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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Collection Bureau Services [Notices] [07/20/1998]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions; Collection Bureau Services [07/20/1998]

[PDF Version]

Volume 63, Number 138, Page 38853-38854

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 98-36; Exemption Application No. D-
10525, et al.]

 
Grant of Individual Exemptions; Collection Bureau Services

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.

Collection Bureau Services, Profit Sharing Plan and Trust (the 
Plan), Located in Missoula, MT

[Prohibited Transaction Exemption 98-36; Exemption Application No. D-
10525]

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 proposed lease (the Lease) by the Plan of 
certain improved real property (the Property) to Collection Bureau 
Services (the Employer), a party in interest with respect to the Plan, 
and (2) the possible purchase of the Property by the Employer in the 
future, pursuant to the Employer's option to purchase the Property 
under the Lease.
    This exemption is subject to the following conditions:

[[Page 38854]]

    (1) The Plan is represented for all purposes under the Lease by a 
qualified, independent fiduciary;
    (2) The terms and conditions of the Lease are at least as favorable 
to the Plan as those the Plan could obtain in a comparable arm's length 
transaction with an unrelated party;
    (3) The rent paid to the Plan under the Lease is no less than the 
fair market rental value of the Property, as established by a 
qualified, independent appraiser;
    (4) The rent is adjusted, at a minimum, every three years, based 
upon an updated independent appraisal of the Property, but in no event 
shall such adjustments result in the rent being less than the rental 
amount for the Property existing for the preceding period;
    (5) The Lease is triple net (with all expenses for maintenance, 
taxes, and insurance to be borne by the Employer as the tenant);
    (6) The independent fiduciary for the Plan (the I/F) reviews the 
terms and conditions of the Lease on behalf of the Plan and determines 
that the Lease is in the best interests of, and appropriate for, the 
Plan;
    (7) The I/F monitors and enforces compliance with all of the terms 
and conditions of the Lease, and of this exemption, throughout the 
duration of the Lease;
    (8) The I/F expressly approves any improvements by the Employer to 
the Property, any renewal of the Lease beyond the initial term, and any 
sale of the Property to the Employer, pursuant to the Employer's option 
to purchase the Property under the Lease;
    (9) In the event that the Employer exercises its option to purchase 
the Property under the Lease, the Employer pays the Plan an amount 
which is the greater of either (a) the original acquisition cost of the 
Property, plus holding expenses, or (b) the fair market value of the 
Property, as of the date of the sale, as established by a qualified, 
independent appraiser; and
    (10) At all times throughout the duration of the Lease, the fair 
market value of the Property represents no more than 25 percent of the 
total assets 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 May 29, 1998 at 63 FR 
29456.

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

McClain's R.V., Inc. 401(k) Profit Sharing Plan (the Plan), Located 
in Lake Dallas, Texas

[Prohibited Transaction Exemption 98-37; Exemption Application No. D-
10583]

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 of certain unimproved real property (the 
Land) by the Plan to Larry McClain, the sole shareholder of McClain's 
R.V. Inc., the sponsor of the Plan, and a party in interest with 
respect to the Plan, provided that the following conditions are 
satisfied:
    (a) The sale will be a one-time cash transaction;
    (b) The Plan will receive the greater of: (1) The original 
acquisition cost of the Land plus the aggregate holding costs incurred 
by the Plan; or (2) the current fair market value of the Land (plus an 
appropriate premium related to the adjacency of the Land to other real 
property owned by McClain's R.V. Inc.), as established by an 
independent qualified appraiser at the time of the sale; and
    (c) The Plan will pay no commissions or other expenses associated 
with 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 May 18, 1998 at 63 FR 
27330.

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 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 15th day of July, 1998.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 98-19233 Filed 7-17-98; 8:45 am]
BILLING CODE 4510-29-P