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