[Federal Register Volume 63, Number 179 (Wednesday, September 16, 1998)] [Notices] [Pages 49610-49612] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 98-24800] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF LABOR Pension and Welfare Benefits Administration [Prohibited Transaction Exemption 98-43; Exemption Application No. D- 10547, et al.] Grant of Individual Exemptions; Individual Retirement Accounts (the IRAs) for Marcia A. Hendrichsen, Larry L. Hendrichsen, Lawrence D. Hendrichsen, Located in Burlington, IA; William H. Napier, George Rashid, Jr., Jake E. Rashid, Carl A. Saunders, and John C. Schuldt, Located in Fort Madison, IA (Collectively, the Participants), et al. AGENCY: Pension and Welfare Benefits Administration, Labor. ACTION: Grant of individual exemptions. ----------------------------------------------------------------------- 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 [[Page 49611]] 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. Individual Retirement Accounts (the IRAs) for Marcia A. Hendrichsen, Larry L. Hendrichsen, Lawrence D. Hendrichsen, Located in Burlington, Iowa; William H. Napier, George Rashid, Jr., Jake E. Rashid, Carl A. Saunders, and John C. Schuldt, Located in Fort Madison, Iowa (Collectively, the Participants) [Prohibited Transaction Exemption 98-43; Exemption Application Number: D-10547] 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 sale (the Sale) of certain membership units (the Units) in the Catfish Bend Casinos, L.C., by the IRAs 1 to the Participants, disqualified persons with respect to the IRAs, provided that the following conditions are met: --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- (a) The Sale of the Units by each IRA is a one-time transaction for cash; (b) The terms and conditions of each Sale are at least as favorable to each IRA as those obtainable in an arm's length transaction with an unrelated party; (c) Each IRA receives the fair market value of the Units at the time of each Sale; and (d) Each IRA is not required to pay any commissions, costs or other expenses in connection with each Sale. For a more complete statement of the facts and circumstances supporting the Department's decision to grant this exemption, refer to the notice of the proposed exemption published on Thursday, August 6, 1998 at 63 FR 42076. For Further Information Contact: Mr. James Scott Frazier of the Department, telephone (202) 219-8881. (This is not a toll-free number). R & J Hoffmann, Inc. Profit Sharing Plan (the Plan) Located in Fremont, California [Prohibited Transaction Exemption 98-44; Exemption Application No. D- 10572] 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: (1) the loan (the Loan) of $53,240 by the Plan to R & J Hoffmann, Inc. (the Employer), a disqualified person with respect to the Plan; and (2) the personal guarantee of the Loan by Richard and Angela Hoffmann (the Hoffmanns), provided the following conditions are satisfied: (a) the terms of the Loan are at least as favorable to the Plan as those obtainable in an arm's-length transaction with an unrelated party; (b) the Loan does not exceed 25% of the assets of the Plan; (c) the Loan is secured by a second mortgage on certain real property (the Property) which has been appraised by a qualified independent appraiser to have a fair market value not less than 150% of the amount of the Loan plus the balance of the first mortgage which it secures; (d) the Hoffmanns have also personally guaranteed the Loan; (e) in the event that the fair market value of the Property is no longer adequate to secure all outstanding loans, additional property will be pledged to the Plan to secure the Loan at an amount equal to at least 150% of the outstanding principal balance of all loans secured by the Property; and (f) the Hoffmanns are the only Plan participants to be affected by the Loan.2 --------------------------------------------------------------------------- \2\ Since the Hoffmanns are the sole owner of the Employer and the only participants 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. --------------------------------------------------------------------------- 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 20, 1998 at 63 FR 38859. For Further Information Contact: Gary H. Lefkowitz of the Department, telephone (202) 219-8881. (This is not a toll-free number.) Kilpatrick Investment Company Employee's Pension Plan (the Plan); Located in Oklahoma City, Oklahoma [Prohibited Transaction Exemption 98-45; Application No.: D-10607] Exemption The restrictions of sections 406(a) and 406(b)(1) and (2) of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of 4975(c)(1)(A) through (E) of the Code, shall not apply to the past sale (the Sale) of improved real property (the Property) by the Plan to the Kilpatrick Investment Company (the Company), a party in interest with respect to the Plan provided the following conditions were met at the time of the Sale: (1) the terms of the Sale were at least as favorable as those the Plan could have obtained in an arm's length transaction with an unrelated party; (2) the fair market value of the Property was determined by an independent and qualified real estate appraiser; (3) the Sale price was equal to the greater of: (a) the fair market value of the Property at the time of the Sale, or (b) $134,600 (which represents the price the Plan originally paid for the Property plus the holding costs incurred by the Plan during the Plan's ownership of the Property); and (4) the Plan paid no commissions or expenses associated with the Sale. Effective Date: If granted, this proposed exemption will be effective as of April 15, 1998. For a more complete statement of facts and representations supporting the Department's decision to grant this exemption refer to the notice of proposed exemption, refer to the notice of proposed exemption published on July 8, 1998 at 63 FR 36957. For Further Information Contact: Allison Padams Lavigne of the Department, telephone (202) 219-8971. (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 [[Page 49612]] 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 are true and complete and accurately describe all material terms of the transaction which is the subject of the exemption. In the case of continuing exemption transactions, if any of the material facts or representations described in the application change after the exemption is granted, the exemption will cease to apply as of the date of such change. In the event of any such change, application for a new exemption may be made to the Department. Signed at Washington, DC, this 10th day of September, 1998. Ivan Strasfeld, Director of Exemption Determinations, Pension and Welfare Benefits Administration, Department of Labor. [FR Doc. 98-24800 Filed 9-15-98; 8:45 am] BILLING CODE 4510-29-P