Skip to page content
Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Roark Young, Russell Rice, Mary J. Rice, Bruce Lamchick, Steven McKean, David McKean & Burton Young [Notices] [08/06/1998]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions; Roark Young, Russell Rice, Mary J. Rice, Bruce Lamchick, Steven McKean, David McKean & Burton Young [08/06/1998]

[PDF Version]

Volume 63, Number 151, Page 42079-42080

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

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 98-38; Exemption Application No. D-
10558, et al.]

 
Grant of Individual Exemptions; Roark Young, Russell Rice, Mary 
J. Rice, Bruce Lamchick, Steven McKean, David McKean & Burton Young

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.

[[Page 42080]]

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.

Individual Retirement Accounts (the IRAs) for Roark Young, Russell 
Rice, Mary J. Rice, Bruce Lamchick, Steven McKean and David McKean, 
and Burton Young (collectively, the Participants) Located in Miami, 
Florida

[Prohibited Transaction Exemption 98-38; Exemption Application Numbers 
D-10558-10561, 10565-10566, 10568]

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 sales (the Sales) of certain stock (the 
Stock) by the IRAs <SUP>1</SUP> to the Participants, disqualified 
persons with respect to the IRAs, provided that the following 
conditions were met:
---------------------------------------------------------------------------

    \1\ Because each IRA has only one Participant, there is no 
jurisdiction under 29 CFR Sec. 2510.3-3(b). However, there is 
jurisdiction under Title II of the Act pursuant to section 4975 of 
the Code.
---------------------------------------------------------------------------

    (a) The terms and conditions of the Sales were at least as 
favorable to each IRA as those obtainable in an arm's length 
transaction with an unrelated party;
    (b) The Sale of Stock by each IRA was a one-time transaction for 
cash;
    (c) Each IRA received the fair market value of the Stock as 
established by a qualified, independent appraiser; and
    (d) Each IRA was not required to pay any commissions, costs or 
other expenses in connection with each Sale.

EFFECTIVE DATE: These exemptions will be effective as of March 30, 
1998.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of the proposed exemption published on Friday, June 19, 1998 
at 63 FR 33725.

FOR FURTHER INFORMATION CONTACT: Mr. James Scott Frazier of the 
Department, telephone (202) 219-8881. (This is not a toll-free number).

William M. Hitchcock SERP (DB) (the Plan) Located in Houston, Texas

[Prohibited Transaction Exemption 98-39; Exemption Application No. D-
10605]

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 proposed sale by the Plan of 67,466 shares of 
stock (the Stock) in Thoratec Laboratories, Inc. to William M. 
Hitchcock (Mr. Hitchcock), a disqualified person with respect to the 
Plan, provided the following conditions are satisfied: (a) the sale is 
a one-time transaction for cash; (b) the Plan pays no sales commissions 
or other expenses in connection with the transaction; (c) the Plan 
receives the fair market value of the Stock, as determined by reference 
to its most current listed price on the National Association of 
Securities Dealers Automated Quotation National Market System (NASDAQ) 
at the time of the transaction; and (d) Mr. Hitchcock is the only Plan 
participant to be affected by the transaction, and he desires that the 
transaction be consummated.<SUP>2</SUP>
---------------------------------------------------------------------------

    \2\ Since Mr. Hitchcock is the sole owner of the Plan sponsor 
and the only participant in the Plan, there is no jurisdiction under 
Title I of the Act pursuant to 29 CFR 2510.3-3(b). However, there is 
jurisdiction under Title II of the Act pursuant to section 4975 of 
the Code.
---------------------------------------------------------------------------

    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 June 29, 1998 at 63 FR 
35290.

Tax Consequences of the Transaction

    The Department of the Treasury has determined that if a transaction 
between a qualified employee benefit plan and its sponsoring employer 
(or affiliate thereof) results in the plan either paying less than or 
receiving more than fair market value, such excess may be considered to 
be a contribution by the sponsoring employer to the plan, and therefore 
must be examined under the applicable provisions of the Internal 
Revenue Code, including sections 401(a)(4), 404 and 415.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz 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 31st day of July, 1998.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 98-21000 Filed 8-5-98; 8:45 am]
BILLING CODE 4510-29-P