has no objection to the new paragraph
suggested by the Applicant, the Department continues to believe that
the original language of the third paragraph in Paragraph 9 of the SFR
is relevant to the issues addressed in the proposed exemption.
Finally, the Applicant requests that the Department modify the
first sentence in Paragraph 10 of the SFR at page 27628. The Department
does not object to this requested revision and amends the sentence to
provide as follows:
In summary, the Applicant represents that it now understands
that the Department is of the view that the conditions of PTE 84-14
may not have been satisfied with respect to the Sale.
The Department has considered the entire record, including the
comments submitted by the Applicant, and has determined to grant the
exemption as amended in response to the Applicant's comments.
FOR FURTHER INFORMATION CONTACT: Wendy McColough of the Department,
telephone (202) 219-8971. (This is not a toll-free number.)
H. Weiss & Company, Incorporated Defined Benefit Pension Plan (The
Plan), Located in New York, New York
[Prohibited Transaction Exemption 97-51; Application No. D-10402]
Exemption
The restrictions of sections 406(a), 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) through (E) of
the Code shall not apply to the sale by the Plan of a certain
condominium unit (the Property) located in New York, New York, to Hanna
Weiss, a party 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 sale is a one-time transaction for cash
(C) The Plan pays no commissions nor other expenses relating to the
sale
(D) The purchase price is the greater of: (1) The fair market value
of the Property as determined by a qualified, independent appraiser, or
(2) the original acquisition price *;
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* The original acquisition cost is determined as follows:
(original purchase price + aggregate real estate taxes + aggregate
condominium association fees)--aggregate rental income = original
acquisition cost.
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(E) 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 during which it
was occupied by Hanna Weiss, a party in interest with respect to the
Plan; and
(F) Within 60 days of the publication in the Federal Register of
this Notice, Weiss 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 Plan's rental of the Property to a
party in interest.
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, 1997 at 62 FR
39028.
FOR FURTHER INFORMATION CONTACT: Janet L. Schmidt of the Department,
telephone (202) 219-8883 (This is not a toll-free number.)
Smart Chevrolet Co. Employees' Profit Sharing Retirement Plan (the
Plan), Located in Pine Bluff, Arkansas
[Prohibited Transaction Exemption 97-52; Exemption Application No. D-
10445]
Exemption
The restrictions of sections 406(a), 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 sections 4975(c)(1) (A) through (E) of the Code
shall not apply to: (1) The secured loans (the Loans) by the Plan to
Motors Finance Company (Motors), a party in interest with respect to
the Plan, and (2) the guaranty of such Loans (the Guaranty) by the
individual partners of Motors; provided that the following conditions
are met: (a) The terms and conditions of the Loans are at least as
favorable as those which the Plan could have received in similar
transactions with an unrelated third party; (b) an independent
fiduciary negotiates, reviews, approves, and monitors the Loans and the
Guaranty under the terms and conditions, as set forth in paragraph # 6
of the notice of proposed exemption; and (c) the balance of all Loans
will at no time exceed 15% of the assets of the Plan.
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 11, 1997 at 62 FR
37307.
Temporary Nature of Exemption
The exemption is temporary and will expire five (5) years after the
date of the grant. However, the exemption will extend until the
maturity of any of the 90 day Loans made within the 5 year period.
FOR FURTHER INFORMATION CONTACT: Mr. 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 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) 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 accurately describes all material terms of the transaction
which is the subject of the exemption.
Signed at Washington, DC, this 10th day of September, 1997.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, Department of Labor.
[FR Doc. 97-24462 Filed 9-15-97; 8:45 am]
BILLING CODE 4510-29-P