[Federal Register Volume 64, Number 44 (Monday, March 8, 1999)]
[Notices]
[Pages 11044-11045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5572]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Application Number: D-10567]
Amendment to Prohibited Transaction Exemption 93-33 (PTE 93-33)
for the Receipt of Certain Services by Individuals for Whose Benefit
Individual Retirement Accounts or Retirement Plans for Self-Employed
Individuals Have Been Established or Maintained
AGENCY: Pension and Welfare Benefits Administration, U.S. Department of
Labor.
ACTION: Adoption of Amendment to PTE 93-33.
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SUMMARY: This document amends PTE 93-33, a class exemption that permits
the receipt of services at reduced or no cost by an individual for
whose benefit an individual retirement account (IRA) or, if self-
employed, a Keogh Plan, is established or maintained, or by members of
his or her family, from a bank, provided that the conditions of the
exemption are met. The amendment affects individuals with a beneficial
interest in IRAs and Keogh Plans who receive such services as well as
the banks that provide such services.
DATES: The amendment is effective January 1, 1998.
FOR FURTHER INFORMATION CONTACT: Ms. Allison Padams Lavigne, Office of
Exemption Determinations, Pension and Welfare Benefits Administration,
U.S. Department of Labor, (202) 219-8971 (this is not a toll-free
number.)
SUPPLEMENTARY INFORMATION: On October 21, 1998, notice was published of
the pendency before the Department of a proposed amendment to PTE 93-33
(58 FR 31053, May 28, 1993, as amended, 59 FR 22686, May 2, 1994). PTE
93-33 provides relief from the restrictions of sections 406(a)(1)(D)
and 406(b) of the Employee Retirement Income Security Act of 1974
(ERISA) and the sanctions resulting from the application of sections
4975(a) and (b), 4975(c)(3) and 408(e)(2) of the Internal Revenue Code
of 1986 (the Code) by reason of section 4975(c)(1)(D), (E) and (F) of
the Code.* The amendment was requested in an exemption
application dated January 26, 1998 filed by the American Bankers
Association.
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\*\ Section 102 of Reorganization Plan No. 4 of 1978 (42 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 application was filed 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). The notice of pendency gave interested persons an opportunity to
comment or to request a hearing on the proposed amendment. No public
comments nor requests for a hearing on the proposed amendment were
received. For the sake of convenience, the entire text of PTE 93-33, as
amended, has been reprinted with this notice.
PTE 93-33, as amended, permits the receipt of services at reduced
or no cost by an individual for whose benefit an IRA or Keogh Plan is
established or maintained or by members of his or her family, from a
bank pursuant to an arrangement in which the account balance of the IRA
or Keogh Plan is taken into account for purposes of determining
eligibility to receive such services, provided the conditions of the
exemption are met.
Section III (b) of PTE 93-33, as amended, defines the term ``IRA''
as an individual retirement account described in Code section 408(a).
In addition, section III(b) provides that for purposes of this
exemption, the term IRA shall not include an IRA which is an employee
benefit plan covered by Title I of ERISA, except for a Simplified
Employee Pension (SEP) described in section 408(k) of the Code which
provides participants with the unrestricted authority to transfer their
SEP balances to IRAs sponsored by different financial institutions. The
amendment set forth in this notice modifies section III(b) of PTE 93-33
to include Education IRAs described in section 530 of the Code and
Simple
[[Page 11045]]
Retirement Accounts described in section 408(p) of the Code. The
Department notes that all conditions contained in PTE 93-33 still must
be met pursuant to the amendment.
General Information
The attention of interested persons is directed to the following:
(1) In accordance with section 408(a) of ERISA and section
4975(c)(2) of the Code, and based upon the entire record, the
Department finds that the amendment is administratively feasible, in
the interests of the IRAs and Keogh Plans and their participants and
beneficiaries and protective of the rights of the participants and
beneficiaries of such plans.
(2) The amendment is supplemental to, and not in derogation of, any
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 exemption is not
dispositive of whether the transaction is in fact a prohibited
transaction.
(3) The exemption is applicable to a transaction only if the
conditions specified in the class exemption are met.
Exemption
Accordingly, PTE 93-33 is amended under the authority of 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).
Section I: Covered Transactions
Effective January 1, 1998, the restrictions of sections
406(a)(1)(D) and 406(b) of ERISA and the sanctions resulting from the
application of section 4975 of the Code, including the loss of
exemption of an individual retirement account (IRA) pursuant to section
408(e)(2)(A) of the Code, by reason of section 4975(c)(1)(D), (E) and
(F) of the Code, shall not apply to the receipt of services at reduced
or no cost by an individual for whose benefit an IRA, or, if self-
employed, a Keogh Plan, is established or maintained, or by members of
his or her family, from a bank pursuant to an arrangement in which the
account balance in the IRA or Keogh Plan is taken into account for
purposes of determining eligibility to receive such services, provided
that each condition of Section II of this exemption is satisfied.
Section II: Conditions
(a) The IRA or Keogh Plan, the balance of which is taken into
account for purposes of determining eligibility to receive services at
reduced or no cost, is established and maintained for the exclusive
benefit of the participant covered under the IRA or Keogh Plan, his or
her spouse or their beneficiaries.
(b) The services must be of the type that the bank itself could
offer consistent with applicable federal and state banking law.
(c) The services are provided by the bank (or an affiliate of the
bank) in the ordinary course of the bank's business to customers who
qualify for reduced or no cost banking services but do not maintain
IRAs or Keogh Plans with the bank.
(d) For the purpose of determining eligibility to receive services
at reduced or no cost, the account balance required by the bank for the
IRA or Keogh Plan is equal to the lowest balance required for any other
type of account which the bank includes to determine eligibility to
receive reduced or no cost services.
(e) The rate of return on the IRA or Keogh Plan investment is no
less favorable than the rate of return on an identical investment that
could have been made at the same time at the same branch of the bank by
a customer of the bank who is not eligible for (or who does not
receive) reduced or no cost services.
Section III: Definitions
The following definitions apply to this exemption:
(a) The term bank means a bank described in section 408(n) of the
Code.
(b) The term IRA means an individual retirement account described
in Code section 408(a) or an education individual retirement account
described in section 530 of the Code. For purposes of this exemption,
the term IRA shall not include an IRA which is an employee benefit plan
covered by Title I of ERISA, except for a Simplified Employee Pension
(SEP) described in section 408(k) of the Code or a Simple Retirement
Account described in section 408(p) of the Code which provides
participants with the unrestricted authority to transfer their balances
to IRAs or Simple Retirement Accounts sponsored by different financial
institutions.
(c) The term Keogh Plan means a pension, profit sharing, or stock
bonus plan qualified under Code section 401(a) and exempt from taxation
under Code section 501(a) under which some or all of the participants
are employees described in section 401(c) of the Code. For purposes of
this exemption, the term Keogh Plan shall not include a Keogh Plan
which is an employee benefit plan covered by title I of ERISA.
(d) The term account balance means deposits as that term is defined
under 29 CFR 2550.408b-4(c)(3), or investments in securities for which
market quotations are readily available. For purposes of this
exemption, the term account balance shall not include investments in
securities offered by the bank (or its affiliate) exclusively to IRAs
and Keogh Plans.
(e) An affiliate of a bank includes any person directly or
indirectly controlling, controlled by, or under common control with a
bank. The term control means the power to exercise a controlling
influence over the management or policies of a person other than an
individual.
(f) The term members of his or her family refers to beneficiaries
of the individual for whose benefit the IRA or Keogh Plan is
established or maintained, who would be members of the family as that
term is defined in Code section 4975(e)(6), or a brother, a sister, or
spouse of a brother or a sister.
(g) The term service includes incidental products of a de minimis
value provided by third persons pursuant to an arrangement with the
bank, which are directly related to the provision of banking services
covered by the exemption.
Signed at Washington, DC this 26th day of February 1999.
Alan D. Lebowitz,
Deputy Assistant Secretary for Program Operations, Pension and Welfare
Benefits Administration, U.S. Department of Labor.
[FR Doc. 99-5572 Filed 3-5-99; 8:45 am]
BILLING CODE 4510-29-P