Grant of Individual Exemptions; Milan Uremovich, D.D.S., P.C.
Profit Sharing Plan and Trust (the Plan)
[11/03/2005]
Volume 70, Number 212, Page 66859-66860
[[Page 66859]]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Prohibited Transaction Exemption 2005-14; Exemption Application No. D-
11175 et al.]
Grant of Individual Exemptions; Milan Uremovich, D.D.S., P.C.
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).
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.
Milan Uremovich, D.D.S., P.C. Profit Sharing Plan and Trust (the Plan)
Located in Arvada, CO [Prohibited Transaction Exemption 2005-14;
Exemption Application No. D-11175]
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 leasing (the New Lease) by the individual
account in the Plan of Dr. Milan Uremovich (the Account), of certain
office space (the Office Space) to Milan Uremovich, D.D.S., P.C., (the
Employer), a party in interest with respect to the Plan, provided that
the following conditions are met:
(a) The terms and conditions of the New Lease are at least as
favorable to the Account as those the Account could obtain in a
comparable arm's length transaction with unrelated parties.
(b) The fair market rental value of the Office Space leased to the
Employer is determined by a qualified, independent appraiser.
(c) The rent charged by the Account under the New Lease and for
each renewal term is, at all times, not less than the fair market
rental value of the Office Space, as determined by a qualified,
independent appraiser. The rental payments under the New Lease are
adjusted once every five years after the initial term and after each
renewal term by the qualified, independent appraiser to ensure that the
New Lease payments are not greater than or less than the fair market
rental value of the leased space. In no event may the rent be adjusted
below the rental amount paid for the preceding term of such lease.
(d) The fair market value of the Office Space represents, at all
times, no more than 25 percent of the total assets of the Account.
(e) The Account does not pay any real estate fees, commissions, or
other expenses with respect to the New Lease.
(f) The New Lease is a triple net lease under which the Employer,
as lessee, pays, in addition to the base rent, all normal operating
expenses associated with the Office Space, including real estate taxes,
insurance, maintenance, repairs and utilities.
(g) Dr. Uremovich is the only participant in the Plan whose Account
is affected by the New Lease.
(h) Within 90 days of the publication, in the Federal Register, of
the notice granting this exemption, the Employer files a Form 5330 with
the Internal Revenue Service and pays all applicable excise taxes under
section 4975(a) of the Code that are attributed to the past purchase of
the Building by Dr. Uremovich's individual account in the Milan
Uremovich, D.D.S., P.C. Profit Sharing Plan (the Profit Sharing Plan),
a predecessor to the current Plan, and the leasing of Office Space in
the Building by the Profit Sharing Plan Account and the Account to Dr.
Uremovich.
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 June 29, 2005 at 70 FR
37434.
FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department,
telephone (202) 693-8556. (This is not a toll-free number.)
Dakotas and Western Minnesota Electrical Workers Apprenticeship Plan
(the Plan) Located in Fargo, ND [Prohibited Transaction Exemption No.
2005-15; Exemption Application No: L-11316]
Exemption
The restrictions of sections 406(a)(1)(A) through (D), 406(b)(1),
and 406(b)(2) of the Act shall not apply to the lease (the Lease) of a
portion of a parcel of improved real property (the Premises) by the
Plan from the Dakotas Chapter of the National Electrical Contractors
Association (the Dakotas NECA), a party in interest with respect to the
Plan; provided that, at the time the transaction is entered into, the
following conditions are satisfied:
(a) An independent, qualified fiduciary (the I/F), acting on behalf
of the Plan, determines prior to entering into the transaction that the
transaction is feasible, in the interest of, and protective of the Plan
and the participants and beneficiaries of the Plan;
(b) Before the Plan enters into the Lease of the Premises, the I/F
reviews the transaction, negotiates the terms of the transaction to
ensure that such terms are at least as favorable to the Plan as an
arm's length transaction with an unrelated party, and determines
whether or not to approve the transaction, in accordance with the
fiduciary provisions of the Act;
(c) The I/F monitors compliance with the terms and conditions of
this
[[Page 66860]]
exemption, as described herein, and ensures that such terms and
conditions are at all times satisfied;
(d) Throughout the duration of the Lease of the Premises, the I/F
monitors compliance with the terms of the Lease of the Premises and
takes any and all steps necessary to ensure that the Plan is protected,
including, but not limited to, notifying Dakotas NECA of the Plan's
intention to extend the Lease of the Premises at the conclusion of the
initial five (5) year term of the Lease;
(e) The rent paid by the Plan for the Premises under the terms of
the Lease and under the terms of any subsequent extension of the Lease
is at no time greater than the fair market rental value of the
Premises, as determined by an independent, qualified appraiser retained
by the Board of Trustees of the Plan (the Trustees);
(f) The Plan pays no rent for the Premises, any remodeling or
maintenance costs, any taxes, insurance, operating expenses or other
costs, expenses, or charges for the Premises for the period from the
date of the Plan's first occupancy of the Premises to the date the
final exemption is published in the Federal Register. Nothing in this
condition (f) shall preclude the payment by the Plan of rent plus its
proportionate share of the cost of taxes, maintenance, and insurance on
the Premises after the final exemption is published in the Federal
Register and the Lease of the Premises is executed;
(g) Under the provisions of the Lease, the transaction is on terms
and at all times remains on terms that are at least as favorable to the
Plan as those that would have been negotiated under similar
circumstances at arm's length with an unrelated third party;
(h) The transaction is appropriate and helpful in carrying out the
purposes for which the Plan is established or maintained;
(i) The Trustees maintain, or cause to be maintained within the
United States for a period of six (6) years in a manner that is
convenient and accessible for audit and examination, such records as
are necessary to enable the persons described, below, in paragraph
(j)(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 (j)(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 Trustees, 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 Trustees 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 (i) of this exemption; and
(j)(1) Except as provided, below, in paragraph (j)(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 (i) 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 Plan, or any duly authorized
representative of such fiduciary;
(C) Any contributing employer to the Plan and any employee
organization whose members are covered by the Plan, or any duly
authorized employee or representative of these entities; or
(D) Any participant or beneficiary of the Plan, or any duly
authorized representative of such participant or beneficiary.
(2) None of the persons described, above, in paragraph (j)(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 of proposed exemption published on August 12, 2005, at 70 FR
47252.
For Further Information Contact: Angelena C. Le Blanc of the
Department, telephone (202) 693-8540 (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 31st day of October, 2005.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
[FR Doc. 05-21963 Filed 11-2-05; 8:45 am]
BILLING CODE 4510-29-P
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