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Employee Benefits Security Administration

EBSA Federal Register Notice

Grant of Individual Exemptions; Linda Ann Smith, M.D. Profit Sharing Plan and Trust (the Plan) [11/10/2004]

[PDF Version]

Volume 69, Number 217, Page 65230-65232

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Prohibited Transaction Exemption 2004-17; (Exemption Application No. 
D-11223) et al.]

 
Grant of Individual Exemptions; Linda Ann Smith, M.D. Profit 
Sharing Plan and Trust (the Plan)

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 
(the Act) and/or the Internal Revenue Code of 1986 (the Code).

[[Page 65231]]

    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.

Linda Ann Smith, M.D. Profit Sharing Plan and Trust (the Plan) Located 
in Albuquerque, NM

[Prohibited Transaction Exemption 2004-17; (Exemption Application No. 
D-11223)]

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 proposed exchange of an unimproved tract of land 
located in Nathrop, Colorado (Lot 154), which is owned by the Plan and 
allocated to the individually-directed account (the Account) in the 
Plan of Linda Ann Smith, M.D., for one unimproved tract of land (Lot 
85) located in San Pedro Creek Estates, New Mexico, which is owned 
jointly by Dr. Smith, and her spouse, Mr. Harold G. Field (the 
Applicants).
    This exemption is subject to the following conditions:
    (a) The exchange of Lot 154 by the Account for Lot 85 owned by the 
Applicants is a one-time transaction.
    (b) The fair market value of Lot 154 and Lot 85 is determined by 
qualified, independent appraisers, who will update their appraisal 
reports at the time the exchange is consummated.
    (c) For purposes of the exchange, Lot 85 has a fair market value 
that is more than the fair market value of Lot 154.
    (d) The terms and conditions of the exchange are at least as 
favorable to the Account as those obtainable in an arm's length 
transaction with an unrelated party.
    (e) The exchange does not involve more than 25 percent of the 
Account's assets.
    (f) Dr. Smith is the only participant in the Plan whose Account is 
affected by the exchange and she desires that the transaction be 
consummated.
    (g) The Account does not pay any real estate fees or commissions in 
conjunction with the exchange.
    For a 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 September 10, 2004 at 69 
FR 54810.

FOR FURTHER INFORMATION CONTACT: Mr. Arjumand A. Ansari of the 
Department at (202) 693-8566. (This is not a toll-free number.)

Carpenters' Joint Training Fund of St. Louis (the Plan), Located in St. 
Louis, Missouri

[Prohibited Transaction Exemption No. 2004-18; (Application No. L-
11181)]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the 
Act shall not apply to: (1) The purchase of a parcel of improved real 
property located at 8300 Valcour Avenue, St. Louis County, Missouri, 
(the Property) by the Plan from the Carpenters District Council of 
Greater St. Louis (the CDC), a party in interest to the Plan; (2) The 
guarantee (the Guarantee) by the CDC of a $6 million loan from an 
unrelated bank (the Bank Loan) for the benefit of the Plan; and (3) An 
unsecured loan for up to $1 million from the CDC to the Plan (the CDC 
Loan). This exemption is subject to the following conditions:
    (a) The Plan pays the lesser of (1) $7,985,000 or (2) the fair 
market value of the Property at the time of the purchase of the 
Property;
    (b) The fair market value of the Property is established by an 
independent, qualified real estate appraiser that is unrelated to the 
CDC or any other party in interest with respect to the Plan;
    (c) The Plan will not pay any commissions or other expenses with 
respect to the transactions.
    (d) An independent, qualified fiduciary (the I/F), after analyzing 
the relevant terms of the transactions, determines that the 
transactions are in the best interest of the Plan and its participants 
and beneficiaries;
    (e) In determining the fair market value of the Property, the I/F 
obtains an appraisal from an independent, qualified appraiser and 
ensures that the appraisal is consistent with sound principles of 
valuation;
    (f) The terms and conditions of the CDC Loan are at least as 
favorable to the Plan as those which the Plan could have obtained in an 
arm's-length transaction with an unrelated party;
    (g) The Bank Loan is repaid by the Plan solely with funds the Plan 
retains after paying all of its operational expenses;
    (h) The I/F will ensure that the terms and conditions relating to 
the Guarantee are in the best interest of the Plan and its participants 
and beneficiaries;
    (i) The CDC will waive any right to recover from the Plan in the 
event that the Bank enforces the Guarantee against the CDC;
    (j) If at any time the Plan does not have sufficient funds to make 
a payment on the CDC Loan, after meeting operational expenses and 
payments on the Bank Loan, then payments on the CDC Loan will be 
suspended, without additional interest or penalty, until such funds are 
available; and
    (k) The I/F will take whatever actions it deems necessary to 
protect the rights of the Plan with respect to the Property and the 
transactions.
    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, 2004 at 69 FR 
43450.

FOR FURTHER INFORMATION CONTACT: Khalif Ford of the Department, 
telephone (202) 693-8540 (this is not a toll-free number).

[[Page 65232]]

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 5th day of November, 2004.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 04-25106 Filed 11-9-04; 8:45 am]

BILLING CODE 4510-29-P