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Employee Benefits Security Administration

EBSA Federal Register Notice

Prohibited Transaction Exemption 2006-13; Grant of Individual Exemptions [09/28/2006]

[PDF Version]

Volume 71, Number 188, Page 57007-57009

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Exemption Application No. D-11330]

 
Prohibited Transaction Exemption 2006-13; Grant of Individual 
Exemptions

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Grant of individual exemption.

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SUMMARY: This document contains an exemption 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.

The Young Men's Christian Association Retirement Fund--Retirement Plan 
(the Plan), Located in New York, NY

[Prohibited Transaction Exemption 2006-13; Application No. D-11330]

Exemption

Transactions and Conditions

    (a) The restrictions of section 406(a) 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 (D) of the Code, shall not apply, 
effective July 1, 2006, to:
    (1) Any arrangement, agreement or understanding between The Young 
Men's Christian Association Retirement Fund Retirement Plan (the Plan) 
and any participating employer whose employees are covered by the Plan, 
whereby the time is extended for the making of a contribution by such a 
participating employer to such Plan, if the following conditions are 
met:
    (i) Prior to entering into such arrangement, agreement or 
understanding, the Plan has made, or has caused to be made, such 
reasonable, diligent and systematic efforts as are appropriate under 
the circumstances to collect such contribution;
    (ii) The terms of such arrangement, agreement or understanding are 
set forth in writing and are reasonable under the circumstances based 
on the likelihood of collecting such contribution or the approximate 
expenses that would be incurred if the Plan continued to attempt to 
collect such contribution through means other than such arrangement, 
agreement or understanding;
    (iii) Such arrangement, agreement or understanding is entered into 
or renewed by the Plan in connection with the collection of such 
contribution and for the exclusive purpose of facilitating the 
collection of such contribution;
    (iv) The Plan's procedures and the guidelines to be followed in 
undertaking to collect such contributions are described in a notice 
provided to all the employers participating in the Plan. This notice 
details the Plan's standard operating guidelines for the collection of 
late employer contributions (the Notice). The Notice provided to all 
participating employers contains the methodology of the Plan that 
applies with respect to the determination to extend the time period for 
the making of such delinquent contribution or to permit such delinquent 
contribution to be made in periodic payments. New participating 
employers will receive the Notice within 30 days of signing the written 
participation agreement; and
    (v) The extension of time does not apply to any failure of an 
employer to timely remit participant contributions to the Plan.
    (2) A determination by the Plan to consider a contribution due to 
the Plan from any participating employer any of whose employees are 
covered by the Plan as uncollectible and to terminate efforts to 
collect such contribution, if the following conditions are met:
    (i) Prior to making such determination, the Plan has made, or has 
caused to be made, such reasonable, diligent and systematic efforts as 
are appropriate under the circumstances to collect such contribution or 
any part thereof;
    (ii) Such determination is set forth in writing and is reasonable 
and appropriate based on the likelihood of collecting such contribution 
or the approximate expenses that would be incurred if the Plan 
continued to attempt to collect such contribution or any part thereof;
    (iii) The Notice provided to all participating employers, which is 
described in section (a)(1)(iv) above, must also contain the 
methodology used by the Plan with respect to the determination that the 
delinquent contribution is uncollectible and in deciding to terminate 
efforts to collect such contribution; and
    (iv) The determination that the contribution is uncollectible and 
the decision to terminate efforts to collect such contribution do not 
apply to any failure of an employer to timely remit participant 
contributions to the Plan.
    (b) If an employer any of whose employees are covered by the Plan 
enters into an arrangement, agreement or understanding with the Plan as 
described in subparagraph (a)(1) with respect to the payment of such 
contribution, or if the Plan makes a determination described in 
subparagraph (a)(2), such employer

[[Page 57008]]

shall not be subject to the civil penalty which may be assessed under 
section 502(i) of the Act, or to the taxes imposed by section 4975(a) 
and (b) of the Code, by reason of section 4975(c)(1)(A) through (D) of 
the Code, except in the case of an arrangement, agreement or 
understanding described in subparagraph (a)(1), where the terms thereof 
are clearly unreasonable under the circumstances based on the 
likelihood of collecting such contribution or the approximate expenses 
that would be incurred if the Plan continued to attempt to collect such 
contribution through means other than such arrangement, agreement or 
understanding.
    (c) The Plan maintains for a period of six years the records 
necessary to enable the persons described in paragraph (d) below to 
determine whether the conditions of this exemption have been met, 
except that:
    (1) A prohibited transaction will not be considered to have 
occurred if, due to circumstances beyond the control of the Plan, the 
records are lost or destroyed prior to the end of the six-year period, 
and
    (2) No party in interest other than the Plan's fiduciaries shall be 
subject to the civil penalty that may be assessed under section 502(i) 
of ERISA or to the taxes imposed by section 4975(a) and (b) of the Code 
if the records are not maintained or not available for examination as 
required by paragraph (d) below.
    (d)(1) Except as provided in subparagraph (d)(2) below and 
notwithstanding any provisions of section 504(a)(2) and (b) of ERISA, 
the records referred to in paragraph (c) above are unconditionally 
available at their customary location for examination during normal 
business hours by:
    (i) Any duly authorized employee or representative of the 
Department of Labor or the Internal Revenue Service;
    (ii) Any fiduciary of the Plan or any duly authorized employee or 
representative of such fiduciary;
    (iii) Any participating employer of the Plan; and
    (iv) Any participant or beneficiary of the Plan or duly authorized 
employee or representative of such participant or beneficiary.
    (2) None of the persons described in subparagraph (d)(1)(ii), (iii) 
and (iv) above shall be authorized to examine commercial or financial 
information which is privileged or confidential, or records that are 
unrelated to the Plan.
    Comments: The Notice in the Federal Register, at 71 FR 41470 (July 
21, 2006) (the Proposed Exemption), invited interested persons to 
submit comments on the Proposed Exemption and/or to request that a 
public hearing be held. In response to the solicitation of comments 
from interested persons, the Department received one written comment 
from an interested person. The comment was in full agreement with the 
Proposed Exemption and stated that the overall quality of the Fund will 
be greatly improved. The Department received one negative comment by 
telephone from an interested person. The Department determined that 
this comment did not relate to the transactions described in the 
Proposed Exemption. The Department received no request that a public 
hearing be held on the Proposed Exemption.
    The Department has considered the entire record and has determined 
to grant the exemption. For a complete statement of the facts and 
representations supporting the Department's decision to grant this 
exemption, refer to the Notice of the Proposed Exemption.

FOR FURTHER INFORMATION CONTACT: Wendy M. McColough of the Department, 
telephone (202) 693-8540. (This is not a toll-free number.)

Little Rock Diagnostic Clinic, P.A. Profit Sharing Plan (the Plan), 
Located in Little Rock, AR

[Prohibited Transaction Exemption 2006-14; Exemption Application No. D-
11350]

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 cash sale by the Plan of a leased fee 
interest (the Leased Fee Interest) in certain real property (the 
Property) to LRDC Real Estate, LLC, a party in interest with respect to 
the Plan.
    This exemption is subject to the following conditions:
    (a) The sale is a one-time transaction for cash.
    (b) The sales price for the Leased Fee Interest is based on its 
fair market value as established by a qualified, independent appraiser, 
who updates the appraisal on the date of the sale is consummated.
    (c) The terms of the proposed transaction are at least as favorable 
to the Plan as those obtainable in an arm's length transaction with an 
unrelated party.
    (d) The Plan does not pay any real estate fees or commissions in 
connection with the sale.
    (e) An independent fiduciary is appointed to approve and monitor 
the sale transaction on behalf of the Plan.
    (f) Within 90 days of the date the notice granting this exemption 
is published in the Federal Register, the Little Rock Diagnostic 
Clinic, P.A., the Plan sponsor, files a Form 5330 with the Internal 
Revenue Service and pays all applicable excise taxes that are 
attributed to the past and continued leasing arrangement between the 
Plan and the LRDC Land Company, of certain land comprising part of the 
Property.
    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 21, 2006 at 71 FR 
41475.

FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan of the Department 
at (202) 693-8552. (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

[[Page 57009]]

transaction which is the subject of the exemption.

Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. E6-15922 Filed 9-27-06; 8:45 am]

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