Class Exemption to Permit Certain Transactions Identified in the
Voluntary Fiduciary Correction Program [11/25/2002]
Volume 67, Number 227, Page 70623-70628
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PENSION AND WELFARE BENEFITS ADMINISTRATION
[Prohibited Transaction Exemption 2002-51; Application No. D-10933]
Class Exemption to Permit Certain Transactions Identified in the
Voluntary Fiduciary Correction Program
AGENCY: Pension and Welfare Benefits Administration, U.S. Department of
Labor.
ACTION: Grant of class exemption.
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SUMMARY: This document contains a final exemption from certain
prohibited transaction restrictions of the Internal Revenue Code of
1986 (the Code). The exemption was proposed in conjunction with the
Department's Voluntary Fiduciary Correction (VFC) Program, the final
version of which was published in the March 28, 2002, issue of the
Federal Register. The VFC Program allows certain persons to avoid
potential civil actions under the Employee Retirement Income Security
Act of 1974 (ERISA) initiated by the Department and the assessment of
civil penalties under section 502(l) of ERISA in connection with
investigation or civil action by the Department. The exemption will
affect plans, participants and beneficiaries of such plans and certain
other persons engaging in such transactions.
EFFECTIVE DATE: The exemption is effective November 25, 2002.
FOR FURTHER INFORMATION CONTACT: Karen E. Lloyd, Office of Exemption
Determinations, Pension and Welfare Benefits Administration, U.S.
Department of Labor, Room N-5649, 200 Constitution Avenue, NW.,
Washington, DC 20210, (202) 693-8540 (not a toll free number) or
Cynthia Weglicki, Plan Benefits Security Division, Office of the
Solicitor, U.S. Department of Labor, 200 Constitution Avenue, NW.,
Washington, DC 20210, (202) 693-5600 (not a toll free number).
SUPPLEMENTARY INFORMATION: On March 28, 2002, the Department published
a notice in the Federal Register (67 FR 15083) of the pendency of a
proposed class exemption from the sanctions resulting from the
application of section 4975(a) and (b) of the Code, by reason of
section 4975(c)(1)(A) through (E) of the Code. The Department proposed
the class exemption on its own motion pursuant to section 4975(c)(2) of
the Code, and in accordance with the procedures set forth in 29 CFR
part 2570, subpart B (55 FR 32836, August 10, 1990).\1\
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\1\ Section 102 of the Reorganization Plan No. 4 of 1978, 5
U.S.C. App. 1 (1996) generally transferred the authority of the
Secretary of the Treasury to issue exemptions under section
4975(c)(2) of the Code to the Secretary of Labor.
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The notice of pendency gave interested persons an opportunity to
comment or request a public hearing on the proposal. Two (2) public
comments were received by the Department. Upon consideration of the
comments received, the Department has determined to grant the proposed
class exemption subject to certain modifications. These
[[Page 70624]]
modifications and the comments are discussed below.
Executive Order 12866
Under Executive Order 12866, the Department must determine whether
a regulatory action is ``significant'' and therefore subject to the
requirements of the Executive Order and subject to review by the Office
of Management and Budget (OMB). Under section 3(f), the order defines a
``significant regulatory action'' as an action that is likely to result
in a rule (1) having an annual effect on the economy of $100 million or
more, or adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
Pursuant to the terms of the Executive Order, it was determined
that this action is ``significant'' under Section 3(f)(4) of the
Executive Order. Accordingly, this action has been reviewed by OMB.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3520)(PRA 95), the Department submitted the information collection
request (ICR) included in the Proposed Class Exemption to Permit
Certain Transactions Identified in the Voluntary Fiduciary Correction
to the Office of Management and Budget (OMB) for review and clearance
at the time the Notice of the Proposed Class Exemption was published in
the Federal Register (March 28, 2002, 67 FR 15083). OMB approved the
Notice under OMB control number 1210-0118. The approval will expire on
November 30, 2003.
The Department solicited comments concerning the ICR in connection
with the Notice of Proposed Class Exemption. The Department received no
comments addressing its burden estimates and no substantive changes
have been made in the final exemption that would affect the
Department's earlier burden estimates.
Agency: Pension and Welfare Benefits Administration, Department of
Labor.
Title: Voluntary Fiduciary Correction Program.
OMB Number: 1210-0118.
Affected Public: Business or other for-profit; Not-for-profit
institutions.
Respondents: 700.
Frequency of Response: On occasion.
Responses: 700.
Estimated Total Burden Hours: 5,710 hours.
Total Burden Cost (Operating and Maintenance): $272,928.
Discussion of Comments Received
The Department received two comments regarding the proposed class
exemption. The commenters requested specific modifications to the
proposal in the following areas:
1. Notice to Interested Persons
Both commenters addressed Section IV of the proposed exemption
which required applicants to provide notice to interested persons of
the transaction and the method of correction. It was noted that, in
many cases, applicants who may be subject to the excise taxes under
section 4975 of the Code will not be the employer whose employees are
covered by the plan, and may be unrelated to the employer.
In this regard, one of the commenters stated that, without the
cooperation of the employer, applicants might find it difficult to
provide notice to participants and beneficiaries because they would not
have access to the participants' and beneficiaries' names and
addresses. The commenter further noted that employers might not be
willing to provide access to such information due to privacy concerns
or concerns that receipt of the notice might cause confusion among the
participants and beneficiaries.
In the commenter's view, relief under the exemption should not be
conditioned on the cooperation of an employer or other person that is
unrelated to the applicant, particularly since the underlying
prohibited transaction will have been corrected pursuant to the VFC
Program. The commenter proposed that, in the case of an applicant
unrelated to the employer whose employees are covered by the plan, the
exemption permit notice to be provided to the employer or other plan
fiduciary unrelated to the applicant who was not involved in the
transaction that is the subject of the VFC Program application, rather
than each participant and beneficiary. The commenter noted that the
unrelated fiduciary could then determine whether plan participants and
beneficiaries should be notified of the underlying transaction and its
correction under the VFC Program.
The other commenter stated generally that the notice requirement
was unnecessary and burdensome, but subsequently clarified that it had
the same concerns as the first commenter.
The Department concurs with the commenters' views on the notice
issue. In this regard, the Department notes that the proposed exemption
does not contain a definition of interested persons to whom notice must
be provided. It is the view of the Department that, where an applicant
is unaffiliated with, and unrelated to, the employer whose employees
are covered by the plan, the notice requirement will be deemed
satisfied if the applicant provides notice to a fiduciary of the plan
who is unrelated to the applicant and all other parties involved in the
prohibited transaction. In many cases, this may be the employer or an
administrative committee composed of officers and employees of the
employer. However, the Department cautions that the notice requirement
will not be considered satisfied if notice is given to an employer who
is not unrelated to all parties involved in the prohibited transaction.
Under no circumstances should plan assets be used to pay for the
notice.
2. Three Year Rule
One of the commenters also was concerned about Section II.F. of the
proposed exemption, which provided that an applicant seeking relief
under the exemption could not have taken advantage of the relief
provided under the VFC Program and this exemption for a similar type of
transaction identified in the current application during the period
which is three years prior to the submission of the current
application. The commenter argued that applicants that are service
providers, as opposed to plan officials, should be permitted to take
advantage of the VFC Program as often as necessary without regard to
the three year rule.
The commenter stated that subjecting service providers to the three
year rule would not, in all cases, further the rule's purpose of
ensuring that relief is not provided to fiduciaries who repeatedly make
the same legal mistake. In contrast to plan sponsors, for example,
service providers such as broker-dealers, banks and insurance companies
may engage in numerous transactions with plans each day which could be
prohibited except for the availability of a statutory or administrative
exemption. The commenter noted that, if the plan fiduciary directing
the transaction is relying on an exemption to deal with a party in
interest, and that fiduciary is factually incorrect on an element of
the exemption, the broker-dealer may
[[Page 70625]]
engage in many transactions that would need relief under this
exemption.
As an example, the commenter explained that a service provider
could enter into a transaction that otherwise would be prohibited based
on a fiduciary's representation that the QPAM class exemption (PTE 84-
14) (49 FR 9494, March 13, 1984) applied. The QPAM class exemption
requires, among other things, that neither the QPAM, an affiliate, nor
any owner of a 5% or more interest in the QPAM, have been convicted or
released from imprisonment as a result of certain crimes within the ten
years immediately preceding the transaction. Information regarding past
crimes of affiliates and 5% owners of the QPAM is not likely to be
within the knowledge of the service provider, and the service provider
must rely on the QPAM for assurance that the condition is satisfied.
The commenter suggested that Section II.F. be modified to provide
an exception from the three year rule for applicants that are banks,
broker-dealers or insurance companies (or affiliates thereof) which did
not exercise discretionary authority or control to cause the plan to
enter into the transaction. The commenter proposed that the exception
be limited to applicants that were parties in interest (including
fiduciaries) solely by reason of providing services to the plan (or
solely by reason of a relationship to such service provider described
in section 3(14)(F), (G), (H), or (I) and the corresponding provisions
of the Code), and that ``did not believe that an exemption was
unavailable'' with respect to the transaction. The commenter suggested
that the applicant must have established written policies and
procedures reasonably designed to ensure compliance with the prohibited
transaction rules, and have engaged in periodic monitoring for
compliance, at the time of the transaction.
The Department agrees that, in the narrow circumstances described
above, such service providers should not be excluded from obtaining
relief under the exemption by the three year rule. Accordingly, the
Department has modified Section II.F. to clarify that the exemption
will continue to be available notwithstanding the applicant's inability
to satisfy the three year rule, provided that:
[sbull] The applicant was a broker-dealer registered under the
Securities Exchange Act of 1934, a bank supervised by the United States
or a State thereof, a broker-dealer or bank subject to foreign
government regulation, an insurance company qualified to do business in
a State, or any affiliate thereof;
[sbull] The applicant was a party in interest (including a
fiduciary) solely by reason of providing services to the plan or solely
by reason of a relationship to such service provider described in
section 3(14)(F), (G), (H) or (I) (and/or the corresponding provisions
of section 4975 of the Code);
[sbull] Neither the applicant nor any affiliate (i) was a fiduciary
(within the meaning of section 3(21)(A) of ERISA) with respect to the
assets of the plan involved in the transaction, and (ii) used its
discretion to cause the plan to engage in the transaction;
[sbull] The individuals acting on behalf of the applicant in
connection with the transaction had no actual knowledge or reason to
know that the transaction was not exempt pursuant to a statutory or
administrative exemption under ERISA and/or the Code; and
[sbull] Prior to the transaction, the applicant established written
policies and procedures that were reasonably designed to ensure
compliance with the prohibited transaction rules and the applicant
engaged in periodic monitoring for compliance.
3. Participant Loan Repayments
The Department has made one additional modification to the final
exemption. As discussed more fully below, the exemption provides relief
for certain transactions described in the VFC Program, including the
failure to transmit participant contributions to a pension plan within
the time frames described in the Department's regulations at 29 CFR
2510.3-102. Subsequent to the publication of the final VFC Program, the
Department issued guidance stating that applicants may correct the
failure to forward participant loan repayments to a plan in a timely
fashion under the VFC Program in the same manner.\2\ Accordingly, the
Department revised the language of Section I.A. of the exemption to
explicitly cover the failure to transmit participant loan repayments to
a pension plan within a reasonable time after withholding or receipt by
the employer.
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\2\ See Frequently Asked Questions on the VFC Program, at http:/
/www.dol.gov/pwba/faqs/faq--vfcp2.html. For the Department's views
on the time frames for repayment of participant loans to pension
plans, see the preamble to the final participant contribution
regulation, 29 CFR section 2510.3-102, published at 61 FR 41220,
41226 (August 7, 1996). See also DOL Advisory Opinion No. 2002-02A
(May 17, 2002).
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Description of the Exemption
1. Scope
The exemption provides relief from the sanctions imposed under
section 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(A)
through (E) of the Code, for certain eligible transactions identified
in the VFC Program. The exemption does not provide relief for any
transactions identified in the VFC Program that are not specifically
described as eligible transactions under Section I of the exemption.
The four eligible transactions described in the exemption are as
follows:
(A) The failure to transmit participant contributions to a pension
plan within the time frames described in the Department's regulations
at 29 CFR section 2510.3-102 and/or the failure to transmit participant
loan repayments to a pension plan within a reasonable time after
withholding or receipt by the employer.
(B) The making of a loan by a plan at a fair market interest rate
to a party in interest with respect to the plan.
(C) The purchase or sale of an asset (including real property)
between a plan and a party in interest at fair market value.
(D) The sale of real property to a plan by the employer and the
leaseback of such property to the employer, at fair market value and
fair market rental value, respectively.
The eligible transactions may be illustrated by the following
examples:
Example (1): Corporation A sponsors a pension plan for its
employees. Corporation A borrowed $100,000 from the plan. The loan
was made at an interest rate no less than that available for a loan
with similar terms (for example, the amount of the loan, amount and
type of security, repayment schedule, and duration of loan)
obtainable in an arm's-length transaction between unrelated parties.
Example (2): Corporation B sponsors a pension plan for its
employees. The plan sold a parcel of real property to Corporation B.
The price Corporation B paid to the plan was the fair market value
of the property as determined by a qualified independent appraiser
as of the date of the transaction and reflected in a qualified
appraisal report. (If there is a generally recognized market for the
property, such as the New York Stock Exchange, the fair market value
of the property is the value objectively determined by reference to
the price on such market on the date of the transaction, and a
determination by a qualified independent appraiser is not required.)
Example (3): Corporation C sponsors a pension plan for its
employees. Corporation C sold a parcel of real property to the plan
which was simultaneously leased back to Corporation C. The price
paid by the plan for the property was its fair market value, and
[[Page 70626]]
the rent paid by Corporation C to the plan is the fair market rental
value, as determined by a qualified independent appraiser and
reflected in a qualified appraisal report. The terms of the lease
(for example, rent, duration and allocation of expenses) are not
less favorable to the plan than those obtainable in an arm's-length
transaction between unrelated parties.
2. General Conditions
Section II of the exemption contains general conditions, as
discussed below, which the Department views as necessary to ensure that
any transaction covered by the exemption would be in the interests of
plan participants and beneficiaries, and to support a finding that the
exemption met the statutory requirements of section 4975(c)(2) of the
Code.
With respect to a transaction involving delinquent transmittal of
participant contributions and/or participant loan repayments to a
pension plan, the exemption requires that the contributions or
repayments be transmitted to the pension plan not more than 180
calendar days from the date the amounts were received by the employer
(in the case of amounts that a participant or beneficiary pays to an
employer) or the date the amount otherwise would have been payable to
the participant in cash (in the case of amounts withheld by an employer
from a participant's wages).
Second, the exemption requires that, with respect to the
transactions described in Sections I.B., I.C. and I.D., the amount of
plan assets involved in the transaction did not exceed 10 percent of
the fair market value of all the assets of the plan at the time of the
transaction. For purposes of this requirement, the 10 percent
limitation would apply after aggregating the value of a series of
related transactions.
Third, under the exemption, the fair market value of any plan asset
involved in a transaction described in Sections I.C. or I.D. must have
been determined in accordance with section 5 of the VFC Program.
Section 5 of the VFC Program requires that the valuation meet the
following conditions: (1) If there is a generally recognized market for
the property (e.g., the New York Stock Exchange), the fair market value
of the asset is the average value of the asset on such market on the
applicable date, unless the plan document specifies another objectively
determined value (e.g., the closing price); and (2) if there is no
generally recognized market for the asset, the fair market value of
that asset must be determined in accordance with generally accepted
appraisal standards by a qualified independent appraiser and reflected
in a written appraisal report signed by the appraiser. For purposes of
these requirements under the VFC Program, an appraiser is considered
qualified if the appraiser has met the education, experience and
licensing requirements that are generally recognized for appraisal of
the type of asset being appraised. An appraiser is ``independent'' if
the appraiser is not one of the following, does not own or control any
of the following, and is not owned or controlled by, or affiliated
with, any of the following: (i) The prior owner of the asset, if the
asset was purchased by the plan; (ii) the purchaser of the asset, if
the asset was or is now being sold by the plan; (iii) any other owner
of the asset, if the plan is not the sole owner; (iv) a fiduciary of
the plan; (v) a party in interest with respect to the plan (except to
the extent the appraiser becomes a party in interest when retained to
perform this appraisal for the plan); or (vi) the VFC Program
applicant.
Fourth, under the exemption, the terms of a transaction described
in Sections I.B., I.C., or I.D., must have been at least as favorable
to the plan as the terms generally available in arm's-length
transactions between unrelated parties.
Fifth, with respect to all of the eligible transactions, the
transaction may not have been part of an agreement, arrangement or
understanding designed to benefit a party in interest. The Department
notes that the intent of this condition is not to deny a direct benefit
to the party in interest but, rather, to exclude relief for
transactions that are part of a broader overall agreement, arrangement
or understanding designed to benefit parties in interest.
Sixth, with respect to all of the eligible transactions, the
applicant may not have taken advantage of the relief provided by the
VFC Program and the exemption for a similar type of transaction
identified in the application during the three-year period prior to the
submission of the application. As modified, however, the final
exemption contains a limited exception from this condition for service
providers. Pursuant to the amended Section II.F., a broker-dealer, bank
or insurance company that is a service provider to a plan would not be
subject to this condition if it engaged in a prohibited transaction
described in Section I, provided that: it was not a fiduciary that used
its discretion to cause the plan to engage in the transaction;
individuals acting on its behalf in connection with the transaction had
no actual knowledge or reason to know that the transaction was not
exempt pursuant to a statutory or administrative exemption under ERISA
and/or the Code; and, prior to the transaction, it established written
policies and procedures that were reasonably designed to ensure
compliance with the prohibited transaction rules and it engaged in
periodic monitoring for compliance.
3. Compliance with VFC Program
In addition to compliance with the general conditions set forth
above, Section III of the exemption requires that the applicant meet
the requirements set forth in the VFC Program that are applicable to
the particular transaction. The exemption also requires that the
applicant have received a no action letter issued by PWBA with respect
to such transaction, which must be an eligible transaction otherwise
described in Section I of the exemption. However, the fact that an
applicant receives a no action letter issued by PWBA should not be
viewed as a determination by PWBA that the applicant has satisfied all
of the conditions of the exemption. Each applicant must determine
whether the pertinent conditions of the exemption have been met.
4. Notice
Notice under the exemption must be given to interested persons
within 60 calendar days following the date of the submission of an
application under the VFC Program to the Department. Plan assets may
not be used to pay for the notice. The exemption does not specify the
format or specific content of the notice. However, the notice must
include an objective description of the transaction and the steps taken
to correct it, written in a manner reasonably calculated to be
understood by the average plan participant or beneficiary. The notice
also must provide for a period of 30 calendar days, beginning on the
date the notice is distributed, for interested persons to provide
comments to the appropriate Regional Office of the United States
Department of Labor, Pension and Welfare Benefits Administration. The
notice must include the address and telephone number of such Regional
Office.
A copy of the notice to interested persons, along with an
indication of the date on which it was distributed, must be provided to
the appropriate Regional Office within the same 60-day period following
the date of the submission of the application. Accordingly, applicants
under the VFC Program who intend to take advantage of the relief
provided under this exemption would indicate on the checklist submitted
as part of the VFC Program application that they will, within 60
calendar days following the
[[Page 70627]]
date of the submission of the application, provide the Department's
Regional Office with a copy of the notice to interested persons.
Notice may be given in any manner that is reasonably calculated,
taking into consideration the particular circumstances of the plan, to
result in the receipt of such notice by interested persons, including
but not limited to posting, regular mail, or electronic mail, or any
combination thereof.
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 4975(c)(2) of the Code does not relieve a fiduciary or
other party in interest or disqualified person with respect to a plan
from certain other provisions of ERISA and the Code, including any
prohibited transaction provisions to which the exemption does not
apply, the requirement that all assets of an employee benefit plan be
held in trust by one or more trustees, and the general fiduciary
responsibility provisions of ERISA which require, among other things,
that a fiduciary discharge his or her duties respecting the plan solely
in the interests of the participants and beneficiaries of the plan and
in a prudent fashion; 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) The exemption does not extend to transactions prohibited under
section 4975(c)(1)(F) of the Code.
(3) In accordance with section 4975(c)(2) of the Code, the
Department finds that the exemption is administratively feasible, in
the interests of plans and their participants and beneficiaries, and
protective of the rights of participants and beneficiaries of such
plans.
(4) The exemption is supplemental to, and not in derogation of
other provisions of ERISA and the Code, including statutory or
administrative exemptions and transitional 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.
(5) The exemption is applicable to a transaction only if the
conditions specified in the class exemption are satisfied.
Exemption
Accordingly, the following exemption is granted under the authority
of section 4975(c)(2) of the Code, and in accordance with the
procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836,
32847, August 10, 1990).
Section I: Eligible Transactions
The sanctions resulting from the application of section 4975(a) and
(b) of the Code, by reason of section 4975(c)(1)(A) through (E) of the
Code, shall not apply to the following eligible transactions described
in section 7 of the Voluntary Fiduciary Correction (VFC) Program (67 FR
15061, March 28, 2002), provided that the applicable conditions set
forth in Sections II, III and IV are met:
A. Failure to transmit participant contributions to a pension plan
within the time frames described in the Department's regulation at 29
CFR section 2510.3-102, (see VFC Program, section 7.A.1.), and/or the
failure to transmit participant loan repayments to a pension plan
within a reasonable time after withholding or receipt by the employer.
B. Loan at a fair market interest rate to a party in interest with
respect to a plan. (See VFC Program, section 7.B.1.).
C. Purchase or sale of an asset (including real property) between a
plan and a party in interest at fair market value. (See VFC Program,
sections 7.C.1. and 7.C.2.).
D. Sale of real property to a plan by the employer and the
leaseback of the property to the employer, at fair market value and
fair market rental value, respectively. (See VFC Program, section
7.C.3.).
Section II: Conditions
A. With respect to a transaction involving participant
contributions or loan repayments to pension plans described in Section
I.A., the contributions or repayments were transmitted to the pension
plan not more than 180 calendar days from the date the amounts were
received by the employer (in the case of amounts that a participant or
beneficiary pays to an employer) or the date the amounts otherwise
would have been payable to the participant in cash (in the case of
amounts withheld by an employer from a participant's wages).
B. With respect to the transactions described in Sections I.B.,
I.C., or I.D., the plan assets involved in the transaction, or series
of related transactions, did not, in the aggregate, exceed 10 percent
of the fair market value of all the assets of the plan at the time of
the transaction.
C. The fair market value of any plan asset involved in a
transaction described in Sections I.C. or I.D. was determined in
accordance with section 5 of the VFC Program.
D. The terms of a transaction described in Sections I.B., I.C., or
I.D. were at least as favorable to the plan as the terms generally
available in arm's-length transactions between unrelated parties.
E. With respect to any transaction described in Section I, the
transaction was not part of an agreement, arrangement or understanding
designed to benefit a party in interest.
F. (1) With respect to any transaction described in Section I, the
applicant has not taken advantage of the relief provided by the VFC
Program and this exemption for a similar type of transaction(s)
identified in the current application during the period which is three
years prior to submission of the current application.
(2) Notwithstanding the foregoing, Section II.F.(1) shall not apply
to an applicant provided that:
(a) The applicant was a broker-dealer registered under the
Securities Exchange Act of 1934, a bank supervised by the United States
or a State thereof, a broker-dealer or bank subject to foreign
government regulation, an insurance company qualified to do business in
a State, or an affiliate thereof;
(b) The applicant was a party in interest (including a fiduciary)
solely by reason of providing services to the plan or solely by reason
of a relationship to such service provider described in section
3(14)(F), (G), (H) or (I) (and/or the corresponding provisions of
section 4975 of the Code);
(c) Neither the applicant nor any affiliate (i) was a fiduciary
(within the meaning of section 3(21)(A) of ERISA) with respect to the
assets of the plan involved in the transaction and (ii) used its
discretion to cause the plan to engage in the transaction;
(d) Individuals acting on behalf of the applicant had no actual
knowledge or reason to know that the transaction was not exempt
pursuant to a statutory or administrative exemption under ERISA and/or
the Code; and
(e) Prior to the transaction, the applicant established written
policies and procedures that were reasonably designed to ensure
compliance with the prohibited transaction rules and the applicant
engaged in periodic monitoring for compliance.
Section III: Compliance with VFC Program
A. The applicant has met all of the applicable requirements of the
VFC Program.
[[Page 70628]]
B. PWBA has issued a no action letter to the applicant pursuant to
the VFC Program with respect to a transaction described in Section I.
Section IV: Notice
A. Written notice of the transaction(s) for which the applicant is
seeking relief pursuant to the VFC Program and this exemption, and the
method of correcting the transaction, was provided to interested
persons within 60 calendar days following the date of the submission of
an application under the VFC Program. A copy of the notice was provided
to the appropriate Regional Office of the United States Department of
Labor, Pension and Welfare Benefits Administration within the same 60-
day period, and the applicant indicated the date upon which notice was
distributed to interested persons. Plan assets were not used to pay for
the notice. The notice included an objective description of the
transaction and the steps taken to correct it, written in a manner
reasonably calculated to be understood by the average plan participant
or beneficiary. The notice provided for a period of 30 calendar days,
beginning on the date the notice was distributed, for interested
persons to provide comments to the appropriate Regional Office. The
notice included the address and telephone number of such Regional
Office.
B. Notice was given in a manner that was reasonably calculated,
taking into consideration the particular circumstances of the plan, to
result in the receipt of such notice by interested persons, including
but not limited to posting, regular mail, or electronic mail, or any
combination thereof. The notice informed interested persons of the
applicant's participation in the VFC Program and intention of availing
itself of relief under the exemption.
Signed at Washington, DC, this 11th day of November, 2002.
Ivan L. Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 02-29799 Filed 11-22-02; 8:45 am]
BILLING CODE 4510-29-P
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