[Federal Register Volume 63, Number 151 (Thursday, August 6, 1998)]
[Notices]
[Pages 42079-42080]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21000]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 98-38; Exemption Application No. D-
10558, et al.]
Grant of Individual Exemptions; Roark Young, Russell Rice, Mary
J. Rice, Bruce Lamchick, Steven McKean, David McKean & Burton Young
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.
[[Page 42080]]
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.
Individual Retirement Accounts (the IRAs) for Roark Young, Russell
Rice, Mary J. Rice, Bruce Lamchick, Steven McKean and David McKean,
and Burton Young (collectively, the Participants) Located in Miami,
Florida
[Prohibited Transaction Exemption 98-38; Exemption Application Numbers
D-10558-10561, 10565-10566, 10568]
Exemption
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 cash sales (the Sales) of certain stock (the
Stock) by the IRAs 1 to the Participants, disqualified
persons with respect to the IRAs, provided that the following
conditions were met:
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\1\ Because each IRA has only one Participant, there is no
jurisdiction under 29 CFR Sec. 2510.3-3(b). However, there is
jurisdiction under Title II of the Act pursuant to section 4975 of
the Code.
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(a) The terms and conditions of the Sales were at least as
favorable to each IRA as those obtainable in an arm's length
transaction with an unrelated party;
(b) The Sale of Stock by each IRA was a one-time transaction for
cash;
(c) Each IRA received the fair market value of the Stock as
established by a qualified, independent appraiser; and
(d) Each IRA was not required to pay any commissions, costs or
other expenses in connection with each Sale.
EFFECTIVE DATE: These exemptions will be effective as of March 30,
1998.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this exemption, refer to
the notice of the proposed exemption published on Friday, June 19, 1998
at 63 FR 33725.
FOR FURTHER INFORMATION CONTACT: Mr. James Scott Frazier of the
Department, telephone (202) 219-8881. (This is not a toll-free number).
William M. Hitchcock SERP (DB) (the Plan) Located in Houston, Texas
[Prohibited Transaction Exemption 98-39; Exemption Application No. D-
10605]
Exemption
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 proposed sale by the Plan of 67,466 shares of
stock (the Stock) in Thoratec Laboratories, Inc. to William M.
Hitchcock (Mr. Hitchcock), a disqualified person with respect to the
Plan, provided the following conditions are satisfied: (a) the sale is
a one-time transaction for cash; (b) the Plan pays no sales commissions
or other expenses in connection with the transaction; (c) the Plan
receives the fair market value of the Stock, as determined by reference
to its most current listed price on the National Association of
Securities Dealers Automated Quotation National Market System (NASDAQ)
at the time of the transaction; and (d) Mr. Hitchcock is the only Plan
participant to be affected by the transaction, and he desires that the
transaction be consummated.2
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\2\ Since Mr. Hitchcock is the sole owner of the Plan sponsor
and the only participant in the Plan, there is no jurisdiction under
Title I of the Act pursuant to 29 CFR 2510.3-3(b). However, there is
jurisdiction under Title II of the Act pursuant to section 4975 of
the Code.
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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 June 29, 1998 at 63 FR
35290.
Tax Consequences of the Transaction
The Department of the Treasury has determined that if a transaction
between a qualified employee benefit plan and its sponsoring employer
(or affiliate thereof) results in the plan either paying less than or
receiving more than fair market value, such excess may be considered to
be a contribution by the sponsoring employer to the plan, and therefore
must be examined under the applicable provisions of the Internal
Revenue Code, including sections 401(a)(4), 404 and 415.
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 accurately describes all material terms of the transaction
which is the subject of the exemption.
Signed at Washington, D.C., this 31st day of July, 1998.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, Department of Labor.
[FR Doc. 98-21000 Filed 8-5-98; 8:45 am]
BILLING CODE 4510-29-P