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EBSA Notices

Exemptions From Certain Prohibited Transaction Restrictions   [10/6/2010]
[PDF]
FR Doc 2010-25119
[Federal Register: October 6, 2010 (Volume 75, Number 193)]
[Notices]               
[Page 61775-61777]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06oc10-125]                         

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

 
Exemptions From Certain Prohibited Transaction Restrictions

AGENCY: Employee Benefits Security 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 
(ERISA or the Act) and/or the Internal Revenue Code of 1986 (the Code). 
This notice includes the following: 2010-28, John D. Simmons Individual 
Retirement Act (the IRA), D-11597; and 2010-29, Boston Carpenters 
Apprenticeship and Training Fund (the Fund), L-11624.

SUPPLEMENTARY INFORMATION: A notice was published in the Federal 
Register of the pendency before the Department of a proposal to grant 
such exemption. The notice set forth a summary of facts and 
representations contained in the application for exemption and referred 
interested persons to the application for a complete statement of the 
facts and representations. The application has been available for 
public inspection at the Department in Washington, DC. The notice also 
invited interested persons to submit comments on the requested 
exemption to the Department. In addition the notice stated that any 
interested person might submit a written request that a public hearing 
be held (where appropriate). The applicant has represented that it has 
complied with the requirements of the notification to interested 
persons. No requests for a hearing were received by the Department. 
Public comments were received by the Department as described in the 
granted exemption.
    The notice of proposed exemption was issued and the exemption is 
being granted solely by the Department because, effective December 31, 
1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 
(1996), 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 exemption is administratively feasible;
    (b) The exemption is in the interests of the plan and its 
participants and beneficiaries; and
    (c) The exemption is protective of the rights of the 
participants and beneficiaries of the plan.

John D. Simmons Individual Retirement Account (the IRA) Located in 
West Chester, PA

[[Page 61776]]

[Prohibited Transaction Exemption 2010-28; Exemption Application No. 
D-11597]

 Exemption

    The sanctions resulting from the application of section 
4975(c)(1)(A)-(E) of the Code, shall not apply to the sale (the Sale) 
by the IRA to John D. Simmons, a disqualified person with respect to 
the IRA,* of a 50 percent interest (the Interest) in a condominium, 
provided that the following conditions are satisfied:
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    * Pursuant to 29 CFR 2510.3-2(d), the IRA is not within the 
jurisdiction of Title I of the Employee Retirement Income Security 
Act of 1974 (the Act). 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 Sale are at least as favorable 
to the IRA as those obtainable in an arm's length transaction with an 
unrelated party;
    (b) The Sale is a one-time transaction for cash;
    (c) As consideration, the IRA receives the fair market value of the 
Interest as determined by a qualified, independent appraiser in an 
updated appraisal on the date of Sale; and
    (d) The IRA pays no commissions, costs, fees, or other expenses 
with respect to the Sale.

Written Comment

    In the notice of proposed exemption, the Department invited all 
interested persons to submit written comments and requests for a 
hearing within 30 days from the date of publication of the notice of 
proposed exemption in the Federal Register. All comments and requests 
for a hearing were due by September 5, 2010. Although the Department 
received no comments or requests for a hearing during the comment 
period, the Department noticed that Condition (c) of the proposal 
needed to be revised for technical accuracy.
    As drafted in the proposal, Condition (c) states that as 
consideration for the Sale of the Interest, the IRA will receive the 
lesser of $192,500 or the fair market value of the Interest as 
determined by a qualified, independent appraiser in an updated 
appraisal on the date of the Sale. The Department intended that the IRA 
should receive the fair market value for the Interest on the date of 
the Sale. Therefore, it has deleted the words ``the lesser of $192,500 
or'' in Condition (c) of the final exemption and notes a corresponding 
change in Representation 11(b) in the notice of proposed exemption. The 
revised condition now reads as follows:

    (c) As consideration, the IRA receives the fair market value of 
the Interest as determined by a qualified, independent appraiser in 
an updated appraisal on the date of the Sale;

    After giving full consideration to the entire record, the 
Department has decided to grant the exemption. The complete application 
file is made available for public inspection in the Public Disclosure 
Room of the Employee Benefits Security Administration, Room N-1513, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210.
    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 6, 2010 at 75 FR 
47642.

FOR FURTHER INFORMATION CONTACT: Mr. Anh-Viet Ly of the Department at 
(202) 693-8648. (This is not a toll-free number.)

Boston Carpenters Apprenticeship and Training Fund (the Fund) 
Located in Boston, Massachusetts
[Prohibited Transaction Exemption No. PTE 2010-29; Exemption 
Application No. L-11624]

Exemption

    The restrictions of 406(b)(1), and 406(b)(2) of the Act shall not 
apply effective for the period from January 29, 2010, through June 30, 
2010, to the lease (the Lease) by the Fund from the NERCC, LLC (the 
Building Corporation), a party in interest with respect to the Fund, of 
a condominium unit (the Condo) in a building (the Building) owned by 
the Building Corporation, where the New England Regional Council of 
Carpenters (the Union), also a party in interest with respect to the 
Fund, indirectly owns the only other condominium unit in the Building; 
provided that, at the time the transaction was entered into, the 
following conditions were satisfied:
    (a) The exemption is conditioned upon satisfaction at all times of 
the terms and conditions of this exemption, and upon adherence to the 
material facts and representations, as described in the Notice of 
Proposed Exemption (the Notice), and, as set forth in application D-
11624, and in application D-11558, including those representations that 
are required by 29 CFR 2570.34 and 29 CFR 2570.35 of the Department's 
regulations;
    (b) Prior to entering into the Lease, the Fund sought legal advice 
from Aaron D. Krakow, Esq. (Mr. Krakow), acting as legal counsel on 
behalf of the Fund, who advised the Fund that it was permissible for 
the Fund to enter into a short term lease with the Building 
Corporation, and the Board of Trustees of the Fund (the Board) relied 
on Mr. Krakow's advice;
    (c) The Lease which is the subject of this exemption and any other 
leasing arrangement of the Condo between the Fund and the Building 
Corporation and/or the Union terminated on June 30, 2010; and the Fund 
shall have no obligation to pay rent to the Union or to the Building 
Corporation after the date of such termination;
    (d) Before the Fund entered into the Lease of the Condo, James F. 
Grosso, Esq. (Mr. Grosso), of O'Reilly, Grosso & Gross, PC, acting as 
attorney for the Fund, assisted in the negotiation of the terms of the 
Lease, reviewed and approved the terms of such Lease to ensure that 
such terms were at least as favorable to the Fund as an arm's length 
transaction with an unrelated party, determined that such terms were 
fair and reasonable, and selected an independent, qualified appraiser 
to determine the fair market rental value of the Condo;
    (e) Mr. Grosso was responsible throughout the duration of the Lease 
for: (i) Monitoring the rent payments made by the Fund to ensure that 
such payments were consistent with the amount of rental specified under 
the terms of such Lease, (ii) monitoring the payments of the Fund's 
share of the expenses for taxes, insurance, and operating expenses 
(including repairs) to ensure that such payments represent a fair 
apportionment of such expenses; and (iii) determining that the Fund had 
sufficient assets to pay the rental amount and its portion of taxes, 
insurance, and operating expenses (including repairs);
    (f) Throughout the duration of the Lease, the terms of the Lease of 
the Condo between the Fund and the Building Corporation were at all 
times satisfied;
    (g) The rent paid by the Fund for the Condo under the terms of the 
Lease was at no time greater than the fair market rental value of the 
Condo, as determined by an independent, qualified appraiser selected by 
Mr. Grosso;
    (h) Under the provisions of the Lease, the subject transaction was 
on terms and at all times remained on terms that were at least as 
favorable to the Fund as those that would have been negotiated under 
similar circumstances at arm's length with an unrelated third party;
    (i) The transaction was appropriate and helpful in carrying out the 
purposes for which the Fund is established or maintained;
    (j) The Board maintains, or causes to be maintained within the 
United States for a period of six (6) years in a manner that is 
convenient and accessible for

[[Page 61777]]

audit and examination, such records as are necessary to enable the 
persons described, below, in paragraph (k)(1) of this exemption to 
determine whether the conditions of this exemption have been met; 
except that--
    (1) If the records necessary to enable the persons described, 
below, in paragraph (k)(1) of this exemption to determine whether the 
conditions of this exemption have been met are lost or destroyed, due 
to circumstances beyond the control of the Board, then no prohibited 
transaction will be considered to have occurred solely on the basis of 
the unavailability of those records; and
    (2) No party in interest, other than the Board shall be subject to 
the civil penalty that may be assessed under section 502(i) of the Act, 
or to the taxes imposed by section 4975(a) and (b) of the Code, if the 
records are not maintained, or are not available for examination as 
required by paragraph (j) of this exemption; and
    (k)(1) Except as provided, below, in paragraph (k)(2) of this 
exemption and notwithstanding any provisions of sections (a)(2) and (b) 
of section 504 of the Act, the records referred to in paragraph (j) of 
this exemption are unconditionally available at their customary 
location for examination during normal business hours by:
    (A) Any duly authorized employee or representative of the 
Department, the Internal Revenue Service, or any other applicable 
federal or state regulatory agency;
    (B) Any fiduciary of the Fund, or any duly authorized 
representative of such fiduciary;
    (C) Any contributing employer to the Fund and any employee 
organization whose members are covered by the Fund, or any duly 
authorized employee or representative of these entities; or
    (D) Any participant or beneficiary of the Fund, or any duly 
authorized representative of such participant or beneficiary.
    (2) None of the persons described, above, in paragraph (k)(1)(B)-
(D) of this exemption are authorized to examine trade secrets or 
commercial or financial information that is privileged or confidential.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the Notice published on June 11, 2010, at 75 FR 33350.

FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc of the 
Department, telephone (202) 693-8551 (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 exemption 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) This exemption is 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 this exemption is subject to the express 
condition that the material facts and representations contained in the 
application accurately describes all material terms of the transaction 
which is the subject of the exemption.

    Signed at Washington, DC, this 1st day of October 2010.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2010-25119 Filed 10-5-10; 8:45 am]
BILLING CODE 4510-29-P