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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Teachers Insurance and Annuity [Notices] [10/17/1996]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions; Teachers Insurance and Annuity [10/17/1996]

[PDF Version]

Volume 61, Number 202, Page 54229-54237

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DEPARTMENT OF LABOR
[Prohibited Transaction Exemption 96-76; Exemption Application No. D-
09915, et al.]

 
Grant of Individual Exemptions; Teachers Insurance and Annuity

AGENCY: Pension and Welfare Benefits 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).
    Notices were published in the Federal Register of the pendency 
before the Department of proposals to grant such exemptions. The 
notices set forth a summary of facts and representations contained in 
each application for exemption and referred interested persons to the 
respective applications for a complete statement of the facts and 
representations. The applications have been available for public 
inspection at the Department in Washington, D.C. The notices also 
invited interested persons to submit comments on the requested 
exemptions to the Department. In addition the notices stated that any 
interested person might submit a written request that a public hearing 
be held (where appropriate). The applicants have represented that they 
have complied with the requirements of the notification to interested 
persons. No public comments and no requests for a hearing, unless 
otherwise stated, were received by the Department.
    The notices of proposed exemption were issued and the exemptions 
are being granted solely by the Department because, effective December 
31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR 
47713, October 17, 1978) 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 exemptions are administratively feasible;
    (b) They are in the interests of the plans and their participants 
and beneficiaries; and
    (c) They are protective of the rights of the participants and 
beneficiaries of the plans.

Teachers Insurance and Annuity Association of America (TIAA) Located in 
New York, New York

[Prohibited Transaction Exemption 96-76 Exemption Application No. D-
09915]

Exemption

Section I--Exemption for Certain Transactions Involving the Purchase 
and Sale of Certain Units in a Real Estate Separate Account by TIAA
    The restrictions of sections 406(a), 406(b)(1) and 406(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, effective October 2, 1995, to the transactions 
described below, if each of the conditions set forth in Section III 
have been satisfied:
    (a) The purchase by TIAA of certain units (the Liquidity Units), as 
defined in Section IV(g) below, in a real estate separate account 
established and operated by TIAA (the Separate Account), as defined in 
Section IV(l) below, in the event of net withdrawals from the Separate 
Account; and
    (b) The sale of Liquidity Units of the Separate Account by TIAA in 
the event of net contributions to the Separate Account.
Section II--Exemption for the Purchase of Liquidity Units Owned by TIAA 
in the Separate Account in Connection With a Decrease in TIAA's 
Participation in the Separate Account Under Certain Circumstances
    The restrictions of section 406(a), 406(b)(1) and 406(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, effective October 2, 1995, to: (a) The use of cash 
flow from the Separate Account (the Cash Flow), as defined in Section 
IV(d) below; (b) the use of liquid investments in the Separate Account; 
or (c) the use of the proceeds from the sale of certain properties (the 
Properties), as defined in Section IV(i) below, owned by the Separate 
Account, for the purpose of purchasing Liquidity Units in the Separate 
Account from TIAA in connection with a decrease in the participation by 
TIAA in the Separate Account after the trigger point (the Trigger 
Point), as defined in Section IV(o) below, has been reached or during 
the wind down period of the Separate Account (the Wind Down), as 
defined in Section IV(q) below, provided that the conditions set forth 
in Section III have been satisfied.*
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    * For purposes of this exemption references to specific 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
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Section III--General Conditions
    This exemption is conditioned upon the adherence by TIAA to the 
material facts and representations described in the notice of proposed 
exemption (the Notice) and upon satisfaction of the following 
requirements:
    (a) The decision to elect to add the Separate Account as an 
additional pension funding option for employee benefit plans (the Plan 
or Plans), as defined in Section IV(h) below, which invest in the 
Separate Account has been and is made by the fiduciaries of such Plans 
(the Fiduciary or Fiduciaries), as defined in Section IV(e) below, or 
in the case of a TIAA supplemental retirement annuity contract (SRA) or 
a TIAA individual retirement annuity contract (IRA), the decision to 
elect to add the Separate Account as an additional pension funding 
option to a TIAA SRA or a TIAA IRA, has been and is made by the 
participant in such TIAA SRA or TIAA IRA, if the Fiduciaries of the 
Plans, and the TIAA SRA and TIAA IRA participants are unrelated to TIAA 
and its affiliates (the Affiliates or Affiliate), as defined in Section 
IV(b) below (other than the fiduciaries of any TIAA Pension Plans, as 
defined in Section IV(n) below);
    (b) Each of the Properties in the Separate Account has been and is 
valued at least annually by an independent, qualified appraiser;
    (c) Except as otherwise specified below in paragraph (c)(10) of 
this Section III, prior to investment of funds in the Separate Account 
by any participants in a Plan (the Participant or Participants) (and, 
if applicable, by any of the Plans) which participate in the Separate 
Account, TIAA has furnished and will furnish to the Fiduciaries of such 
Plans, to the sponsors of any TIAA SRA, and to the participants in any 
TIAA IRA, the following information:
    (1) A copy of the most recent prospectus for the Separate Account;
    (2) Full disclosure concerning the investment guidelines, 
structure, manner of operation, and administration of the Separate 
Account; the method of

[[Page 54230]]

valuation applicable to accumulation units (the Accumulation Units), as 
defined in Section IV(a) below, and the method of valuation of the 
Properties, and all other assets owned by the Separate Account;
    (3) A written description of potential conflicts of interest that 
may result from TIAA's acquisition, purchase, retention, redemption, or 
sale of Accumulation Units in the Separate Account;
    (4) The rules and procedures for withdrawal, transfer, redemption, 
distribution, and payout applicable throughout the term of the Separate 
Account to TIAA, to individual Participants (and, if applicable, to 
Plans) which participate in the Separate Account;
    (5) The expense and fee provisions of the Separate Account 
(including but not limited to a description of any services rendered by 
TIAA, a schedule of fees for such services, and an estimate of the 
amount of fees to be paid by the Separate Account annually);
    (6) A list of all assets in the Separate Account, as of the end of 
the most recent fiscal period of the Separate Account, and a list of 
the Properties which the Separate Account acquired or sold within 
twelve months prior to the end of the most recent fiscal period of the 
Separate Account;
    (7) The appropriate financial statements pertaining to the Separate 
Account (including but not limited to the most recent audited annual 
report, income statement, and balance sheet on the Separate Account);
    (8) The toll-free telephone number by which information relating to 
the value of the units in the Separate Account (the Units) and 
information concerning the quarterly return of the Separate Account is 
made available daily;
    (9) Any reasonably available information (including but not limited 
to, a copy of the most recent quarterly and other financial reports for 
the Separate Account filed with the Securities and Exchange Commission 
(SEC), and the most recent copy of any supplemental schedules of 
information, publications, or ancillary materials which have been made 
available to the Fiduciaries of the Plans or to the sponsors of the 
plans (the Plan Sponsor or the Plan Sponsors) or to Participants 
invested in the Separate Account) which TIAA believes to be necessary, 
or which any fiduciary of a plan or any sponsor of a plan reasonably 
requests in order to determine whether such plan should elect to add 
the Separate Account as an additional pension funding option for the 
benefit of participants (or, if applicable, for such plan), or, in the 
case of a TIAA SRA or a TIAA IRA, which the participant in such TIAA 
SRA or TIAA IRA reasonably requests in order to determine if he or she 
should elect to add the Separate Account as an additional pension 
funding option under such SRA or IRA contract with TIAA; and
    (10) A copy of the Notice, as it appeared in the Federal Register, 
has been provided to the Fiduciaries of the Plans, to the sponsors of 
the Plans, to the sponsors of any TIAA SRA, and to the participants in 
any TIAA IRA which prior to or after the publication of the Notice 
elected to add the Separate Account as an additional pension funding 
option. In addition, a copy of the granted exemption (the Grant), as it 
appeared in the Federal Register, is provided to the Fiduciaries of the 
Plans, to the sponsors of the Plans, to the sponsors of any TIAA SRA, 
and to the participants in any TIAA IRA which are invested in the 
Separate Account at the time of the publication of the Grant. If 
subsequent to the publication of the Grant, any fiduciaries of plans, 
any sponsors of plans, the sponsors of any SRA, or the participants in 
any TIAA IRA choose to elect to add the Separate Account as an 
additional pension funding option to enable such plans to invest in the 
Separate Account, the fiduciaries of such plans, the sponsors of such 
plans, the sponsors of such SRA, and the participants in any such IRA 
shall be provided, prior to investment in the Separate Account, with a 
copy of both the Notice and the Grant, as such documents appeared upon 
publication in the Federal Register.
    (d) TIAA has made and will make available, within the time periods 
specified below in subparagraphs (1) through (5) of this paragraph (d), 
to the Fiduciaries of the Plans, or in the case of a TIAA SRA or a TIAA 
IRA, to the participant in such SRA or IRA:
    (1) Information relating to the value of the Units in the Separate 
Account to be available daily over a toll-free telephone number and/or 
to be distributed in writing to Participants (or, if applicable, to the 
Plans) in the Separate Account in quarterly confirmation statements 
within five (5) to ten (10) days after the end of each calendar 
quarter;
    (2) Information concerning the quarterly return of the Separate 
Account to be available daily over a toll-free telephone number and/or 
to be distributed in writing to Participants (or, if applicable, to the 
Plans) in the Separate Account in quarterly confirmation statements 
within five (5) to ten (10) days after the end of each calendar 
quarter;
    (3) A prospectus for the Separate Account to be distributed 
annually;
    (4) Any information or TIAA publication, to be distributed from 
time to time, which TIAA reasonably believes to be necessary or which 
the Fiduciaries request, or in the case of a TIAA SRA or a TIAA IRA, 
which the participant in such SRA or IRA requests (including but not 
limited to quarterly financial reports filed with the SEC) in order to 
determine whether any Participant in such Plan, or participant in such 
SRA or IRA should buy, sell, or continue to hold the Units in the 
Separate Account, as defined in Section IV(p) below; and
    (5) A written notification that quarterly financial reports 
(including the list of Properties and their current values) are 
available upon request and a written disclosure of the toll-free 
telephone number by which Plan Fiduciaries and Plan Sponsors may 
request delivery of such quarterly financial reports will be provided 
by TIAA in a publication sent to all Plan Fiduciaries and all Plan 
Sponsors of the Plans, beginning after the end of the first calendar 
quarter after the Grant is published in the Federal Register and 
continuing at least quarterly thereafter.
    (e) An independent, qualified fiduciary (the Independent 
Fiduciary), as defined in Section IV(f) below, has been appointed prior 
to or coincident with the start of operations of the Separate Account 
(and is subject to renewal and removal described herein) whose 
responsibilities include, but are not limited to:
    (1) Reviewing and approving the written investment guidelines of 
the Separate Account as established by TIAA, and approving any changes 
to such investment guidelines;
    (2) Monitoring whether the Properties acquired by the Separate 
Account conform with the requirements of such investment guidelines;
    (3) Reviewing and approving valuation procedures for the Separate 
Account and approving changes in those procedures;
    (4) Reviewing and approving the valuation of Units in the Separate 
Account and the valuation of Properties held in the Separate Account, 
as described in the Summary of Facts and Representations in the Notice;
    (5) Approving the appointment of all independent, qualified 
appraisers retained by TIAA to perform periodic valuations of the 
Properties in the Separate Account;
    (6) Requiring appraisals in addition to those normally conducted, 
whenever, the Independent Fiduciary believes that the characteristics 
of any of the Properties have changed materially, or with respect to 
any of the Properties,

[[Page 54231]]

whenever the Independent Fiduciary deems an additional appraisal to be 
necessary or appropriate in order to assure the correct valuation of 
the Separate Account;
    (7) Reviewing the purchases and sales of Units in the Separate 
Account by TIAA and the Participants (and, if applicable, by the Plans) 
which participate in the Separate Account to assure that the correct 
values of the Units and of the Separate Account are applied; reviewing 
the fixed repayment schedule applicable to the redemption of certain 
seed money units (the Seed Money Units), as defined in Section IV(k) 
below, as approved by the State of New York Insurance Department; 
reviewing any exercise of discretion by TIAA to accelerate the fixed 
repayment schedule applicable to the redemption of Seed Money Units; 
and, approving TIAA's exercise of discretion only if such acceleration 
would benefit the Participants in the Separate Account;
    (8) After (and, if necessary, during) the start up period (the 
Start Up Period), as defined in Section IV(m) below, determining the 
appropriate Trigger Point, with respect to the ongoing ownership by 
TIAA of Liquidity Units; establishing a method to implement any changes 
to the Trigger Point; adjusting the percentage which serves as the 
Trigger Point; approving or requiring any reduction of TIAA's interest 
in the Separate Account; and, approving the manner in which such 
reduction of TIAA's participation in the Separate Account in excess of 
the Trigger Point is to be effected;
    (9) In the event the Trigger Point is reached, participating in and 
planning any program of sales of the assets of the Separate Account, 
which would include the selection of the Properties to be sold, the 
guidelines to be followed in making such sales, and the approval of 
such sales, if in the opinion of the Independent Fiduciary, such sales 
are desirable at the Trigger Point in order to reduce the ownership by 
TIAA of Liquidity Units in the Separate Account or to facilitate the 
Wind Down;
    (10) Supervising the operation of the Separate Account during the 
Wind Down of such Separate Account;
    (11) During the Wind Down, planning any program of sales of the 
assets of the Separate Account, including the selection of the 
Properties to be sold, determining the guidelines to be followed in 
making such sales, and approving the sale of the Properties in the 
Separate Account, in the event of the termination of the Separate 
Account, if in the opinion of the Independent Fiduciary, such sales are 
desirable to facilitate the Wind Down; and
    (12) Reviewing any other transactions or matters involving the 
Separate Account that are submitted to the Independent Fiduciary by 
TIAA and determining whether such transactions or other matters are 
fair to the Separate Account and in the best interest of the Separate 
Account.
    (f) The exemption is also subject to the condition that the 
following transactions involving the Separate Account have not occurred 
and will not occur:
    (1) Participation by the Independent Fiduciary, TIAA, any Affiliate 
of TIAA, TIAA's general account (the General Account), or any other 
separate account over which TIAA or its Affiliates has any investment 
control in any joint venture with the Separate Account, or in the 
ownership of the Properties of the Separate Account either alone or 
together with a joint venture partner;
    (2) The borrowing of funds from the Separate Account by the 
Independent Fiduciary, TIAA, any Affiliate of TIAA, TIAA's General 
Account, or any other separate account over which TIAA or its 
Affiliates has investment control, or the lending of funds to the 
Separate Account by the Independent Fiduciary, TIAA, any Affiliate of 
TIAA, TIAA's General Account, or any other separate account over which 
TIAA or its Affiliates has investment control in order to leverage any 
purchase by the Separate Account of any of the Properties, or 
otherwise; and
    (3) The acquisition by the Separate Account of any Properties from 
or the sale by the Separate Account of any Properties to the 
Independent Fiduciary, TIAA, any Affiliate of TIAA, TIAA's General 
Account, or any other separate account over which TIAA or its 
Affiliates has investment control.
    (g) The liquidation of any Accumulation Units held by a Participant 
or participating Plan, for which a withdrawal request is pending, has 
not been and will not be delayed by reason of the redemption of Seed 
Money Units held by TIAA, and TIAA will always advance funds by 
purchasing Liquidity Units to fund the withdrawal requests of 
Participants or Plans on a timely basis;
    (h) TIAA must maintain for a period of six (6) years from the date 
of any transaction, the records necessary to enable the persons 
described in paragraph (i) of this Section III to determine whether the 
conditions of this exemption have been met. However, a prohibited 
transaction will not be considered to have occurred if, due to 
circumstances beyond the control of TIAA and its Affiliates, the 
records are lost or destroyed prior to the end of the six-year period, 
and no parties in interest, other than TIAA or its Affiliates, shall be 
subject to a civil penalty that may be assessed under section 502(i) of 
the Act, or to 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) below.
    (i)(1) Except as provided in subparagraph (2) of this paragraph (i) 
and notwithstanding any provision of subsection (a)(2) and (b) of 
section 504 of the Act, the records referred to in paragraph (h) of 
this Section III are unconditionally available at their customary 
location for examination during normal business hours by:
    (A) Any duly authorized employee or representative of the 
Department of Labor (The Department) or the Internal Revenue Service;
    (B) Any Fiduciary of a Plan which participates in the Separate 
Account, or in the case of a TIAA SRA or a TIAA IRA, any participant in 
such SRA or IRA, who has authority to acquire or dispose of the 
interests of such SRA or IRA contract, or any duly authorized employee 
or representative of such Fiduciary of a Plan or participant in such 
SRA or IRA;
    (C) Any contributing employer to any Plan participating in the 
Separate Account, or any duly authorized employee or representative of 
such employer; and
    (D) Any Participant or beneficiary of any Plan participating in the 
Separate Account, or any duly authorized employee or representative of 
such Participant or beneficiary.
    (2) None of the persons described in subparagraphs (1) (B) through 
(D) of this paragraph (i) shall be authorized to examine the trade 
secrets of TIAA or any of its Affiliates, or any of its commercial or 
financial information which is privileged or confidential.
Section IV--Definitions
    For the purpose of this exemption:
    (a) ``Accumulation Units'' mean the units of interest into which 
equity participation in the Separate Account is divided during the 
accumulation phase of the annuity contracts prior to retirement by a 
Participant. Seed Money Units, as defined in Section IV(k) below, and 
Liquidity Units, as defined in Section IV(g) below, are Accumulation 
Units.
    (b) ``Affiliate'' or ``Affiliates'' of TIAA include(s):
    (1) Any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by or under common control with 
TIAA.

[[Page 54232]]

    (2) Any officer, director, or employee of TIAA, or of a person 
described in paragraph (b)(1) of Section IV, and
    (3) Any partnership in which TIAA is a partner.
    (c) ``Control'' means the power to exercise a controlling influence 
over the management or policies of a person other than an individual.
    (d) ``Cash Flow'' means: (1) The sum of: (a) Income received by the 
Separate Account from investments (including dividends and/or interest 
from non-real estate investments, and net operating income, less 
payment of capital expenditures and changes in reserves for capital 
expenditures, from equity real estate investments); and (b) Participant 
and Plan contributions (including transfers to the Separate Account) 
MINUS (2) the sum of: (a) Separate Account expense charges (including 
investment and administrative expenses for mortality and expense 
guarantees); and (b) any redemption of Seed Money Units at fair market 
value.
    (e) ``Fiduciary'' or ``Fiduciaries'' mean(s) the individual 
fiduciary or fiduciaries acting on behalf of each of the Plans that 
invest in the Separate Account.
    (f) ``Independent Fiduciary''--
    (1) For purposes of this definition, an Independent Fiduciary means 
a person who:
    (A) Is not an Affiliate of TIAA;
    (B) Does not have an ownership interest in TIAA or its Affiliates;
    (C) Is not a corporation or partnership in which TIAA or any of its 
Affiliates has an ownership interest;
    (D) Is not a Fiduciary with respect to any Plan which participates 
in the Separate Account;
    (E) Has acknowledged in writing acceptance of fiduciary 
responsibility; and
    (F) Is either:
    (i) A business organization which has at least five (5) years of 
experience with respect to commercial real estate investments or other 
appropriate experience;
    (ii) A committee comprised of three to five individuals who each 
have had at least five (5) years of experience with respect to 
commercial real estate investments or other appropriate experience; or
    (iii) A committee comprised both of a business organization or 
organizations and individuals having the qualifications described in 
paragraphs (f)(1) (A) through (E) of Section IV above.
    (2) For the purposes of the definition of Independent Fiduciary, no 
organization or individual may serve as Independent Fiduciary for the 
Separate Account for any fiscal year, if the gross income received from 
TIAA or its Affiliates by such organization or individual (or by any 
partnership or corporation of which such organization or individual is 
an officer, director, or 10 percent (10%) or more partner or 
shareholder) for that fiscal year exceeds 5 percent (5%) of its or his 
annual gross income from all sources for the prior fiscal year. If such 
organization or individual had no income for the prior fiscal year, the 
5 percent (5%) limitation is applied with reference to the fiscal year 
in which such organization or individual serves as an Independent 
Fiduciary. The income limitation includes services rendered to the 
Separate Account as Independent Fiduciary, as described in this 
exemption.
    (3) No organization or individual who is an Independent Fiduciary, 
and no partnership or corporation of which such organization or 
individual is an officer, director, or 10 percent (10%) or more partner 
or shareholder, during the period that such organization or individual 
serves as an Independent Fiduciary and continuing for a period of six 
(6) months after such organization or individual ceases to be an 
Independent Fiduciary, may
    (A) Acquire any property from or sell any property to TIAA, its 
Affiliates, TIAA's General Account, or any separate account maintained 
by TIAA or its Affiliates, including the Separate Account;
    (B) Borrow any funds from, or lend any funds to TIAA, its 
Affiliates, TIAA's General Account, or any separate account maintained 
by TIAA or its Affiliates, including the Separate Account;
    (C) Participate in any joint venture with TIAA, its Affiliates, 
TIAA's General Account, or any separate account maintained by TIAA or 
its Affiliates, including the Separate Account, or participate, either 
alone or together with a joint venture partner, in the ownership of the 
Properties with TIAA, its Affiliates, TIAA's General Account, or any 
separate account maintained by TIAA or its Affiliates, including the 
Separate Account; or
    (D) Negotiate any such transactions, described above in paragraph 
(f)(3) (A) through (C) of Section IV.
    (4) No Fiduciary of a Plan or Plan Sponsor which participates in 
the Separate Account or a designee of such Fiduciary, Plan Sponsor, or 
Plan may serve as the Independent Fiduciary with respect to the 
Separate Account.
    (g) ``Liquidity Units'' mean Accumulation Units, as defined in 
Section IV(a) above, that are purchased from Participants (or, if 
applicable, from the Plans) who participate in the Separate Account by 
TIAA's General Account, when the Cash Flow of the Separate Account, as 
defined above in Section IV(d), and liquid investments of the Separate 
Account are insufficient, in order to guarantee liquidity for such 
Participants (or, if applicable, for such Plans) who wish to withdraw 
or transfer funds from the Separate Account.
    (h) ``Plan or Plans'' mean(s) an employee benefit plan or employee 
benefit plans (primarily participant-directed defined contribution 
plans, but also some defined benefit plans), qualified pursuant to 
sections 401(a), 403(a), 403(b), 414(d) and 457(b) of the Code, as well 
as any TIAA IRA and TIAA SRA, as described, respectively, under section 
408 and section 403(b) of the Code, which may participate in ownerships 
of Units in the Separate Account and which are subject to section 406 
of the Act and/or section 4975 of the Code.
    (i) ``Properties'' mean the geographically dispersed retail and 
office buildings, light industrial facilities, and residential 
apartment space with good operating income (and such other Properties 
that may be acquired pursuant to changes in the investment guidelines 
for the Separate Account that are approved by the Independent 
Fiduciary) which TIAA has acquired on behalf of the Participants (and, 
if applicable, the Plans) that invest in the Separate Account.
    (j) ``Seed Money'' means the total amount (not to exceed $100 
million) actually contributed by TIAA's General Account to the Separate 
Account for the purpose of acquiring Properties for the Separate 
Account. Seed Money will be applied to purchase Accumulation Units at 
the fair market value of those Units at the time of purchase.
    (k) ``Seed Money Units'' mean the Accumulation Units, as defined in 
Section IV(a) above, that are issued by the Separate Account to TIAA's 
General Account in exchange for Seed Money, as defined above in Section 
IV(j), during the Start Up Period of the Separate Account.
    (l) ``Separate Account'' means the real estate equity pooled 
separate account invested in by Participants (and, if applicable by 
Plans), as described herein.
    (m) ``Start Up Period'' means the period during which repayment of 
TIAA's General Account of Seed Money, as defined in Section IV(j) 
above, must be made on a fixed repayment schedule as approved by the 
State of New York

[[Page 54233]]

Insurance Department (NYID). In this regard, the redemption of Seed 
Money Units by TIAA will begin on the earlier to occur of:
    (1) Two (2) years from the date on which TIAA first opened the 
Separate Account to Participants (and, if applicable, to Plans) for 
paying premiums to the Separate Account, or
    (2) The date on which the value of the Separate Account first 
reaches $200 million. Thereafter, at least 20 percent (20%) of the 
original number of Seed Money Units acquired by TIAA's General Account 
from the contribution of Seed Money to the Separate Account are to be 
redeemed on predetermined dates in each year, as established by TIAA, 
for a period of five (5) years (at fair market value based on the value 
of Accumulation Units on the date of each redemption). The exercise of 
any discretion by TIAA to accelerate the fixed repayment schedule 
applicable to the redemption of Seed Money Units is subject to the 
advance review and approval of the Independent Fiduciary, and any such 
acceleration will not be applied so as to prevent a redemption of Seed 
Money Units scheduled to occur on any of the predetermined dates during 
any year. The Start Up Period will expire when all the Seed Money Units 
originally acquired by TIAA's General Account from the contribution of 
Seed Money to the Separate Account have been redeemed by TIAA.
    (n) ``TIAA Pension Plans'' mean certain defined benefit and certain 
defined contribution plans maintained by TIAA. Among the defined 
contribution plans maintained by TIAA are the TIAA Retirement Plan, 
which is tax-qualified under the Code, and the TIAA Tax-Deferred 
Annuity Plan, which is a salary reduction annuity plan, pursuant to 
section 403(b) of the Code. Participants in the TIAA Retirement Plan 
and the TIAA Tax-Deferred Annuity Plan are permitted to invest in the 
Separate Account.
    (o) ``Trigger Point'' means the point, as established by the 
Independent Fiduciary, at which TIAA's participation in the Separate 
Account through the ownership of Liquidity Units is decreased with the 
approval of or as required by the Independent Fiduciary, acting on 
behalf of the Participants (and, if applicable, the Plans).
    (p) ``Units'' mean the units of interest into which equity 
participation in the Separate Account is divided.
    (q) ``Wind Down'' means the period which begins on the date on 
which TIAA notifies all Participants (and, if applicable, all Plans 
invested in the Separate Account) that TIAA has decided to terminate 
the Separate Account and concludes on the date on which no Accumulation 
Units are held by Participants (or, if applicable, by Plans).

EFFECTIVE DATE: The exemption is effective, as of October 2, 1995, the 
date the Separate Account was first opened to Participants and Plans 
for investment.

Written Comments

    In the Notice, the Department invited all interested persons to 
submit written comments and requests for a hearing on the proposed 
exemption within 45 days of the date of the publication of the Notice 
in the Federal Register on April 4, 1996. All comments and requests for 
hearing were due by May 20, 1996.
    During the comment period, the Department received no requests for 
hearing. However, the Department did receive a comment letter from the 
applicant, TIAA, dated May 17, 1996. The comments from TIAA requested 
certain changes and clarifications to the conditions of the exemption 
as proposed in the Notice, and certain amendments which, according to 
TIAA, should have been reflected in the SFR, as published in the Notice 
in the Federal Register. TIAA's comments on the conditions of the 
exemption and the SFR are discussed below in an order that corresponds 
to the appearance of the relevant language in the Notice.
    1. In its comment TIAA points out that throughout the Notice the 
phrase, ``in the case of a contract between TIAA and a supplemental 
retirement account (SRA) or an individual retirement account (IRA),'' 
is used to describe the relationship between TIAA and any SRA or IRA. 
To reflect the fact that TIAA provides annuity products to 
contractholders who are participants in such an SRA or an IRA, TIAA 
requests that the phrase, ``in the case of a TIAA supplemental 
retirement annuity contract (SRA) or TIAA individual retirement annuity 
contract (IRA),'' be substituted for all references throughout the 
final exemption to the phrase quoted above which appeared throughout 
the Notice.
    The Department concurs with TIAA's requested change. Accordingly, 
the Department has modified the final exemption to reflect the change 
in the first instance where the phrase occurred in the operant language 
of the exemption; but, in order to avoid repeating the entire phrase, 
the Department has instead substituted the following abbreviated 
phrase, ``in the case of a TIAA SRA or a TIAA IRA,'' subsequently. In 
addition, the Department has made changes in the language of the 
conditions of the exemption in order to be consistent, so that any 
reference therein to an SRA or an IRA will now be to a TIAA SRA or a 
TIAA IRA.
    2. TIAA believes that a modification to Section III(a) of the 
exemption is necessary to take into account the fact that TIAA's own 
plans have been and will be invested in the Separate Account. TIAA 
appears to be concerned that the obligation of TIAA to purchase 
Liquidity Units may amount to an extension of credit between TIAA and 
its own plans and that such transaction would not be permitted under 
the terms of condition III(a), as it appeared in the Notice. As a 
result, TIAA requests that at the end of Section III(a) on page 15128 
of the Notice, the parenthetical phrase, ``(other than the fiduciaries 
of any TIAA Pension Plans, as defined in Section IV(n) below),'' be 
inserted before the semi-colon. TIAA also requests that a similar 
change should have been made to the SFR at the end of the second 
sentence of the first paragraph of representation 14 on page 15138 of 
the Notice.
    The Department concurs with TIAA's request for changes in the 
language of the conditions of Section III(a) of the exemption. 
Accordingly, the language of Section III(a) has been amended to read as 
follows:

    The decision to elect to add the Separate Account as an 
additional pension funding option for employee benefit plans (the 
Plan or Plans), as defined in Section IV(h) below, which invest in 
the Separate Account has been and is made by the fiduciaries of such 
Plans (the Fiduciary or Fiduciaries), as defined in Section IV(e) 
below, or in the case of a contract between TIAA and a supplemental 
retirement annuity contract (SRA) or an individual retirement 
annuity contract (IRA), the decision to elect to add the Separate 
Account as an additional pension funding option to a TIAA SRA or a 
TIAA IRA has been and is made by the participant in such TIAA SRA or 
TIAA IRA, if the Fiduciaries of the Plans and the TIAA IRA and TIAA 
SRA participants are unrelated to TIAA and its affiliates (the 
Affiliates or Affiliate), as defined in Section IV(b) below, (other 
than the fiduciaries of any TIAA Pension Plans, as defined in 
Section IV(n) below).

    However, the Department wishes to note that as indicated in 
footnote 9 on page 15132 of the Notice, TIAA represented in its 
application for exemption that any acquisition of Units in the Separate 
Account by employee benefit plans sponsored by TIAA would not violate 
section 406(a) or 406(b) of the Act by reason of the statutory 
exemption contained in section 408(b)(5) of the Act. To the extent that 
the acquisition of Units in the Separate Account by plans sponsored by 
TIAA

[[Page 54234]]

does not satisfy the requirements of section 408(b)(5) of the Act, no 
relief has been provided by the exemption for the participation by such 
plans in the Separate Account.
    3. TIAA has requested a modification to the language of Section 
III(c) of the exemption. In this regard, Section III(c), as set forth 
on page 15128, column 2 of the Notice read, in part,

    Except as otherwise specified below in paragraph (c)(10) of this 
Section III, prior to investment of funds in the Separate Account by 
any participant in a Plan (the Participant or Participants) (and, if 
applicable, by any of the Plans) which participate in the Separate 
Account, TIAA has furnished and will furnish to the Fiduciaries of 
such Plans and, in the case of a contract between TIAA and a SRA or 
an IRA, to the participant in such SRA or IRA, the following 
information.

    TIAA requests that the phrase, ``or immediately following,'' be 
inserted after the words, ``prior to,'' and before the word, 
``investment,'' in the language of Section III(c) above. TIAA asserts 
that, as it has 1.8 million existing contractholders, it cannot provide 
the information required in Section III(c), prior to a participant's 
decision to invest in the Separate Account. In this regard, TIAA states 
that, with some exceptions, the information the Department requires 
TIAA to disclose, pursuant to Section III(c), is included in the 
prospectus for the Separate Account. In the event the prospectus is not 
provided prior to investment of funds in the Separate Account, TIAA 
represents that it will provide this information immediately following 
such investment in accordance with the Federal securities rules 
governing prospectus delivery. However, in the event this proposal was 
not satisfactory to the Department, TIAA suggested as an alternative 
that the introductory language of Section III(c) be amended to conform 
to the language, as set forth in Section III(c)(10). As such, the 
introductory language of Section III(c), as proposed in the alternative 
by TIAA, would read as follows:

    Except as otherwise specified below in paragraph (c)(10) of this 
Section III, prior to investment of funds in the Separate Account by 
any participant in a Plan (the Participant or Participants) (and, if 
applicable, by any of the Plans) which participate in the Separate 
Account, TIAA has furnished and will furnish to the Fiduciaries of 
such Plans to the sponsors of any TIAA SRA, and to the participants 
in any TIAA IRA, the following information:

    With respect to the timing of disclosures, the Department believes 
that the information required to be provided by TIAA, pursuant to 
Section III(c) of the exemption, is fundamental to the making of 
informed investment decisions and should be furnished to certain 
parties by TIAA prior to investment of funds in the Separate Account by 
investors. In this regard, the Department points out that TIAA on page 
30 of its application for exemption and again on page 2 of Exhibit A to 
such application, represented that the timing of disclosures to 
Fiduciaries of the Plans, Plan Sponsors, and in the case of a TIAA SRA 
or TIAA IRA to the Participants of such TIAA SRA and TIAA IRA would 
occur prior to the investment of funds in the Separate Account by any 
participants (and, if applicable, by any plans).
    The Department concurs with the alternative language proposed by 
TIAA. Accordingly, the language of Section III(c) has been amended to 
read as above.
    4. As discussed in paragraph three (3) above, pursuant to Section 
III(c), TIAA must provide certain disclosures about the Separate 
Account to certain investors prior to their investing in the Separate 
Account. In this regard, the Department required in Section III(c)(1), 
as set forth on page 15128, column 2 of the Notice, that TIAA provide 
to such parties, among other information, the following items:

a copy of the most recent prospectus for the Separate Account, the 
most recent quarterly and other financial reports for the Separate 
Account filed with the Securities and Exchange Commission (SEC), and 
the most recent copy of any supplemental schedule of information, 
publications, or ancillary materials which have been made available 
to Plan Sponsors or Participants invested in the Separate Account.

Further, pursuant to Section III(c)(8), as set forth on page 15128, 
column 2 of the Notice, the Department required TIAA to provide such 
parties with:

copies of the most recent reports on the Separate Account, including 
but not limited to information relating [sic.] the value of units in 
the Separate Account (the Units), as defined in Section IV(p) below; 
and the quarterly return for the Separate Account, and the most 
recent quarterly updates of the valuation of the Separate Account 
(including a list of the holdings of the Separate Account during the 
period).

    TIAA requests that Section III(c)(1) be amended such that only a 
copy of the most recent prospectus for the Separate Account be required 
to be disclosed. In this regard, TIAA represents that, as required by 
the amended introductory language in Section III(c), it has provided 
and will continue to provide a copy of the prospectus for the Separate 
Account to the Fiduciaries of Plans, to the sponsors of any TIAA SRA, 
and to the participants in any TIAA IRA which invest in the Separate 
Account. TIAA represents that the prospectus is updated annually and 
contains detailed audited financial information concerning the Separate 
Account and detailed disclosure concerning its operations and 
investment objectives. Further, TIAA represents that it has made and 
will make available unit value information and quarterly return 
information for the Separate Account via a toll-free telephone number 
that can be accessed at any time. In addition, TIAA represents that, 
upon request, it has provided and will provide copies of quarterly and 
other financial reports filed with the SEC. TIAA believes that its 
approach provides superior disclosure at a substantial cost savings 
which benefits the Participants (and, if applicable, the Plans) which 
participate in the Separate Account, and is essential for the Separate 
Account to be cost-effective.
    The Department concurs, in part, with TIAA's requested 
modifications to the disclosure requirements of Section III(c)(1) and 
(c)(8), as set forth in the Notice. However, the Department believes 
that, any prospective investor who wishes to receive the information 
which was described in the deleted portion of Section III(c)(1) should 
be able to request that TIAA provide such information, pursuant to 
Section III(c)(9) of the exemption. Further, the Department believes 
that any investor interested in investing in the Separate Account 
should be able to request additional information from TIAA which is 
reasonably available. This is consistent with the provisions of Section 
III(d)(4) which permit a Fiduciary of a Plan which is invested in the 
Separate Account and a participant in a TIAA SRA or an TIAA IRA which 
is invested in the Separate Account to request similar information from 
TIAA. In this regard, the Department wishes to make clear that the 
phrase, ``any other reasonably available information,'' as set forth in 
Section III(c)(9), includes, but is not limited to, copies of the most 
recent quarterly and other financial reports for the Separate Account 
filed with the SEC, or the supplemental schedules of information, 
publications, or ancillary materials which have been made available to 
Fiduciaries of the Plan, to Plan Sponsors, or to Participants who are 
invested in the Separate Account. Accordingly, the Department has 
modified the language in Section III(c)(9) by inserting between the 
word, ``information,'' and the word, ``which,'' the following 
parenthetical phrase,

(including but not limited to, a copy of the most recent quarterly 
and other financial reports for the Separate Account filed with

[[Page 54235]]

the Securities and Exchange Commission (SEC), and the most recent 
copy of any supplemental schedules of information, publications, or 
ancillary materials which have been made available to Fiduciaries of 
the Plan or to the sponsors of the plans (the Plan Sponsor or the 
Plan Sponsors) or to Participants invested in the Separate Account).

    With respect to Section III(c)(8), the Department concurs with 
TIAA's request to delete Section III(c)(8), as set forth on page 15128, 
column 2 of the Notice. However, the Department notes that TIAA has 
already agreed to make such information available daily via a toll-free 
telephone number to any Fiduciary of a Plan and to any participant in a 
TIAA SRA or a TIAA IRA who is already invested in the Separate Account, 
pursuant to Section III(d)(1) and (d)(2), as set forth in the Notice on 
page 15129, columns 1-2. Accordingly, the Department has modified 
Section III(c)(8) to read as follows, ``the toll-free telephone number 
by which information relating to the value of the units in the Separate 
Account (the Units) and information concerning the quarterly return of 
the Separate Account is made available daily.''
    5. TIAA submitted comments with respect to Section III(c)(10). 
Section III(c)(10) requires that TIAA provide copies of the Notice and 
copies of the granted final exemption (the Grant) to certain parties 
within a prescribed period of time. TIAA requested modification of the 
requirements of Section III(c)(10), such that the Notice and Grant need 
not be supplied to prospective investors in the Separate Account 30 
days prior to their investment. TIAA believes that requiring the 
prospective investors to wait 30 days after receiving a copy of the 
Notice and Grant would unduly interrupt investment in the Separate 
Account. Further, TIAA maintains that it would be impractical and 
costly for TIAA to administer a 30 day waiting period, particularly 
with respect to participants in TIAA IRAs who are allowed to select 
other allocation options immediately upon enrollment.
    Although the Department notes that TIAA on page 31 of its 
application for exemption, represented that it would provide a copy of 
the Notice and a copy of the Grant to Plan Fiduciaries and Plan 
Sponsors, at least 30 days prior to investment in the Separate Account, 
the Department concurs with TIAA's request, and accordingly, has 
deleted the 30 day requirement from Section III(c)(10) for those 
investors who invest in the Separate Account after the date of the 
Grant.
    In addition, with respect to the requirements imposed by Section 
III(c)(10), TIAA was concerned that investors who invested after 
publication of the Notice but before publication of the Grant received 
inconsistent treatment with respect to the receipt of a copy of the 
Notice. In this regard, Section III(c)(10), as proposed, required 
delivery of a copy of the Notice, upon publication of the Notice, to 
certain parties who were at that time invested in the Separate Account; 
but, did not specify, when or if, those parties who invested in the 
Separate Account subsequent to the publication of the Notice had to 
receive a copy of the Notice. TIAA requested that the Department modify 
Section III(c)(10), such that investors who invested after the 
publication of the Notice but before the publication of the Grant, 
receive a copy of the Notice immediately following their investment, 
and receive a copy of the Grant, upon publication of the Grant in the 
Federal Register. The Department concurs and has modified the language 
of Section III(c)(10) accordingly.
    6. In Section III(d)(1) on page 15129 of the Notice, in the line 5, 
after the word, ``Participants,'' TIAA suggests that the parenthetical 
phrase, ``(or, if applicable, to the Plans),'' be added to the sentence 
which should read, as follows:

information relating to the value of the Units in the Separate 
Account to be available daily over a toll-free telephone number and/
or to be distributed in writing to Participants (or, if applicable, 
to the Plans) in the Separate Account in quarterly confirmation 
statements within five (5) to ten (10) days after the end of each 
calendar quarter.

Further, TIAA suggests that the same parenthetical phrase should be 
inserted after the word, ``Participants,'' in line 5, in Section 
III(d)(2) on page 15129 of the Notice, such that the sentence should 
read as follows:

information concerning the quarterly return of the Separate Account 
to be available daily over a toll-free telephone number and/or to be 
distributed in writing to Participants (or, if applicable, to the 
Plans) in the Separate Account in quarterly confirmation statements 
within five (5) to ten (10) days after the end of each calendar 
quarter.

The Department concurs.
    7. In Section III(g), as set forth in the Notice on page 15130, 
column 1, lines 7 and 8, TIAA requests that the Department delete the 
italicized phrase ``has advanced and'' from the following sentence:

    The liquidation of any Accumulation Units held by a Participant 
or participating Plan, for which a withdrawal request is pending, 
has not been and will not be delayed by reason of the redemption of 
Seed Money Units held by TIAA, and TIAA has advanced and [emphasis 
added] will always advance funds by purchasing Liquidity Units to 
fund the withdrawal requests of Participants or Plans on a timely 
basis.

TIAA believes that this change is necessary, because to date TIAA has 
not had to advance funds by purchasing Liquidity Units. The Department 
concurs.
    8. TIAA requests that representation 12, as it appeared in the SFR, 
should have been stated differently. In this regard, in representation 
12, as set forth on page 15137 of the Notice, column 3, the first 
sentence of the last full paragraph, reads as follows:

    Prior to investing in the Separate Account, it is represented 
that each prospective participant (and, if applicable, each 
fiduciary of prospective participating plans) has been and will be 
provided with information regarding the role of the Independent 
Fiduciary with respect to the Separate Account and has been and will 
be advised of the identity of the party appointed to serve as the 
Independent Fiduciary.

TIAA requests that the phrase, ``[P]rior to investing in the Separate 
Account,'' at the beginning of this paragraph should have been deleted, 
and the word, ``it,'' should have been capitalized as the beginning of 
the sentence. In addition, TIAA requests that on line 5 and on line 9 
of the same paragraph, the word, ``and'' should have been deleted, and 
the word, ``or,'' should have been substituted following the words, 
``has been.''
    The Department does not concur with TIAA in the changes that have 
been requested to representation 12 of the SFR. In the opinion of the 
Department, investors who are interested in investing in the Separate 
Account must be provided, prior to investing in such account, with 
disclosure of the identity of the Independent Fiduciary and the role of 
such fiduciary with respect to the Separate Account. In this regard, 
the Department notes that on page 15 of its application for exemption 
TIAA made the following representation:

    Each Participant (and, as applicable, each Participating Plan) 
will be informed of the appointment of the Independent Fiduciary. A 
decision by a Plan fiduciary or a Plan Sponsor on behalf of a Plan 
to elect to add the Real Estate Separate Account as an additional 
pension funding option, and to participate in the Account, after 
full disclosure by TIAA, will constitute approval and acceptance by 
the Plan fiduciary or Plan sponsor of the Independent Fiduciary. 
Similarly, a decision by a TIAA SRA contractholder or by a TIAA IRA 
contractholder to elect to add the Real Estate Separate Account as 
an additional pension funding option, after full disclosure by TIAA,

[[Page 54236]]

will constitute approval and acceptance by such a contractholder of 
the Independent Fiduciary. (A decision by a Participant in such a 
Plan to invest in the Account, after full disclosure by TIAA, will 
constitute approval and acceptance by the Participant of the 
Independent Fiduciary.)

Accordingly, the Department does not agree that changes to the SFR, as 
requested by TIAA are merited.
    9. TIAA has requested that representation 14, as set forth in the 
SFR at page 15138, column 3 of the Notice, should have been stated 
differently. In this regard, TIAA requests that the italicized phrase 
in the quotation below should have been deleted from representation 14. 
The language of the first paragraph of representation 14 reads as 
follows:

    It is represented that during the operation of the Separate 
Account, no member of the Board of Trustees of TIAA or of CREF has 
had or will have a role in the selection of the Separate Account as 
a funding vehicle for any of the Plans or has served or will serve 
as a Fiduciary to any Plan participating in TIAA investment funding 
options [emphasis added]. In this regard, Fiduciaries of the Plans 
unrelated to TIAA, or in the case of an SRA or an IRA, participants 
unrelated to TIAA who participate in such SRA or IRA, have made and 
will make the decision to invest in the Separate Account.

    Specifically, TIAA does not wish any member of the Board of 
Trustees of TIAA or of CREF to be prohibited, either currently or in 
the future, from serving as a fiduciary to any of the Plans. The 
Department concurs.
    In the event a member of the Board of Trustees of TIAA or of CREF 
does serve as a fiduciary to a Plan, TIAA represented in its comment 
that such member will not play a role in such Plan's consideration and 
selection of the Separate Account as a funding vehicle for the Plan. In 
this regard, TIAA stated, on page 10 of Exhibit A of its application 
for exemption, that:

    In the event that any member of the TIAA Board or the CREF Board 
also serves in a fiduciary capacity to an ERISA-covered plan, such 
person will recuse himself or herself from any and all fiduciary 
decisions related to the Real Estate Separate Account, including the 
decision to add the Real Estate Separate Account as a funding option 
to his or her plan.

The Department concurs.
    10. TIAA has requested that representation 14, as set forth in the 
SFR at the bottom of page 15139, column 1 in the Notice, should have 
been stated differently. Specifically, TIAA requests that the 
underlined phrase in the sentence quoted below should have been deleted 
from the SFR. In this regard, the fourth line of representation 14, 
reads as follows:

    Further, TIAA has published and [emphasis added] will publish in 
a TIAA publication, which is provided at least quarterly to all Plan 
Sponsors and Fiduciaries of the Plans, a written notice that the 
quarterly financial reports (including the list of Properties and 
their current values) are available on request.

    The Department concurs that TIAA's requested change should have 
been reflected in the SFR. Further, in a letter dated October 5, 1995, 
TIAA represented that it would also publish a toll-free telephone 
number, which would enable Plan Sponsors and Fiduciaries of the Plans 
to easily get prompt delivery of such quarterly financial reports. The 
Department believes that it is necessary for Plan Sponsors and 
Fiduciaries of the Plans to receive such periodic notification of the 
availability of quarterly financial reports and to be reminded of the 
toll-free telephone number, in order to request and receive copies of 
such financial reports from TIAA. Accordingly, the Department has added 
a new subparagraph five (5) to Section III(d). In this regard, Section 
III(d)(5) reads, as follows,

a written notification that quarterly financial reports (including 
the list of Properties and their current values) are available upon 
request and a written disclosure of the toll-free telephone number 
by which Plan Fiduciaries and Plan Sponsors may request delivery of 
such quarterly financial reports will be provided by TIAA in a 
publication sent to all Plan Fiduciaries and all Plan Sponsors of 
the Plans, beginning after the end of the first calendar quarter 
after the Grant is published in the Federal Register and continuing 
at least quarterly thereafter.

In order to integrate this new Section III(d)(5) into the numbering 
system of the exemption, the Department has deleted the word, ``and,'' 
after the semi-colon in Section III(d)(3) and has added the word, 
``and,'' after the semi-colon at the end of Section III(d)(4).
    11. The Department acknowledges and incorporates by reference such 
other clarifications requested by the applicant to the information 
contained in the SFR. For further discussion regarding the applicant's 
comments, interested persons are encouraged to obtain a copy of the 
exemption application file (D-9915) which is available in the Public 
Documents Room of the Pension and Welfare Benefits Administration, U.S. 
Department of Labor, Room N-5638, 200 Constitution Avenue, N.W., 
Washington, D.C. 20210.
    After full consideration and review of the entire record, including 
the written comments filed by the applicant, the Department has 
determined to grant the exemption, as modified and clarified above. 
Comments submitted by the applicant to the Department have been 
included as part of the public record of the exemption application. The 
complete application file, including all supplemental submissions 
received by the Department, is available for public inspection in the 
Public Documents Room of the Pension Welfare Benefits Administration, 
Room N-5638, U.S. Department of Labor, 200 Constitution Avenue N.W., 
Washington, D.C. 20210.
    For a complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the Notice published on Thursday, April 4, 1996, 60 FR 15128.

FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc of the 
Department, telephone (202) 219-8883. (This is not a toll-free number.)

Mewbourne Oil Company, Inc. Plan (the Plan) Located in Tyler, TX

[Prohibited Transaction Exemption 96-77; Exemption Application No. D-
10173]

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 past contribution by Mewbourne Oil Company (the 
Employer) to the Plan of a U.S. Treasury Strip Bond (the Bond) and the 
subsequent exchange by the Employer of the Bond for cash provided that: 
(a) The contribution was a one-time transaction; (b) the Bond was 
valued at fair market value as of the date of the contribution; (c) no 
commissions were paid in connection with the transaction; (d) the Bond 
represented less than 25% of the fair market value of the Plan's assets 
at the time of the contribution; and (e) the Bond was returned to the 
Employer in exchange for cash in the amount of $173,759 plus interest.

EFFECTIVE DATE: This exemption is effective February 11, 1994.
    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 22, 1996 at 61 FR 
37925.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

[[Page 54237]]

Zerhusen and Ghazi, M.D. Inc. Profit Sharing Plan (the Plan) Located in 
Cincinnati, Ohio

[Prohibited Transaction Exemption 96-78 Exemption Application No. D-
10224]

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 sale (the Sale) by Dr. J. Robert Zerhusen's 
individual, self-directed account within the Plan (the Account) of a 
parcel of real property (the Property) to his spouse, Marilyn E. 
Zerhusen (Mrs. Zerhusen), a participant in the Plan and a party in 
interest with respect to the Plan, provided that the following 
conditions are satisfied: (a) The Sale is a one time transaction for a 
lump sum cash payment; (b) the purchase price is the fair market value 
of the Property as of the date of the Sale; (c) the Property has been 
appraised by a qualified, independent real estate appraiser; and (d) 
the Account will pay no commissions or other expenses relating to the 
Sale.
    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 27, 1996 at 61 FR 
44085.

FOR FURTHER INFORMATION CONTACT: Wendy McColough of the Department, 
telephone (202) 219-8971. (This is not a toll-free number.)

Huggler & Silverang Profit Sharing Plan (the Plan) Located In 
Philadelphia, Pennsylvania

[Prohibited Transaction Exemption 96-79; Exemption Application No. D-
10238]

Exemption

    The restrictions of sections 406(a) and 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 cash sale (the Sale) by the Plan of two 5 
percent limited partnership interests (collectively, the Interests) in 
Rosemont Square Associates, L.P. (the Partnership), one to Mr. David H. 
Huggler and the second to Mr. Kevin J. Silverang, respectively, parties 
in interest with respect to the Plan; provided (1) the Sale is a one-
time transaction for cash, (2) the Plan pays no commissions nor incurs 
any expenses in connection with the transaction, and (3) the Plan 
receives as consideration for the Sale no less than the fair market 
value of the Interests as of the date of the Sale.
    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 September 6, 1996, at 61 
FR 47203.

FOR FURTHER INFORMATION CONTACT: Mr. C.E. Beaver of the Department, 
telephone (202) 219-8881. (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 exemptions 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) These exemptions are 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 these exemptions is subject to the express 
condition that the material facts and representations contained in each 
application accurately describes all material terms of the transaction 
which is the subject of the exemption.

    Signed at Washington, DC, this 11th day of October, 1996.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 96-26601 Filed 10-16-96; 8:45 am]
BILLING CODE 4510-29-P