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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Individual Retirement Accounts (the IRAs) for Marcia A. Hendrichsen, Larry L. Hendrichsen, Lawrence D. Hendrichsen, Located in Burlington, IA; William H. Napier, George Rashid, Jr., Jake E. Rashid, Carl A. Saunders, and John C. Schuldt, Located in Fort Madison, IA (Collectively, the Participants), et al. [Notices] [09/16/1998]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions; Individual Retirement Accounts (the IRAs) for Marcia A. Hendrichsen, Larry L. Hendrichsen, Lawrence D. Hendrichsen, Located in Burlington, IA; William H. Napier, George Rashid, Jr., Jake E. Rashid, Carl A. Saunders, and John C. Schuldt, Located in Fort Madison, IA (Collectively, the Participants), et al. [09/16/1998]

[PDF Version]

Volume 63, Number 179, Page 49610-49612

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 98-43; Exemption Application No. D-
10547, et al.]

 
Grant of Individual Exemptions; Individual Retirement Accounts 
(the IRAs) for Marcia A. Hendrichsen, Larry L. Hendrichsen, Lawrence D. 
Hendrichsen, Located in Burlington, IA; William H. Napier, George 
Rashid, Jr., Jake E. Rashid, Carl A. Saunders, and John C. Schuldt, 
Located in Fort Madison, IA (Collectively, the Participants), et al.

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

[[Page 49611]]

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.

Individual Retirement Accounts (the IRAs) for Marcia A. 
Hendrichsen, Larry L. Hendrichsen, Lawrence D. Hendrichsen, Located 
in Burlington, Iowa; William H. Napier, George Rashid, Jr., Jake E. 
Rashid, Carl A. Saunders, and John C. Schuldt, Located in Fort 
Madison, Iowa (Collectively, the Participants)

[Prohibited Transaction Exemption 98-43; Exemption Application Number: 
D-10547]

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 sale (the Sale) of certain membership units (the 
Units) in the Catfish Bend Casinos, L.C., by the IRAs <SUP>1</SUP> to 
the Participants, disqualified persons with respect to the IRAs, 
provided that the following conditions are met:
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    \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.
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    (a) The Sale of the Units by each IRA is a one-time transaction for 
cash;
    (b) The terms and conditions of each Sale are at least as favorable 
to each IRA as those obtainable in an arm's length transaction with an 
unrelated party;
    (c) Each IRA receives the fair market value of the Units at the 
time of each Sale; and
    (d) Each IRA is not required to pay any commissions, costs or other 
expenses in connection with each Sale.
    For a more complete statement of the facts and circumstances 
supporting the Department's decision to grant this exemption, refer to 
the notice of the proposed exemption published on Thursday, August 6, 
1998 at 63 FR 42076.
    For Further Information Contact: Mr. James Scott Frazier of the 
Department, telephone (202) 219-8881. (This is not a toll-free number).

R & J Hoffmann, Inc. Profit Sharing Plan (the Plan) Located in 
Fremont, California

[Prohibited Transaction Exemption 98-44; Exemption Application No. D-
10572]

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: (1) the loan (the Loan) of $53,240 by the Plan to R & J 
Hoffmann, Inc. (the Employer), a disqualified person with respect to 
the Plan; and (2) the personal guarantee of the Loan by Richard and 
Angela Hoffmann (the Hoffmanns), provided the following conditions are 
satisfied: (a) the terms of the Loan are at least as favorable to the 
Plan as those obtainable in an arm's-length transaction with an 
unrelated party; (b) the Loan does not exceed 25% of the assets of the 
Plan; (c) the Loan is secured by a second mortgage on certain real 
property (the Property) which has been appraised by a qualified 
independent appraiser to have a fair market value not less than 150% of 
the amount of the Loan plus the balance of the first mortgage which it 
secures; (d) the Hoffmanns have also personally guaranteed the Loan; 
(e) in the event that the fair market value of the Property is no 
longer adequate to secure all outstanding loans, additional property 
will be pledged to the Plan to secure the Loan at an amount equal to at 
least 150% of the outstanding principal balance of all loans secured by 
the Property; and (f) the Hoffmanns are the only Plan participants to 
be affected by the Loan.<SUP>2</SUP>
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    \2\ Since the Hoffmanns are the sole owner of the Employer and 
the only participants 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.
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    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 July 20, 1998 at 63 FR 
38859.
    For Further Information Contact: Gary H. Lefkowitz of the 
Department, telephone (202) 219-8881. (This is not a toll-free number.)

Kilpatrick Investment Company Employee's Pension Plan (the Plan); 
Located in Oklahoma City, Oklahoma

[Prohibited Transaction Exemption 98-45; Application No.: D-10607]

Exemption

    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 4975(c)(1)(A) through (E) of the Code, shall not 
apply to the past sale (the Sale) of improved real property (the 
Property) by the Plan to the Kilpatrick Investment Company (the 
Company), a party in interest with respect to the Plan provided the 
following conditions were met at the time of the Sale: (1) the terms of 
the Sale were at least as favorable as those the Plan could have 
obtained in an arm's length transaction with an unrelated party; (2) 
the fair market value of the Property was determined by an independent 
and qualified real estate appraiser; (3) the Sale price was equal to 
the greater of: (a) the fair market value of the Property at the time 
of the Sale, or (b) $134,600 (which represents the price the Plan 
originally paid for the Property plus the holding costs incurred by the 
Plan during the Plan's ownership of the Property); and (4) the Plan 
paid no commissions or expenses associated with the Sale.
    Effective Date: If granted, this proposed exemption will be 
effective as of April 15, 1998.
    For a more complete statement of facts and representations 
supporting the Department's decision to grant this exemption refer to 
the notice of proposed exemption, refer to the notice of proposed 
exemption published on July 8, 1998 at 63 FR 36957.
    For Further Information Contact: Allison Padams Lavigne of the 
Department, telephone (202) 219-8971. (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

[[Page 49612]]

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 are true and complete and accurately describe all material 
terms of the transaction which is the subject of the exemption. In the 
case of continuing exemption transactions, if any of the material facts 
or representations described in the application change after the 
exemption is granted, the exemption will cease to apply as of the date 
of such change. In the event of any such change, application for a new 
exemption may be made to the Department.

    Signed at Washington, DC, this 10th day of September, 1998.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 98-24800 Filed 9-15-98; 8:45 am]
BILLING CODE 4510-29-P