Skip to page content
Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Massachusetts Mutual Life Insurance Company [Notices] [06/19/1998]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions; Massachusetts Mutual Life Insurance Company [06/19/1998]

[PDF Version]

Volume 63, Number 118, Page 33727-33732

-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 98-28; Exemption Application No. D-
10396, et al.]

 
Grant of Individual Exemptions; Massachusetts Mutual Life 
Insurance Company

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of individual exemptions.

-----------------------------------------------------------------------

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.

Massachusetts Mutual Life Insurance Company (MM) Located in 
Springfield, Massachusetts [Prohibited Transaction Exemption 98-28; 
Exemption Application No. D-10396]

Exemption

Section I--Exemption for Certain Transactions Involving the Management 
of Investments Shared by Two or More Accounts Maintained by MM

    The restrictions of certain sections of the Act and the sanctions 
resulting from the application of certain parts of section 4975 of the 
Code shall not apply to the following transactions if the conditions 
set forth in Section IV are met:
    (a) Transfers Between Accounts
    (1) The restrictions of section 406(b)(2) of the Act shall not 
apply to

[[Page 33728]]

the sale or transfer of an interest in a shared investment (including a 
shared joint venture interest) between two or more Accounts (except the 
General Account), provided that each ERISA-Covered Account pays no 
more, or receives no less, than fair market value for its interest in a 
shared investment.
    (2) 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 to the sale or transfer of an interest in a shared 
investment (including a shared joint venture interest) between ERISA-
Covered Accounts and the General Account, provided that such transfer 
is made pursuant to stalemate procedures, described in the notice of 
proposed exemption, adopted by the independent fiduciary for the ERISA-
Covered Account, and provided further that the ERISA-Covered Account 
pays no more or receives no less than fair market value for its 
interest in a shared investment.
    (b) Joint Sales of Property--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 to the sale to a 
third party of the entire interest in a shared investment (including a 
shared joint venture interest) by two or more Accounts, provided that 
each ERISA-Covered Account receives no less than fair market value for 
its interest in the shared investment.
    (c) Additional Capital Contributions--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 either to the 
making of a pro rata equity capital contribution by one or more of the 
Accounts to a shared investment; or to the making of a Disproportionate 
[as defined in Section V(e)] equity capital contribution by one or more 
of such Accounts which results in an adjustment in the equity ownership 
interests of the Accounts in the shared investment on the basis of the 
fair market value of such interests subsequent to such contribution, 
provided that each ERISA-Covered Account is given an opportunity to 
make a pro rata contribution.
    (d) Lending of Funds--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 to the lending of 
funds from the General Account to an ERISA-Covered Account to enable 
the ERISA-Covered Account to make an additional pro rata contribution, 
provided that such loan--
    (A) is unsecured and non-recourse with respect to participating 
plans,
    (B) bears interest at a rate not to exceed the greater of the prime 
rate plus two percentage points or the prevailing rate on 90-day 
Treasury Bills,
    (C) is not callable at any time by the General Account, and
    (D) is prepayable at any time without penalty.
    (e) Shared Debt Investments--In the case of a debt investment that 
is shared between two or more Accounts, including one or more of the 
ERISA-Covered Accounts, (1) the restrictions of sections 406(a) and 
406(b)(1) and (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 any material 
modification in the terms of the loan agreement resulting from a 
request by the borrower, any decision regarding the action to be taken, 
if any, on behalf of the Accounts in the event of a loan default by the 
borrower, or any exercise of a right under the loan agreement in the 
event of such default, and (2) the restrictions of section 406(b)(2) of 
the Act shall not apply to any decision by MM thereof on behalf of two 
or more ERISA-Covered Accounts: (A) not to modify a loan agreement as 
requested by the borrower; or (B) to exercise any rights provided in 
the loan agreement in the event of a loan default by the borrower, even 
though the independent fiduciary for one (but not all) of such Accounts 
has approved such modification or has not approved the exercise of such 
rights.

Section II--Exemption for Certain Transactions Involving the Management 
of Joint Venture Interests Shared by Two or More Accounts Maintained by 
MM

    The restrictions of certain sections of the Act and the sanctions 
resulting from the application of certain parts of section 4975 of the 
Code shall not apply to the following transactions resulting from the 
sharing of an investment in a real estate joint venture between two or 
more Accounts, if the conditions set forth in Section IV are met:
    (a) Additional Capital Contributions--(1) 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 to the 
making of additional pro rata equity capital contributions by one or 
more Accounts participating in the joint venture.
    (2) 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 to the lending of funds from the General Account 
to an ERISA-Covered Account to enable the ERISA-Covered Account to make 
an additional pro rata capital contribution, provided that such loan--
    (A) is unsecured and non-recourse with respect to the participating 
plans,
    (B) bears interest at a rate not to exceed the greater of the prime 
rate plus two percentage points or the prevailing rate on 90-day 
Treasury Bills,
    (C) is not callable at any time by the General Account, and
    (D) is prepayable at any time without penalty.
    (3) 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 to the making of Disproportionate [as defined in 
section V(e)] additional equity capital contributions (or the failure 
to make such additional contributions) in the joint venture by one or 
more Accounts which result in an adjustment in the equity ownership 
interests of the Accounts in the joint venture on the basis of the fair 
market value of such joint venture interests subsequent to such 
contributions, provided that each ERISA-Covered Account is given an 
opportunity to provide its proportionate share of the additional equity 
capital contributions; and
    (4) In the event a co-venturer fails to provide all or any part of 
its pro rata share of an additional equity capital contribution, 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 to the making of Disproportionate additional equity capital 
contributions to the joint venture by the General Account and an ERISA-
Covered Account up to the amount of such contribution not provided by 
the co-venturer which result in an adjustment in the equity ownership 
interests of the Accounts in the joint venture on the basis provided in 
the joint venture agreement, provided that such ERISA-Covered Account 
is given an opportunity to participate in all

[[Page 33729]]

additional equity capital contributions on a proportionate basis.
    (b) Third Party Purchase Offers--(1) In the case of an offer by a 
third party to purchase any property owned by the joint venture, 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 to the acquisition by the Accounts, including one or more 
ERISA-Covered Account[s], on either a proportionate or Disproportionate 
basis of a co-venturer's interest in the joint venture in connection 
with a decision on behalf of such Accounts to reject such purchase 
offer, provided that each ERISA-Covered Account is first given an 
opportunity to participate in the acquisition on a proportionate basis; 
and
    (2) The restrictions of section 406(b)(2) of the Act shall not 
apply to any acceptance by MM on behalf of two or more Accounts, 
including one or more ERISA-Covered Account[s], of an offer by a third 
party to purchase a property owned by the joint venture even though the 
independent fiduciary for one (but not all) of such ERISA-Covered 
Account[s] has not approved the acceptance of the offer, provided that 
such declining ERISA-Covered Account[s] are first afforded the 
opportunity to buy out both the co-venturer and ``selling'' Account's 
interests in the joint venture.
    (c) Rights of First Refusal--(1) In the case of the right to 
exercise a right of first refusal described in a joint venture 
agreement to purchase a co-venturer's interest in the joint venture at 
the price offered for such interest by a third party, 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 to the acquisition by such Accounts, including one or more ERISA-
Covered Account[s], on either a proportionate or Disproportionate basis 
of a co-venturer's interest in the joint venture in connection with the 
exercise of such a right of first refusal, provided that each ERISA-
Covered Account is first given an opportunity to participate on a 
proportionate basis; and
    (2) The restrictions of section 406(b)(2) of the Act shall not 
apply to any decision by MM on behalf of the Accounts not to exercise 
such a right of first refusal even though the independent fiduciary for 
one (but not all) of such ERISA-Covered Accounts has approved the 
exercise of the right of first refusal, provided that none of the 
ERISA-Covered Accounts that approved the exercise of the right of first 
refusal decides to buy-out the co-venturer on its own.
    (d) Buy-Sell Options--(1) In the case of the exercise of a buy-sell 
option set forth in the joint venture agreement, 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 to the 
acquisition by one or more of the Accounts on either a proportionate or 
Disproportionate basis of a co-venturer's interest in the joint venture 
in connection with the exercise of such a buy-sell option, provided 
that each ERISA-Covered Account is first given the opportunity to 
participate on a proportionate basis; and
    (2) The restrictions of section 406(b)(2) of the Act shall not 
apply to any decision by MM on behalf of two or more Accounts, 
including one or more ERISA-Covered Account[s], to sell the interest of 
such Accounts in the joint venture to a co-venturer even though the 
independent fiduciary for one (but not all) of such ERISA-Covered 
Account[s] has not approved such sale, provided that such disapproving 
ERISA-Covered Account is first afforded the opportunity to purchase the 
entire interest of the co-venturer.

Section III--Exemption for Transactions Involving a Joint Venture or 
Persons Related to a Joint Venture

    The restrictions of section 406(a) of the Act and the sanctions 
resulting from the application of section 4975 of the Code by reason of 
section 4975(c)(1) (A) through (D) of the Code shall not apply, if the 
conditions in Section IV are met, to any additional equity or debt 
capital contributions to a joint venture by an ERISA-Covered Account 
that is participating in an interest in the joint venture, or to any 
material modification in the terms of, or action taken upon default 
with respect to, a loan to the joint venture in which the ERISA-Covered 
Account has an interest as a lender, where the joint venture is a party 
in interest solely by reason of the ownership on behalf of the General 
Account of a 50 percent or more interest in such joint venture.

Section IV--General Conditions

    (a) The decision to participate in any ERISA-Covered Account that 
shares real estate investments must be made by plan fiduciaries who are 
totally unrelated to MM and its affiliates. This condition shall not 
apply to plans covering employees of MM.
    (b) Each contractholder or prospective contractholder in an ERISA-
Covered Account which shares or proposes to share real estate 
investments that are structured as shared investments under this 
exemption is provided with a written description of potential conflicts 
of interest that may result from the sharing, a copy of the notice of 
pendency, and a copy of the final exemption.
    (c) An independent fiduciary must be appointed on behalf of each 
ERISA-Covered Account participating in the sharing of investments. The 
independent fiduciary shall be either
    (1) a business organization which has at least five years of 
experience with respect to commercial real estate investments,
    (2) a committee composed of three to five individuals (who may be 
investors or investor representatives approved by the plans 
participating in the ERISA-Covered Account, and) who each have at least 
five years of experience with respect to commercial real estate 
investments, or
    (3) the plan sponsor (or its designee) of a plan (or plans) that is 
the sole participant in an ERISA-Covered Account.
    (d) The independent fiduciary or independent fiduciary committee 
member shall not be or consist of MM or any of its affiliates.
    (e) No organization or individual may serve as an independent 
fiduciary for an ERISA-Covered Account for any fiscal year if the gross 
income (other than fixed, non-discretionary retirement income) received 
by such organization or individual (or any partnership or corporation 
of which such organization or individual is an officer, director, or 
ten percent or more partner or shareholder) from MM, its affiliates and 
the ERISA-Covered Accounts for that fiscal year exceeds five percent of 
its or his or her 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 five percent limitation shall be applied with 
reference to the fiscal year in which such organization or individual 
serves as an independent fiduciary. The income limitation shall not 
include compensation for services rendered to a single-customer ERISA-
Covered Account by an independent fiduciary who is initially selected 
by the Plan sponsor for that ERISA-Covered Account.
    The income limitation will include income for services rendered to 
the Accounts as independent fiduciary under any prohibited transaction 
exemption(s) granted by the

[[Page 33730]]

Department. Notwithstanding the foregoing, such income limitation shall 
not include any income for services rendered to a single customer 
ERISA-Covered Account by an independent fiduciary selected by the Plan 
sponsor to the extent determined by the Department in any subsequent 
prohibited transaction exemption proceeding.
    In addition, 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 ten percent or more partner or 
shareholder, may acquire any property from, sell any property to, or 
borrow any funds from, MM, its affiliates, or any Account maintained by 
MM or its affiliates, during the period that such organization or 
individual serves as an independent fiduciary and continuing for a 
period of six months after such organization or individual ceases to be 
an independent fiduciary, or negotiate any such transaction during the 
period that such organization or individual serves as independent 
fiduciary.
    (f) The independent fiduciary acting on behalf of an ERISA-Covered 
Account shall have the responsibility and authority to approve or 
reject recommendations made by MM or its affiliates for each of the 
transactions in this exemption. In the case of a possible transfer or 
exchange of any interest in a shared investment between the General 
Account and an ERISA-Covered Account, the independent fiduciary shall 
also have full authority to negotiate the terms of the transfer. MM and 
its affiliates shall involve the independent fiduciary in the 
consideration of contemplated transactions prior to the making of any 
decisions, and shall provide the independent fiduciary with whatever 
information may be necessary in making its determinations.
    In addition, the independent fiduciary shall review on an as-needed 
basis, but not less than twice annually, the shared real estate 
investments in the ERISA-Covered Account to determine whether the 
shared real estate investments are held in the best interest of the 
ERISA-Covered Account.
    (g) MM maintains for a period of six years from the date of the 
transaction the records necessary to enable the persons described in 
paragraph (h) of this Section to determine whether the conditions of 
this exemption have been met, except that a prohibited transaction will 
not be considered to have occurred if, due to circumstances beyond the 
control of MM or its affiliates, the records are lost or destroyed 
prior to the end of the six-year period.
    (h)(1) Except as provided in paragraph (2) of this subsection (h) 
and notwithstanding any provisions of subsection (a)(2) and (b) of 
section 504 of the Act, the records referred to in subsection (g) of 
this Section are unconditionally available at their customary location 
for examination during normal business hours by--
    (A) Any duly authorized employee or representative of the 
Department or the Internal Revenue Service,
    (B) Any fiduciary of a plan participating in an ERISA-Covered 
Account engaging in transactions structured as shared investments under 
this exemption who has authority to acquire or dispose of the interests 
of the plan, or any duly authorized employee or representative of such 
fiduciary,
    (C) Any contributing employer to any plan participating in an 
ERISA-Covered Account engaging in transactions structured as shared 
investments under this exemption or any duly authorized employee or 
representative of such employer, and
    (D) Any participant or beneficiary of any plan participating in an 
ERISA-Covered Account engaging in transactions structured as shared 
investments under this exemption, or any duly authorized employee or 
representative of such participant or beneficiary.
    (2) None of the persons described in subparagraphs (B) through (D) 
of this subsection (h) shall be authorized to examine trade secrets of 
MM, any of its affiliates, or commercial or financial information which 
is privileged or confidential.

Section V--Definitions

    For the purposes of this exemption:
    (a) An ``affiliate'' of MM includes--
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with MM,
    (2) Any officer, director or employee of MM or person described in 
section V(a)(1), and
    (3) Any partnership in which MM is a partner.
    (b) An ``Account'' means the General Account (including the general 
accounts of MM affiliates which are managed by MM), any separate 
account managed by MM, or any investment advisory account, trust, 
limited partnership or other investment account or fund managed by MM.
    (c) The ``General Account'' means the general asset account of MM 
and any of its affiliates which are insurance companies licensed to do 
business in at least one State as defined in section 3(10) of the Act.
    (d) An ``ERISA-Covered Account'' means any Account (other than the 
General Account) in which employee benefit plans subject to Title I or 
Title II of the Act participate.
    (e) ``Disproportionate'' means not in proportion to an Account's 
existing equity ownership interest in an investment, joint venture or 
joint venture interest.
    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 February 6, 1998 at 63 FR 
6217.
    Written Comments and Hearing Requests: The Department received no 
hearing requests with respect to the proposed exemption. The only 
written comments were submitted by MM in order to clarify certain of 
the information contained in the summary of facts and representations 
for the proposed exemption (the Summary).
    First, MM states that with regard to the reference to health 
insurance in Representation 1 of the Summary, Footnote 1 is intended to 
indicate only the extent to which MM currently offers such health 
insurance. The footnote states that MM sold its group life and health 
subsidiary on March 31, 1996 and will no longer offer group life and 
health insurance after the completion of a transition period under the 
purchase and sale agreement relating thereto.
    Second, with respect to the second paragraph of Representation 1 of 
the Summary, MM wishes to clarify that the exemption will cover 
Accounts (including ERISA-Covered Accounts) other than those currently 
in existence, and which may invest in equity real estate and mortgage 
investments.
    Third, the last sentence of Representation 7 of the Summary 
concerns those persons to whom MM must make certain disclosures 
regarding its shared real estate investments. With respect to the 
proposed exemption and other information to be contained in such 
disclosures, MM seeks to clarify that it was only required to provide a 
copy of the proposed exemption within 30 days of the publication of the 
proposed exemption (i.e., March 8, 1998) to each current contractholder 
in an ERISA-Covered Account that proposes to engage in transactions 
which are structured as shared investments under the exemption. In 
addition, MM states that it will provide a copy of this exemption (as 
published in the Federal Register) before the Account begins to 
participate in such investments.

[[Page 33731]]

    Fourth, concerning the first sentence of Representation 8 of the 
Summary, MM states that in order to more clearly define the persons to 
whom certain disclosures must be made, the sentence should be rewritten 
to read as follows:

    With respect to new contractholders in an ERISA-Covered Account 
that participates in the sharing of investments which are structured 
as shared investments under this exemption, each such contractholder 
must be provided with the description outlined above, a copy of the 
notice of pendency and a copy of the exemption as granted, before 
the Account begins to participate in the sharing of such 
investments.

    Fifth, with respect to Footnote 4 in Representation 12 of the 
Summary, relating to the sophistication of investors participating in 
MM's single customer and pooled closed-end real estate Accounts, MM 
states that this footnote only refers to contractholders in its ERISA-
Covered Accounts which engage in transactions structured as shared 
investments under this exemption.
    Finally, the third sentence in Representation 18 of the Summary and 
the fourth paragraph of Representation 21 of the Summary both refer to 
the partition and sale of undivided and divided real estate investment 
interests, respectively. In this regard, MM seeks to clarify that the 
partition and sale of such interests is meant to establish a possible 
resolution to the stalemates which are described in Representations 18 
and 21 of the Summary. Such events would involve the partition of 
property in which Accounts own a fractional undivided interest in the 
whole, and the sale of one or more resulting divided interests, 
including those interests which are co-owned by some of the Accounts. 
The Department confirms that these scenarios are presented only as 
examples of possible resolutions to the stalemates which are described 
in Representations 18 and 21 of the Summary, and are not meant to 
describe resolutions to other matters.
    In addition, the Department acknowledges all of the above-described 
clarifications by MM to the record which formed the basis for the 
proposed exemption as published in the Federal Register.
    Accordingly, after considering the entire record, including the 
comments made by MM, the Department has determined to grant the 
exemption as proposed.
    For Further Information Contact: Gary H. Lefkowitz of the 
Department, telephone (202) 219-8881. (This is not a toll-free number.)

Knoxville Surgical Group Qualified Retirement Plan (the Plan) Located 
in Knoxville, Tennessee

[Prohibited Transaction Exemption 98-29; Exemption Application No: D-
10506]

Exemption

    The restrictions of section 406(a) and 406(b) of the Act and the 
sanctions resulting from the application of section 4975 of the Code, 
by reason of sections 4975(c)(1)(A) through (E) of the Code shall not 
apply to the sale (the Sale) of a medical office condominium (the 
Property) by the Plan to Hugh C. Hyatt, M.D., Richard A. Brinner, M.D., 
Randal O. Graham, Michael D. Kropilak, M.D., and P. Kevin Zirkle, M.D., 
parties in interest with respect to the Plan provided the following 
conditions are satisfied: (1) The Sale will be a one time transaction 
for cash; (2) the Property will be sold at a price equal to the greater 
of $780,000 or the fair market value of the Property on the date of the 
Sale; and (3) the Plan will pay no commissions or expenses associated 
with the Sale.
    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 
February 6, 1998 at 63 FR 6216.
    Written Comments: The Department received one comment from the 
applicant. The applicant noted that during the Department's 
consideration of the exemption application, the Knoxville Surgical 
Group had originally planned to merge the Plan into the Premier 
Surgical Plan. However, this merger did not occur. Rather, the Plan 
will remain a dormant plan with all participants fully vested.
    The Department has considered the entire record, including the 
comment submitted by the applicant, and has determined to grant the 
exemption as proposed.
    For Further Information Contact: Allison Padams Lavigne, U. S. 
Department of Labor, telephone (202) 219-8971. (This is not a toll-free 
number.)

Jack Mayesh Wholesale Florist, Inc. Profit Sharing Plan (the Plan) 
Located in Los Angeles, California

[Prohibited Transaction Exemption 98-30; Exemption Application No. D-
10524]

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 certain unimproved real 
property (the Property) to Roy Dahlson, a party in interest with 
respect to the Plan, provided that the following conditions are 
satisfied: (1) The sale is a one-time transaction for cash; (2) the 
Plan pays no commissions nor other expenses relating to the sale; and 
(3) the Plan receives an amount which is the greater of either (a) the 
fair market value of the Property as of the date of the sale, as 
determined by a qualified, independent appraiser, or (b) the original 
acquisition cost of the Property to the Plan, plus lost opportunity 
costs attributable to 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 
19950.
    For Further Information Contact: Ms. Karin Weng of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

Pipefitters Local Union No. 537 Pension Fund (the Plan) Located in 
Boston, Massachusetts

[Prohibited Transaction Exemption No. 98-31; Application No. D-10577]

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 sale (the Sale) of certain real property (the 
Property) to the Plan by Local Union 537 (the Union) of the United 
Association of Journeymen and Apprentices of the Plumbing and 
Pipefitting Industry of the United States and Canada, a party in 
interest with respect to the Plan; provided the following conditions 
are satisfied:
    (A) The terms and conditions of the transaction are no less 
favorable to the Plan than those which the Plan would receive in an 
arm's-length transaction with an unrelated party;
    (B) The Sale is a one-time transaction for cash;
    (C) The Plan incurs no expenses from the Sale;
    (D) The Plan pays as consideration for the Property no more than 
the fair market value of the Property as determined by a qualified, 
independent appraiser on the date of the Sale; and
    (E) The independent fiduciary for the Plan will undertake to 
monitor and enforce the terms of the exemption.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this

[[Page 33732]]

exemption, refer to the Notice of Proposed Exemption published on April 
22, 1998, at 63 FR 19953.
    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, D.C., this 16th day of June 1998.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 98-16337 Filed 6-18-98; 8:45 am]
BILLING CODE 4510-29-P