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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Smart Retirement The OLDE 401(k) Plan [Notices] [06/09/1998]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions; Smart Retirement The OLDE 401(k) Plan [06/09/1998]

[PDF Version]

Volume 63, Number 110, Page 31528-31532

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 98-25; Exemption Application No. D-
10410, et al.]

 
Grant of Individual Exemptions; Smart Retirement The OLDE 401(k) 
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, DC. 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.

SmartRetirement: The OLDE 401(k) Plan (the Plan), Located in 
Detroit, MI

[Prohibited Transaction Exemption 98-25; Application No. D-10410]

Exemption

Section I. Covered Transactions
    The restrictions of sections 406(a)(1) (B) and (D) and 406(b) of 
the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1) (B), (D), (E) and (F) 
of the Code, shall not apply, (1) effective October 4, 1996, to the 
past and continuing receipt, by OLDE Discount Corporation (OLDE 
Discount), a wholly owned subsidiary of OLDE Financial Corporation 
(OLDE Financial), the Plan sponsor, of a portion of certain 
distribution fees that are paid by third party mutual funds (the Funds) 
to OLDE Discount pursuant to Rule 12b-1 (Rule 12b-1; the 12b-1 Fees) 
under the Investment Company Act of 1940 (the 1940 Act) and which are 
attributable to Plan assets that are invested in the Funds; and (2) the 
proposed cash rebate of such 12b-1 Fees, by OLDE Discount, to either 
the Plan or to the individually-directed accounts (the Accounts) of the 
participants in the Plan.<SUP>1</SUP>
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    \1\ Unless otherwise noted, OLDE Financial and its affiliates 
are collectively referred to herein as OLDE.
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    The transactions are conditioned on the requirements set forth 
below in Section II.
Section II. General Conditions
    (a) The decision to invest the assets of an Account in the Funds is 
made by a Plan participant and not by OLDE nor is OLDE providing 
``investment advice'' to the participant within the meaning of section 
3(21) of the Act.
    (b) No sales commissions, other than 12b-1 Fees, are paid by an 
Account in

[[Page 31529]]

connection with the purchase or sale of shares in the Funds and no 
redemption fees are paid by an Account with respect to the sale of 
shares of the Funds.
    (c) The Plan, or if applicable, Account, receives a rebate from 
OLDE Discount in the form of cash equal to such Plan's or Account's pro 
rata portion of all 12b-1 Fees received by OLDE Discount from the Funds 
under a rebate program (the Rebate Program).
    (d) For purposes of the Rebate Program:
    (1) During the course of each calendar year, as it receives 12b-1 
Fees from the Funds, OLDE Discount calculates that portion of the 12b-1 
Fees that are attributable to the Plan, including interest based on the 
Federal Funds Rate plus 2 percent.
    (2) Within 30 days of receipt by OLDE Discount of the 12b-1 Fees, 
OLDE Discount separates and transfers the Plan's allocable portion of 
the 12b-1 Fees, together with interest earned on such fees (as 
determined in Step 1 above), to a money market account that has been 
established in the Plan's name with an unrelated bank, Comerica Bank of 
Detroit, Michigan (Comerica).
    (3) The Plan may draw upon its Comerica money market account during 
the course of the year for the purpose of paying the Plan's 
administrative expenses owed to third parties.
    (4) Immediately following the end of each calendar year, any 
remaining rebated 12b-1 Fees that are not drawn upon, after the payment 
of the Plan's administrative expenses, are allocated by the Plan to the 
participant Accounts.
    (5) OLDE establishes and maintains a system of internal and 
external accounting controls for the Rebate Program.
    (6) OLDE retains an independent auditor outside of the control of 
OLDE to audit, on an annual basis, OLDE Discount's rebating of 12b-1 
Fees to either the Plan or the Accounts.
    (e) Prior to purchasing shares of the Funds, each Plan participant 
receives full written disclosure of information concerning the Funds, 
including, but not limited to, the following:
    (1) A communications document containing a general overview of the 
Plan, the types of investment Funds available, a listing of each 
specific Fund alternative and its investment objective, which directs 
the participant to request, either from the Fund or from OLDE, 
prospectuses for those Funds in which participant is interested in 
investing.
    (2) Standard & Poor's reports on all of the Funds on OLDE's 
company-wide Intranet which participants may access and print on 
demand.
    (3) If requested by the participant, copies of applicable 
prospectuses for the Funds discussing the investment objectives of the 
Funds, the policies employed to achieve these objectives, the 
relationship, if any, existing between OLDE Discount with the parties 
who act as sponsors, distributors, administrators, investment advisers 
and sub-advisers, custodians and transfer agents to the Funds and a 
statement describing the fee structure and the 12b-1 Fees. (OLDE will 
supplement such disclosures with information describing the Rebate 
Program.)
    (4) Upon written or oral request to OLDE, a statement of additional 
information supplementing the applicable prospectus, which describes 
the types of securities and other instruments in which the Funds may 
invest, the investment policies and strategies that the Funds may 
utilize, including a description of the risks.
    (5) Upon written request to OLDE, a copy of OLDE Discount's 
distribution agreements pertaining to the various Funds.
    (6) Copies of the proposed exemption and grant notice describing 
the exemptive relief provided herein.
    (f) After receiving the disclosures noted above, the participant 
acknowledges receipt of the documents in writing and provides 
authorization to OLDE with respect to investing in the Funds. However, 
for Fund purchases occurring prior to the date this final exemption is 
granted, the acknowledgement and authorization are given by a 
participant at the time of and as part of the next proposed investment 
change by such participant.
    (g) Each additional purchase or redemption of shares in the Funds 
is directed by the participant, provided OLDE makes available to the 
participant, copies of the applicable Fund prospectus and disclosures 
regarding the fee structure and the 12b-1 Fees.
    (h) Each Plan participant receives the following written or oral 
disclosures from OLDE with respect to ongoing investment in the Funds:
    (1) Written confirmations of each purchase or redemption 
transaction involving shares of a Fund.
    (2) Telephone quotations of such participant's Account balance.
    (3) A monthly statement of account specifying the net asset value 
of the assets in a participant's Account, a summary of current year 
contributions, contributions since inception, beginning and ending 
account balances, summaries of contributions, purchases and sales 
during the month, a summary of the participant's final Account 
portfolio, aggregate 12b-1 Fees paid to OLDE Discount, and, to the 
extent applicable during one month per year only, any rebated fees that 
are allocated to the participant's Account.
    (4) Semiannual and annual reports that include financial statements 
for the Funds.
    (5) Investment performance histories and other information provided 
by the Funds to OLDE;
    (6) Ratings information received about the Funds from independent 
sources such as Morningstar;
    (7) Responses to oral or written inquiries of participants upon 
request.
    (i) The terms of each purchase or redemption of shares in the Funds 
remain at least as favorable to an Account as those obtainable in an 
arm's length transaction with an unrelated party.
    (j) OLDE maintains for a period of six years the records necessary 
to enable the persons described below in paragraph (k) 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 OLDE, the records are lost 
or destroyed prior to the end of the six year period, and (2) no party 
in interest, other than OLDE, shall be subject to the civil penalty 
that may be assessed under section 502(i) of the Act or to the taxes 
imposed by section 4975(a) and (b) of the Code if the records are not 
maintained or are not available for examination as required by 
paragraph (k) below; and
    (k)(1) Except as provided in paragraph (k)(2) and notwithstanding 
any provisions of section 504(a)(2) and (b) of the Act, the records 
referred to in paragraph (j) are unconditionally available at their 
customary location for examination during normal business hours by--
    (A) Any duly authorized employee or representative of the 
Department, the Internal Revenue Service or the Securities and Exchange 
Commission (the SEC), and
    (B) 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 paragraph (k)(1)(B) shall be 
authorized to examine trade secrets of OLDE, or commercial or financial 
information which is privileged or confidential.

III. Definitions

    For purposes of this exemption:
    (a) The term OLDE means OLDE Financial Corporation and any 
affiliate

[[Page 31530]]

of OLDE Financial, as defined in paragraph (b) of this Section III.
    (b) An affiliate of OLDE includes--
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with OLDE.
    (2) Any officer, director or employee or relative of such person, 
or partner in any such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner or employee.
    (c) The term control means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual.
    (d) The term participant includes participants in the Plan and 
their beneficiaries who may invest in the Funds.
    (e) The term Fund or Funds means any open-end management investment 
company or companies registered under the 1940 Act for which OLDE 
Discount provides distribution and related services.
    (f) The term net asset value means the amount calculated by 
dividing the value of all securities, determined by a method as set 
forth in a Fund's prospectus and statement of additional information, 
and other assets belonging to each of the portfolios in such fund, less 
the liabilities chargeable to each portfolio, by the number of 
outstanding shares.
    (g) The term relative means a relative as that term is defined in 
section 3(15) of the Act (or a member of the family as that term is 
defined in section 4975(e)(6) of the Code), or a brother, a sister, or 
a spouse of a brother or a sister.

EFFECTIVE DATE: This exemption is effective as of October 4, 1996 with 
respect to transactions involving the past and continuing receipt, by 
OLDE Discount, of 12b-1 Fees that are attributable to the Plan from the 
Funds. However, it is prospective for transactions involving the cash 
rebate, by OLDE Discount, of such fees to either the Plan or to the 
Accounts.
    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 (the Notice) published on February 26, 
1998 at 63 FR 9863.

Written Comments

    The Department received two written comments with respect to the 
Notice and no requests for a public hearing. The first comment, which 
was submitted by employees of OLDE Discount, was in favor of the 
exemption and urged that it be granted. The second comment was 
submitted by OLDE and suggested clarifications to ambiguities in the 
conditional language of the Notice and the Summary of Facts and 
Representations (the Summary). Presented below are OLDE's comments and 
the Department's accompanying responses.

1. Section 406(a) Exemptive Relief

    The operative language of the Notice provides exemptive relief from 
the restrictions of section 406(b) of the Act and the sanctions 
resulting from the application of section 4975 of the Code, by reason 
of section 4975(c)(1)(E) and (F) for the covered transactions. However, 
in its comment, OLDE has requested that the Department expand the scope 
of the Notice to include exemptive relief from section 406(a) of the 
Act and the corresponding sections of the Code.
    The Department agrees with OLDE's comment and has revised the 
operative language of the Notice to include exemptive relief from 
section 406(a) of the Act and the corresponding sections of the Code. 
Specifically, the Department has amended the Notice to include 
exemptive relief from section 406(a)(1)(B) of the Act and section 
4975(c)(1)(B) of the Code under the theory that the 30 day time lag 
between OLDE Discount's receipt of 12b-1 Fees from the Funds that are 
attributable to the Plan and the transfer of such fees to the Comerica 
money market established in the Plan's name, could be construed as a 
prohibited extension of credit between the Plan and OLDE Discount. In 
addition, the Department has revised the Notice to include exemptive 
relief from section 406(a)(1)(D) of the Act and section 4975(c)(1)(D) 
of the Code under the premise that the covered transactions may be 
considered prohibited transfers to OLDE Discount of assets of the Plan 
inasmuch as the Plan's allocable portion of the 12b-1 Fees are 
ultimately borne by the Plan through internal mutual fund expenses that 
reduce the Plan's earnings.

2. Section II(c)

    Section II(c) of the Notice refers to ``12b-1 Fees charged by OLDE 
Discount to the Funds.'' As a technical matter relating to the nature 
of 12b-1 Fees, OLDE wishes to clarify that OLDE Discount does not 
charge the Funds for 12b-1 Fees. Instead, OLDE suggests that the 
Department reword this phrase to read as follows: ``12b-1 Fees received 
by OLDE Discount from the Funds.'' In response, the Department has made 
the requested change to Section II(c) of the Notice.

3. Section II(e)(1) and Representation 11

    OLDE states that Section II(e)(1) of the Notice and Representation 
11 of the Summary indicate that prior to purchasing shares in the 
funds, each Plan participant will receive copies of all applicable 
prospectuses for the Funds. Because there are in excess of 50 Funds 
available under the Plan, OLDE represents that this would require that 
OLDE provide in advance to all participants more than 50 prospectuses. 
Instead, OLDE would prefer to make all prospectuses available to 
participants upon their request. In addition, OLDE explains that it 
would automatically provide an applicable prospectus to a participant 
who elects to invest in a specific Fund.
    To inform participants of Fund options, OLDE represents that it has 
developed a communications document for employees which gives a general 
overview of the Plan, the types of investment Funds available and a 
listing of each specific Fund alternative and its investment objective. 
OLDE explains that the communications document urges participants to 
request, either from the Fund houses or from OLDE's human resources 
department, prospectuses for those Funds in which participants are 
interested in investing prior to investing in the Funds. In this way, 
OLDE believes that it can provide relevant materials to each 
participant. In addition, OLDE states that it makes available Standard 
& Poor's reports on all of the Funds on its company-wide Intranet which 
participants may access and print on demand.
    The Department does not wish to create an unwieldy result by 
requiring that OLDE provide each participant more than 50 prospectuses 
in advance of such participant's purchase of Fund shares. Rather, the 
Department wishes to clarify that this condition and the corresponding 
language in Representation 11 relate to OLDE's provision to a Plan 
participant of ``applicable'' prospectuses, meaning prospectuses for 
those Funds in which the participant may contemplate investing and not 
all of the prospectuses that may be available for the Funds offered 
under the Plan. Although the Department expects that a participant will 
receive a copy of an applicable prospectus before investing in the 
Funds, it believes that the different strategies adopted by OLDE help 
to satisfy this objective. Therefore, the Department has revised 
Section II(e) of the Notice in its entirety as follows:

    (e) Prior to purchasing shares of the Funds, each Plan 
participant receives full written disclosure of information 
concerning the

[[Page 31531]]

Funds, including, but not limited to, the following:
    (1) A communications document containing a general overview of 
the Plan, the types of investment Funds available, a listing of each 
specific Fund alternative and its investment objective, which 
directs the participant to request, either from the Fund or from 
OLDE, prospectuses for those Funds in which participant is 
interested in investing.
    (2) Standard & Poor's reports on all of the Funds on OLDE's 
company-wide Intranet which participants may access and print on 
demand.
    (3) If requested by the participant, copies of applicable 
prospectuses for the Funds discussing the investment objectives of 
the Funds, the policies employed to achieve these objectives, the 
relationship, if any, existing between OLDE Discount with the 
parties who act as sponsors, distributors, administrators, 
investment advisers and sub-advisers, custodians and transfer agents 
to the Funds and a statement describing the fee structure and the 
12b-1 Fees. (OLDE will supplement such disclosures with information 
describing the Rebate Program.)
    (4) Upon written or oral request to OLDE, a statement of 
additional information supplementing the applicable prospectus, 
which describes the types of securities and other instruments in 
which the Funds may invest, the investment policies and strategies 
that the Funds may utilize, including a description of the risks.
    (5) Upon written request to OLDE, a copy of OLDE Discount's 
distribution agreements pertaining to the various Funds.
    (6) Copies of the proposed exemption and grant notice describing 
the exemptive relief provided herein.

In addition, the Department has made similar changes to Representation 
11.

4. Section II(f) and Representation 11

    OLDE represents that Section II(f) of the Notice and Representation 
11 of the Summary indicate that participants will acknowledge receipt 
of the disclosure documents and will provide authorization to OLDE with 
respect to investing in the Funds. As to the timing of this 
acknowledgement and authorization, OLDE believes that most workable 
mechanism is to have each Plan participant provide the acknowledgement 
and authorization on the next occasion on which such participant makes 
a written election with regard to Plan investments, given the 
retroactive nature of the exemption request and to avoid potential 
participant inaction if OLDE mailed acknowledgment/authorization forms 
to each Plan participant. Under the alternative proposed, OLDE notes 
that this would generally be the date that the participant next elects 
to modify his or her investment choices.
    The Department has considered this comment and has redrafted 
Condition I(f) to read as follows:

    (f) After receiving the disclosures noted above, the participant 
acknowledges receipt of the documents in writing and provides 
authorization to OLDE with respect to investing in the Funds. 
However, for Fund purchases occurring prior to the date this final 
exemption is granted, the acknowledgement and authorization are 
given by a participant at the time of and as part of the next 
proposed investment change by such participant.

5. Section II(g) and Representation 11

    OLDE states that section II(g) of the Notice requires that OLDE 
``makes available to the participant, copies of the applicable Fund 
prospectuses and disclosures regarding the fee structure and the 12b-1 
Fees.'' OLDE points out that a similar requirement is included in 
Representation 11 of the Summary. Although OLDE interprets the phrase 
makes available to mean informing participants of the availability of 
these items and providing them to participants upon request, it wonders 
whether its assumptions are correct.
    In response, the Department concurs with the construction given by 
OLDE to this phrase.

6. Section II(h)(1) and Representation 11

    OLDE represents that Section II(h)(1) of the Notice and 
Representation 11 of the Summary require written confirmation of each 
purchase or redemption transaction involving shares of a Fund. OLDE 
proposes that the confirmation requirement be satisfied by the 
participant's receipt of his or her next monthly statement detailing 
each transaction. The Department concurs with this approach.

7. Section II(h)(4) and Representation 11

    OLDE represents that Section II(h)(4) of the Notice and 
Representation 11 of the Summary require that semiannual and annual 
reports be provided to participants that include financial statements 
for the Funds as well as fees paid to OLDE Discount. Although the Funds 
provide semiannual and annual reports to those participants investing 
in the Funds, OLDE wishes to clarify that it intends to list aggregate 
12b-1 Fees paid to OLDE Discount as separate informational items on 
monthly statements provided to participants.
    In response, the Department concurs with this approach because it 
will allow participants to review aggregate 12b-1 Fees that are paid to 
OLDE Discount on a monthly basis. This should satisfy the requirement 
that OLDE Discount provide such information both semiannually or 
annually to Plan participants. Therefore, to reflect these changes, the 
Department has revised Section II(h)(3) and (4) of the Notice to read 
as follows:

    (3) A monthly statement of account specifying the net asset 
value of the assets in a participant's Account, a summary of current 
year contributions, contributions since inception, beginning and 
ending account balances, summaries of contributions, purchases and 
sales during the month, a summary of the participant's final Account 
portfolio, aggregate 12b-1 Fees paid to OLDE Discount, and, to the 
extent applicable during one month per year only, any rebated fees 
that are allocated to the participant's Account.

    (4) Semiannual and annual reports that include financial statements 
for the Funds.
    In addition to the above, the Department has made corresponding 
modifications to Representation 11 of the Summary.

8. Representation 1

    OLDE points out that the third sentence of Representation 1 of the 
Summary states that ``The Funds have been offered to the plan at no 
load pursuant to agreements with the Fund sponsors.'' OLDE believes 
that, consistent with the disclosures under applicable securities laws, 
this sentence should be amended to read as follows: ``The Funds have 
been offered to the Plan at net asset value pursuant to agreements with 
the Funds' sponsors.''
    In response to OLDE's suggestion, the Department has revised the 
third sentence of Representation 3, accordingly.

9. Footnote 3

    OLDE states that Footnote 3 of the Summary lists sample Funds 
offered under the Plan and includes a reference to ``The American 
Mutual Fund.'' OLDE represents that there is no ``American Mutual 
Fund'' offered under the Plan.
    In response, the Department agrees to make this change to the 
Summary. However, it notes that the reference to ``The American Mutual 
Fund'' was included in a Fund listing supplied by OLDE to the 
Department.
    For further information regarding the comment letters or other 
matters discussed herein, interested persons are encouraged to obtain 
copies of the exemption application file (Exemption Application No. D-
10410) pertaining to this case. The complete application file, as well 
as all supplemental submissions received by the Department, are made 
available for public inspection in the Public Documents Room of the 
Pension and Welfare Benefits Administration, Room N-5638, U.S. 
Department of Labor, 200 Constitution Avenue, NW, Washington, DC 20210.

[[Page 31532]]

    Accordingly, after consideration of the entire record, including 
the comments, the Department has determined to grant the exemption as 
modified herein.
    For Further Information Contact: Ms. Jan D. Broady of the 
Department, telephone (202) 219-8881. (This is not a toll-free number.)

Beer Nuts, Inc. Profit Sharing Plan (the Plan), Located in 
Bloomington, Illinois

[Prohibited Transaction Exemption 98-26; Exemption Application No. D-
10531]

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 the Plan of certain limited 
partnership interests (the Interests) to Beer Nuts, Inc., a party in 
interest and a disqualified person with respect to the Plan, provided 
that the following conditions were satisfied:
    (a) The terms of the Sale were at least as favorable to the Plan as 
those obtainable in an arm's length transaction with an unrelated 
party;
    (b) The Sale was a one-time transaction for cash;
    (c) The Plan paid no commissions or other expenses relating to the 
Sale; and
    (d) The Sale price was not less than the fair market value of the 
Interests as determined by a qualified, independent appraiser.

    Effective Date: The exemption is effective as of December 30, 1996.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption please 
refer to the notice of proposed exemption published on March 31, 1998 
at 63 FR 15462.
    For Further Information Contact: Mr. James Scott Frazier of the 
Department, telephone (202) 219-8891 (This is not a toll-free number).

James E. Jordan, Sr. Individual Retirement Account (the IRA), 
Located in Phoenix, Arizona

[Prohibited Transaction Exemption 98-27; Exemption Application No. D-
10550]

Exemption

    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 purchase by the IRA of a certain promissory note 
issued by unrelated parties (the Martin Note) which is secured by a 
first mortgage on certain residential property (the Property) from the 
James E. Jordan Revocable Trust Agreement (the Trust), a disqualified 
person with respect to the IRA; <SUP>2</SUP> provided that the 
following conditions are met:
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    \2\ Pursuant to CFR 2510.3-2(d), the Department has no 
jurisdiction with respect to the IRA under Title I of the Act. 
However, there is jurisdiction under Title II of the Act pursuant to 
section 4975 of the Code.
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    1. The purchase of the Martin Note will be a one-time cash 
transaction;
    2. The IRA will pay no commissions or other expenses associated 
with the purchase;
    3. The amount paid by the IRA for the Martin Note will be the 
lesser of (i) $63,108.97, which is the current fair market value of the 
Martin Note as determined by an independent, qualified appraiser, or 
(ii) the fair market value of the Martin Note, as determined at the 
time of the purchase by an independent, qualified appraiser;
    4. Both the amount paid by the IRA for the Martin Note and the 
outstanding principal balance on such Note will involve less than 25% 
of the IRA's total assets;
    5. Mr. Jordan, as the sole participant of the IRA, will be the only 
individual affected by the proposed transaction; and
    6. On the date the IRA purchases the Martin Note from the Trust, 
the IRA will be named as loss payee under the homeowners insurance 
policy on 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 April 22, 1998 at 63 FR 
19952.
    For Further Information Contact: Ekaterina A. Uzlyan of the 
Department at (202) 219-8883. (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 do 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 4th day of June, 1998.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 98-15289 Filed 6-8-98; 8:45 am]
BILLING CODE 4510-29-P