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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Washington National Retirement Plan [Notices] [06/10/1997]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions; Washington National Retirement Plan [06/10/1997]

[PDF Version]

Volume 62, Number 111, Page 31630-31632

[DOCID:fr10jn97-126]

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

Prohibited Transaction Exemption 97-30; Exemption Application No. 
D-10345, et al.]

 
Grant of Individual Exemptions; Washington National Retirement 
Plan

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.

Washington National Retirement Plan (the Plan) Located in 
Lincolnshire, IL

[Prohibited Transaction Exemption 97-30; Exemption Application No. D-
10345]

Exemption

    The restrictions of sections 406(a), 406 (b)(1) and (b)(2) of the 
Act and the

[[Page 31631]]

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 by the Plan of five venture capital limited 
partnership interests (the Venture Capital Funds) and a private 
placement bond issue (the Private Placement Bond Issue) * to Washington 
National Insurance Company (the Employer), a party in interest with 
respect to the Plan.
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    * The interests in the Venture Capital Funds and the Private 
Placement Bond Issue are collectively referred to herein as the 
Interests.
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    This exemption is subject to the following conditions:
    (a) All terms and conditions of the sale are at least as favorable 
to the Plan as those obtainable in an arm's length transaction with an 
unrelated party.
    (b) The sale is a one-time transaction for cash.
    (c) The fair market value of the Interests is determined by a 
qualified, independent appraiser.
    (d) The Plan does not pay any commissions, costs or other expenses 
in connection with the sale.
    (e) With respect to each Venture Capital Fund Interest, the Plan 
receives as consideration an amount that is no less than the greater of 
(1) its investment basis in such Interest or (2) the fair market value 
of the Interest on the date of the sale.
    (f) With respect to the Private Placement Bond Issue, the Plan 
receives as consideration an amount that is no less than the greater of 
(1) the remaining principal balance of such Interest or (2) the fair 
market value of the Interest on 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 April 9, 1997 at 62 FR 
17210.

Written Comments

    The Department received five written comments with respect to the 
proposed exemption and no requests for a public hearing. Of the 
comments received, four commenters said they were opposed to the 
proposed exemption primarily because they did not understand the 
substance of the subject transaction or its implications. These 
commenters subsequently withdrew their comments. The fifth commenter 
stated matters that were not germane to the transaction.
    Thus, after giving full consideration to the entire record, 
including the written comments, the Department has decided to grant the 
exemption. The comment letters have been included as part of the public 
record of the exemption application. The complete application file, as 
well as all supplemental submissions received by the Department, is 
made available for public inspection in the Public Documents Room of 
the Pensionand Welfare Benefits Administration, Room N-5638, U.S. 
Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210.
    For Further Information Contact: Ms. Jan D. Broady of the 
Department, telephone (202) 219-8881. (This is not a toll-free number.)

Joint Apprenticeship Committee of Plumbers Local No. 27 (the Plan) 
Located in Pittsburgh, Pennsylvania

[Prohibited Transaction Exemption 97-31; Exemption Application No. L-
10366]

Exemption

    The restrictions of sections 406(a), 406 (b)(1) and (b)(2) of the 
Act shall not apply to the sale by the Plan of certain improved real 
property located in Allegheny County, Pennsylvania (the Property) to 
the Local Union No. 27 of the United Association of Journeymen and 
Apprentices of the Plumbing and Pipe Fitting Industry of the United 
States and Canada, a party in interest with respect to the Plan; 
provided that the following conditions are met:
    (A) The Plan does not incur any expenses or suffer any loss with 
respect to the transaction; and
    (B) The Plan receives a cash purchase price for the Property of no 
less than the greater of (1) the Plan's cost basis in the Property as 
of the date of the sale, or (2) the fair market value of the Property 
as of the date of the sale, as determined by an independent, qualified 
appraiser, and in no event less than $265,597.
    For a more complete statement of the summary of facts and 
representations supporting the Department's decision to grant this 
exemption refer to the Notice of Proposed Exemption published on April 
17, 1997 at 62 FR 18804.
    For Further Information Contact: Ronald Willett of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

Howes Leather Company, Inc. Employee Stock Ownership Plan (the Plan) 
Located in Curwensville, Pennsylvania

[Prohibited Transaction Exemption 97-32; Exemption Application No. D-
10385]

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 by the Plan of an individual life insurance 
policy (the Policy) to the Howes Leather Company, Inc. (the Employer), 
the sponsor of the Plan; provided that the following conditions are 
satisfied:
    (A) All terms and conditions of the transaction are at least as 
favorable to the Plan as those which the Plan could obtain in arm's-
length transactions with unrelated parties;
    (B) The Plan receives a purchase price for the Policy of no less 
than the greater of (1) the fair market value of the Policy as of the 
sale date, or (2) Policy's cash surrender value (as described in the 
Notice of Proposed Exemption) as of the sale date;
    (C) The Plan does not incur any expenses or suffer any loss with 
respect to the transaction; and
    (D) In the event the Employer recovers with respect to the Policy a 
total amount in excess of the purchase price paid to the Plan for the 
Policy, such excess amount shall be distributed prorata among the 
participants of the Plan.
    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 April 17, 1997 at 62 FR 
18805.
    For Further Information Contact: Ronald Willett of the Department, 
telephone (202) 219-8881. (This is not a toll free Number.)

Thrift Savings Plan and Trust (the Plan) Located in New York, New 
York

[Prohibited Transaction Exemption 97-33; Exemption Application No. D-
10391]

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 (1) the ``restoration payment'' (the Restoration 
Payment) to the Plan by The Kenzer Corporation (the Employer), in 
respect of certain defaulted notes (the Notes), and (2) the potential 
future receipt by the Employer of ``recapture payments'' (the Recapture 
Payments) from the Plan.
    This exemption is subject to the following conditions:
    (1) The Restoration Payment covers the face amount of the Notes and 
accrued interest as of the date of default, plus lost opportunity costs 
attributable to the Notes since the date of default;
    (2) Any Recapture Payments are restricted solely to the amounts, if 
any, recovered by the Plan with respect to the Notes in litigation or 
otherwise; and

[[Page 31632]]

    (3) The Employer receives a favorable ruling from the Internal 
Revenue Service that the Restoration Payment does not constitute a 
``contribution'' or other payment that will disqualify the Plan.
    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 April 9, 1997 at 62 FR 
17213.
    For Further Information Contact: Ms. Karin Weng 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, D.C., this 5th day of June, 1997.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 97-15087 Filed 6-9-97; 8:45 am]
BILLING CODE 4510-29-P