[Federal Register Volume 63, Number 138 (Monday, July 20, 1998)]
[Notices]
[Pages 38853-38854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19233]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 98-36; Exemption Application No. D-
10525, et al.]
Grant of Individual Exemptions; Collection Bureau Services
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.
Collection Bureau Services, Profit Sharing Plan and Trust (the
Plan), Located in Missoula, MT
[Prohibited Transaction Exemption 98-36; Exemption Application No. D-
10525]
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 proposed lease (the Lease) by the Plan of
certain improved real property (the Property) to Collection Bureau
Services (the Employer), a party in interest with respect to the Plan,
and (2) the possible purchase of the Property by the Employer in the
future, pursuant to the Employer's option to purchase the Property
under the Lease.
This exemption is subject to the following conditions:
[[Page 38854]]
(1) The Plan is represented for all purposes under the Lease by a
qualified, independent fiduciary;
(2) The terms and conditions of the Lease are at least as favorable
to the Plan as those the Plan could obtain in a comparable arm's length
transaction with an unrelated party;
(3) The rent paid to the Plan under the Lease is no less than the
fair market rental value of the Property, as established by a
qualified, independent appraiser;
(4) The rent is adjusted, at a minimum, every three years, based
upon an updated independent appraisal of the Property, but in no event
shall such adjustments result in the rent being less than the rental
amount for the Property existing for the preceding period;
(5) The Lease is triple net (with all expenses for maintenance,
taxes, and insurance to be borne by the Employer as the tenant);
(6) The independent fiduciary for the Plan (the I/F) reviews the
terms and conditions of the Lease on behalf of the Plan and determines
that the Lease is in the best interests of, and appropriate for, the
Plan;
(7) The I/F monitors and enforces compliance with all of the terms
and conditions of the Lease, and of this exemption, throughout the
duration of the Lease;
(8) The I/F expressly approves any improvements by the Employer to
the Property, any renewal of the Lease beyond the initial term, and any
sale of the Property to the Employer, pursuant to the Employer's option
to purchase the Property under the Lease;
(9) In the event that the Employer exercises its option to purchase
the Property under the Lease, the Employer pays the Plan an amount
which is the greater of either (a) the original acquisition cost of the
Property, plus holding expenses, or (b) the fair market value of the
Property, as of the date of the sale, as established by a qualified,
independent appraiser; and
(10) At all times throughout the duration of the Lease, the fair
market value of the Property represents no more than 25 percent of the
total 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 May 29, 1998 at 63 FR
29456.
FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
McClain's R.V., Inc. 401(k) Profit Sharing Plan (the Plan), Located
in Lake Dallas, Texas
[Prohibited Transaction Exemption 98-37; Exemption Application No. D-
10583]
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 sale of certain unimproved real property (the
Land) by the Plan to Larry McClain, the sole shareholder of McClain's
R.V. Inc., the sponsor of the Plan, and a party in interest with
respect to the Plan, provided that the following conditions are
satisfied:
(a) The sale will be a one-time cash transaction;
(b) The Plan will receive the greater of: (1) The original
acquisition cost of the Land plus the aggregate holding costs incurred
by the Plan; or (2) the current fair market value of the Land (plus an
appropriate premium related to the adjacency of the Land to other real
property owned by McClain's R.V. Inc.), as established by an
independent qualified appraiser at the time of the sale; and
(c) The Plan will pay no commissions or other expenses associated
with 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 18, 1998 at 63 FR
27330.
FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan of the Department
at (202) 219-8883. (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 accurately describes all material terms of the transaction
which is the subject of the exemption.
Signed at Washington, D.C., this 15th day of July, 1998.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 98-19233 Filed 7-17-98; 8:45 am]
BILLING CODE 4510-29-P