[Federal Register Volume 64, Number 203 (Thursday, October 21, 1999)]
[Notices]
[Pages 56812-56814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27521]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 99-42; Exemption Application No. D-
10671, et al.]
Grant of Individual Exemptions; Pacific Coast Roofers Pension
Plan (the Plan), et al.
AGENCY: Pension and Welfare Benefits Administration, Labor.
[[Page 56813]]
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.
Pacific Coast Roofers Pension Plan (the Plan), Located in San
Jose, California, [Prohibited Transaction Exemption 99-42; Exemption
Application No. D-10671]
Exemption
The restrictions of section 406(a)(1)(D) of the Act and the
sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1)(D) of the Code, shall not apply to the
making of loans by certain banks (the Banks), under a loan program (the
Program) providing for loans to Bank customers for residential and
commercial re-roofing jobs that are performed by contributing employers
to the Plan, pursuant to an arrangement in which the Plan will purchase
certificates of deposit (the CDs) issued by the Banks, provided the
following conditions are met:
(a) Alan D. Biller and Associates, Inc., an independent investment
manager with respect to the Plan's equities and fixed-income
investments, determines on an on-going basis the appropriateness of the
Plan's investment of up to 5% of the Plan's total assets in CDs,
including CDs issued under the Program, with respect to the Plan's
overall investment objectives and policy guidelines;
(b) Turner Dale Associates, Inc. (TDA), an independent investment
manager with respect to the Plan's assets involved in the Program,
which is also independent of the Banks, acts on the Plan's behalf
pursuant to a written Investment Management Agreement to determine on
an on-going basis whether the Plan should make each particular
investment in the CDs under the Program, and should continue or
terminate participation in the Program;
(c) TDA determines at least annually that the Banks participating
in the Program are solvent institutions, based on analysis of all
relevant information involving the Banks' financial status;
(d) The requirements of section 408(b)(4) of the Act are satisfied
if any Bank participating in the Program is a fiduciary or other party
in interest with respect to the Plan (see 29 CFR 2550.408b-4);
(e) The Plan's CDs will have a maturity date of at least one year
from the date of issuance and will pay the maximum rates of interest
provided by the Banks for CDs of the same size and maturity being
purchased at the time of the transaction by customers of the Bank not
participating in the Program;
(f) The Banks offer CDs provided under the Program to other,
unrelated customers in the ordinary course of business;
(g) Interest rates on CDs under the Program, and the total net
rates of return to the Plan, taking into consideration all expenses
associated with the transaction, are at least comparable to or better
than those rates which the Plan could obtain on similar fixed-income
investments of similar risk and term at the time of each CD purchase;
(h) No person who is a party in interest with respect to the Plan,
including contributing employers, trustees and other plan fiduciaries,
receives a loan under the Program;
(i) The total outstanding amount of CDs purchased by the Plan from
the Banks will not exceed 5% of the Plan's total assets at the time of
any transaction;
(j) No Plan trustee currently engages in any personal or business
transactions with a Bank which will be involved in the Program, and if
a trustee engages in such transactions in the future, the trustee shall
recuse himself or herself with respect to any decision regarding the
Program on behalf of the Plan;
(k) The Plan's investment in CDs is not part of an agreement,
arrangement or understanding designed to benefit any investment
manager, other Plan fiduciary, or contributing employer, other than to
the extent that residential or commercial re-roofing jobs will be
performed by contributing employers to the Plan; and
(l) If a customer defaults on a loan, the Bank has no claim
against, or recourse to, the CDs or other 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 August 26, 1999 at 64 FR
46725.
FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Jonas Builders, Inc. Restated Profit Sharing Plan (the Plan),
Located in Milwaukee, Wisconsin, [Prohibited Transaction Exemption
99-43; Exemption Application No. D-10764]
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 a certain building, which contains a
warehouse and a single-family residence (collectively; the Building),
by the Plan to Mr. Gerald Jonas, a party in interest with respect to
the Plan, provided that the following conditions are satisfied:
(a) All terms and conditions of the sale 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;
[[Page 56814]]
(b) The fair market value of the Building has been determined by an
independent qualified appraiser;
(c) The sale of the Building is a one-time transaction for cash;
(d) The Plan does not pay any commissions, costs or other expenses
in connection with the sale of the Building; and
(e) The Plan receives an amount equal to the greater of either: (i)
The original acquisition cost of the Building plus any improvement
costs and real estate taxes that were incurred by the Plan from the
date the Building was acquired by the Plan until the date of the sale
(i.e., the total cost of $1,929,422.73, as of December 31, 1998); or
(ii) the current fair market value of the Building, as established by
an independent qualified appraiser at the time of 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 August 26, 1999 at 64 FR
46730.
FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan of the Department,
telephone (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 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 19th day of October, 1999.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, Department of Labor.
[FR Doc. 99-27521 Filed 10-20-99; 8:45 am]
BILLING CODE 4510-29-P