Proposed Exemptions; Bricklayers and Allied Crafts Local No. 74 of DuPage County

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Application No. D-10310, et al.]

Proposed Exemptions; Bricklayers and Allied Crafts Local No. 74

of DuPage County

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Notice of proposed exemptions.

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SUMMARY: This document contains notices of pendency before the

Department of Labor (the Department) of proposed exemptions from

certain of the prohibited transaction restriction of the Employee

Retirement Income Security Act of 1974 (the Act) and/or the Internal

Revenue Code of 1986 (the Code).

Written Comments and Hearing Requests

All interested persons are invited to submit written comments or

request for a hearing on the pending exemptions, unless otherwise

stated in the Notice of Proposed Exemption, within 45 days from the

date of publication of this Federal Register Notice. Comments and

request for a hearing should state: (1) The name, address, and

telephone number of the person making the comment or request, and (2)

the nature of the person's interest in the exemption and the manner in

which the person would be adversely affected by the exemption. A

request for a hearing must also state the issues to be addressed and

include a general description of the evidence to be presented at the

hearing. A request for a hearing must also state the issues to be

addressed and include a general description of the evidence to be

presented at the hearing.

ADDRESSES: All written comments and request for a hearing (at least

three copies) should be sent to the Pension and Welfare Benefits

Administration, Office of Exemption Determinations, Room N-5649, U.S.

Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C.

20210. Attention: Application No. stated in each Notice of Proposed

Exemption. The applications for exemption and the comments received

will be available for public inspection in the Public Documents Room of

Pension and Welfare Benefits Administration, U.S. Department of Labor,

Room N-5507, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

Notice to Interested Persons

Notice of the proposed exemptions will be provided to all

interested persons in the manner agreed upon by the applicant and the

Department within 15 days of the date of publication in the Federal

Register. Such notice shall include a copy of the notice of proposed

exemption as published in the Federal Register and shall inform

interested persons of their right to comment and to request a hearing

(where appropriate).

SUPPLEMENTARY INFORMATION: The proposed exemptions were requested in

applications filed pursuant to section 408(a) of the Act and/or section

4975(c)(2) of the Code, and in accordance with procedures set forth in

29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990).

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 requested

to the Secretary of Labor. Therefore, these notices of proposed

exemption are issued solely by the Department.

The applications contain representations with regard to the

proposed exemptions which are summarized below. Interested persons are

referred to the applications on file with the Department for a complete

statement of the facts and representations.

Pension Fund of the Bricklayers and Allied Crafts, Local No. 74 of

DuPage County, Illinois, a/k/a Masons' and Plasterers', Local No. 74 of

Dupage County, Illinois (the Pension Plan) and Bricklayers and Allied

Craftsmen Local No. 74 Apprenticeship, Education and Training Trust

Fund (the Apprenticeship Plan; Together, the Plans) Located in

Westmont, Illinois

[Application No. D-10310 and L-10311]

Proposed Exemption

The Department is considering granting an exemption under the

authority of section 408(a) of the Act and in accordance with the

procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836,

32847, August 10, 1990). If the exemption is granted, the restrictions

of section 406(b)(2) of the Act shall not apply to the proposed sale of

certain real property (the Property) by the Apprenticeship Plan to the

Pension Plan, provided the following conditions are satisfied: (1) The

sale is a one-time transaction for cash; (2) no commissions or other

expenses are paid by the Plans in connection with the sale; (3) the

purchase price for the Property represents its fair market value as

determined by a qualified, independent appraiser; and (4) the Pension

Plan's independent fiduciary and the Apprenticeship Plan's trustees

have reviewed the proposed transaction and have determined that the

transaction is appropriate for each of the Plans and in the best

interest of the Plans' participants and beneficiaries.

Summary of Facts and Representations

1. The Apprenticeship Plan is a welfare plan providing

apprenticeship training services. It was formed as a result of a trust

agreement entered by the Southern DuPage County Contractors Association

and the Bricklayers and Allied Crafts, Local No. 74 of DuPage County,

Illinois, a/k/a Masons' and Plasterers' Local Union No. 74 of DuPage

County, Illinois (the Union). The Pension Plan was also formed as a

result of a trust agreement between these same two entities and is a

qualified pension plan. The Apprenticeship Plan has approximately 300

participants and assets of approximately $115,282. The Pension Plan has

approximately 400 participants and had assets with a fair market value

of approximately $14,459,758 as of December 1, 1995. The Plans have

three common management trustees and one common Union trustee.

2. The Plans each currently own adjoining condominiums located at

6422 South Cass Avenue and 6424 South Cass Avenue in Westmont,

Illinois. The condominium at 6422 South Cass Avenue has been owned by

the Pension Plan, while the condominium at 6424 South Cass Avenue

(i.e., the Property) has been owned by the Apprenticeship Plan.

Pursuant to cost-sharing arrangements, the Pension Plan currently acts

as a lessor in the condominium it owns at 6422 South Cass Avenue to the

Union and to the Bricklayers and Allied Craftsmen Local Union No. 74 of

DuPage County, Illinois Welfare Plan (the Welfare Plan). The

Apprenticeship Plan acts as a lessor in the Property to the Union, the

Welfare Plan and the Pension Plan. The rental rates charged by the

Plans are based upon a survey of area rental property. These amounts

are contained in five year leases which are subject to cancellation

upon reasonably short notice and which permit annual increases based

upon increased costs of the owner of the real estate. The relevant

offices are occupied by no entities other than the Union and its

Pension, Apprenticeship and Welfare Plans. The applicants represent

that the leases are exempt from the prohibited transaction restrictions

under Prohibited Transaction Exemptions (PTEs) 76-1 (41

[[Page 39028]]

FR 12740, March 26, 1976) and 77-10 (42 FR 33918, July 1, 1977).

1

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\1\ In this proposed exemption, the Department expresses no

opinion as to whether the leases have been exempt under PTEs 76-1

and 77-10.

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3. Under the exemption proposed herein, the Apprenticeship Plan

will sell the Property to the Pension Plan. The purchase price for the

Property is to be $96,000. This price was established by an independent

appraisal of the Property performed by an independent appraiser, Mr.

Matthew R. Bulthuis, of Oak Brook, Illinois as of April 30, 1996. Mr.

Bulthuis has updated the appraisal as of April 30, 1997, and determined

that the Property still had a fair market value of $96,000 as of that

date. The applicants have requested relief from section 406(b)(2) of

the Act because all of the management trustees for both the Pension

Plan and the Apprenticeship Plan are identical, and one of the Union

trustees is common to both Plans.

4. Following the purchase of the Property by the Pension Plan, it

is anticipated that the usage of the Property will remain essentially

unchanged. The Union and the Welfare Plan will continue to act as

lessees of space in the Property under current leases, with the

identity of the lessor changed from the Apprenticeship Plan to the

Pension Plan. The Pension Plan will no longer lease space since it will

own the Property.

5. The Plans' motivation for entering into the proposed transaction

stems from the changing needs of the Plans and the Union. In previous

years, the Property was utilized as an apprenticeship training school

by the Apprenticeship Plan. These services are now provided at other

locations. The Apprenticeship Plan thus has little need for controlling

real estate at this location. In contrast, the Pension Plan and the

Union both have increasing needs for office space. In order to free the

Apprenticeship Plan to concentrate on the performance of services for

its participants, to simplify accounting procedures with respect to

office sharing arrangements, and to reflect the actual current patterns

of use of the Property, the Plans' have determined it to be in their

best interests to have the Apprenticeship Plan sell the Property to the

Pension Plan. While the Plans believe that they could continue to share

space pursuant to PTEs 76-1 and 77-10, 2 the Plans believe

it is in their best interests to centralize ownership in the Pension

Plan. In so doing, the number of leases can be reduced, the

Apprenticeship Plan can be freed from its role as landlord, and the

number of transactions involving transfers of rent from the Plans or

the Union to a landlord Plan minimized.

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\2\ See footnote 1, above.

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6. Union Labor Life Insurance Company, through its Director of Real

Estate Investments, Mr. David S. Glasner, has acted as an independent

fiduciary for the Pension Plan with respect to the proposed

transaction. Mr. Glasner has reviewed the proposed transaction and

determined that it is appropriate for the Pension Plan and in the

Pension Plan's best interests. While there are numerous alternative

locations which the Pension Plan could acquire or lease for the purpose

of conducting its business, Mr. Glasner states that the Property is

clearly the most suitable. The Property is adjacent to a condominium

unit owned by the Pension Plan which it utilizes for administrative

purposes. The Pension Plan is in need of additional working space, and

acquisition of the Property will save the Pension Plan significant

relocation costs and eliminate potential business disruptions. In view

of these factors, as well as having reviewed the appraisal prepared by

Mr. Bulthuis and considered that the Property will represent a small

percentage of the assets of the Pension Plan (approximately 0.66

percent), it is Mr. Glasner's opinion that the proposed acquisition is

appropriate for the Pension Plan and in the best interests of its

participants and beneficiaries.

7. In summary, the applicants represent that the proposed

transaction satisfies the criteria contained in section 408(a) of the

Act because: (a) The sale is a one-time transaction for cash, and no

commissions or other expenses will be paid in connection with the

transaction; (b) the Property represents less than 1% of the assets of

the Pension Plan; (c) the purchase price for the Property was

determined by an appraisal performed by Mr. Bulthuis, a qualified

independent appraiser; and (d) the trustees of the Apprenticeship Plan

and Mr. Glasner of Union Labor Life Insurance Company, the independent

fiduciary for the Pension Plan, have determined that the proposed

transaction is appropriate for their respective Plans and in the best

interest of the Plans' participants and beneficiaries.

For Further Information Contact: Gary H. Lefkowitz of the

Department, telephone (202) 219-8881. (This is not a toll-free number.)

H. Weiss & Company, Incorporated Defined Benefit Pension Plan (The

Plan) Located in New York, New York [Application No. D-10402]

Proposed Exemption

The Department is considering granting an exemption under the

authority of section 408(a) of the Act and section 4975 (c)(2) of the

Code and in accordance with the procedures set forth in 29 CFR Part

2570, Subpart B (55 FR 32847, August 10, 1990). If the exemption is

granted, 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 proposed sale by the Plan of a certain

condominium unit (the Property) located in New York, New York, to Hanna

Weiss, a party in interest with respect to the Plan, provided that the

following conditions are satisfied:

(A) All terms of the transaction are at least as favorable to the

Plan as those which the Plan could obtain in an arm's-length

transaction with an unrelated party;

(B) The sale is a one-time transaction for cash;

(C) The Plan pays no commissions nor other expenses relating to the

sale;

(D) The purchase price is the greater of: (1) The fair market value

of the Property as determined by a qualified, independent appraiser, or

(2) the original acquisition price; 3

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\3\ The original acquisition cost is determined as follows:

(original purchase price + aggregate real estate taxes + aggregate

condominium association fees)-aggregate rental income = original

acquisition cost.

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(E) Before the transaction is consummated, the Plan has received

rental payments of no less than the Property's fair market rental value

for each month of the Plan's ownership of the Property during which it

was occupied by Hanna Weiss, a party in interest with respect to the

Plan; and

(F) Within 60 days of the publication in the Federal Register of a

notice granting the exemption proposed herein, if granted, Weiss makes

final payment to the Internal Revenue Service of any remaining unpaid

excise taxes which are applicable under section 4975(a) of the Code by

reason of the Plan's rental of the Property to a party in interest.

Summary of Facts and Representations

1. The Plan is a defined benefit plan with five (5) participants

and total assets of $479,934 as of September 30, 1995. As of the same

date, the present value of accrued benefits under the Plan was

[[Page 39029]]

$466,384. The Plan is sponsored by H. Weiss & Company, Incorporated

(the Company), an Ohio Corporation, with its principal office in New

York, which is engaged in the business of gold wholesaling. The Company

is in the process of terminating the Plan. The Plan's address is 579

Fifth Avenue, Suite 840, New York, New York. Ms. Hanna Weiss (Weiss) is

the Plan trustee and the sole shareholder of the Company. It is

represented that Weiss makes investment decisions for the Plan.

2. Among the assets of the Plan is the Property, a condomimium unit

in Trump Parc, a Trump Corporation development located at 106 Central

Park South in New York City. The Plan purchased the Property for

$190,000 on March 28, 1988, in a one-time transaction for cash, from

Park South Associates, an unrelated party.4

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\4\ The Department notes that the decisions to acquire and hold

the Property are governed by the fiduciary responsibility

requirements of Part 4, Subtitle B, Title I of the Act. In this

regard, the Department herein is not proposing relief for any

violations of Part 4 of the Act which may have arisen as a result of

the acquisition and holding of the Property.

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3. After the Plan purchased the Property, Weiss in her capacity as

Plan trustee attempted to rent the Property. Weiss listed the Property

for rental with the Trump Corporation (Trump), which owns and leases

similar units in the Trump Parc development. Weiss secured a tenant

(Tenant) through Trump for September 1, 1988 and the Property was

continuously occupied by the Tenant until May 31, 1989 at a monthly

rental rate of $1,300. During June and July of 1989 the Tenant failed

to remit the full amount of the rent and made payments of $650.00 per

month. At the end of July of 1989, the Tenant vacated the Property and

it was not rented for August, September and October of 1989. It is

represented that Weiss was unable to find another unrelated person to

rent the Property after July of 1989, and therefore she decided to rent

the Property.

On November 1, 1989, Weiss entered into a rental arrangement

(Rental Arrangement) with the Plan and began to occupy the Property and

pay rent to the Plan at a monthly rental rate of $1,300. Weiss

presently continues to rent the Property and the rent has never been

increased during her occupancy. From November 1, 1989 through November

30, 1996, Weiss paid $110,700 in rent to the Plan.

4. Between March 28, 1988, the date on which the Property was

purchased, and November 30, 1996, the Plan collected a total of

$123,500 in income attributable to the rental of the Property. During

the same period, the Plan paid real estate taxes of $20,242.92, and

condominium associate fees of $27,984.54 on the Property. In this

regard, the Plan recognized net rental income of $75,272.54.

5. Weiss represents that after she was advised by the Plan's

actuary that the Rental Arrangement may constitute a prohibited

transaction under the Act, she met with legal counsel to discuss the

alternatives available to address the issue. Weiss determined that the

Plan should liquidate the Property. Weiss is proposing to purchase the

Property from the Plan and is requesting an exemption for the purchase

transaction under the terms and conditions described herein.

Weiss proposes to purchase the Property from the Plan in a one-time

transaction for cash. It is represented that Weiss will pay the greater

of: (a) The Property's fair market value on the date of the sale, or

(b) the Plan's original acquisition cost. For purposes of the sale, the

original acquisition cost is determined as follows: (original purchase

price + aggregate real estate taxes + aggregate condominium association

fees) - aggregate rental income = original acquisition cost.

6. The Property was appraised by Lewis Tonks (Tonks), an

independent real estate appraiser certified by the State of New York,

on August 15, 1996. Tonks relied on the comparable sales method and

estimates that the fair market value of the Property is $155,000. In

the appraisal, Tonks indicates that the fair market value of the

Property would be $165,000 if the Property was not obsolete because it

did not have a kitchen. It is represented that Weiss removed the

kitchen from the Property in 1990, at her own expense. Weiss represents

that fair market value of the Property for the purposes of the sale

will be no less than $165,000.

7. Weiss states that she recently became aware that she may have

paid less that fair market rental value for the rental of the Property,

during the entire period of her occupancy. Weiss sought an assessment

of the Property's fair market rental value, on March 24, 1997, in order

to establish that the Plan received rent equal to fair market value

over the period that she has rented the Property. The assessment

(Assessment) was performed by Nancy Packes (Packes) of Feathered Nest,

a New York based residential brokerage company. It is represented that

Feathered Nest is Manhattan's largest rental company, and it produces

an extensive report on Manhattan rental values which has been published

in the New York Times and is relied upon by real estate professional,

developers and financial institutions. Packes is a real estate broker

licenced by the State of New York and the president of Feathered Nest.

Packes states that during the period of 1989 through 1996 the Property

should have rented for between $1,400 and $1,600 a month. Weiss

represents that she will remit to the Plan the difference between the

fair market rent and the rent actually paid, plus reasonable interest.

As a condition of this exemption proposed herein, Weiss is required to

pay the Plan the difference between the rent actually paid through the

sale date and the total rents due with interest.

8. The Department is not proposing exemptive relief for Weiss'

rental of the Property from the Plan. Weiss recognizes that her rental

of the Property since November of 1989 constitutes a prohibited

transaction under the Act and Code for which no exemptive relief is

proposed herein. Weiss represents that on or about March 13, 1997, she

paid the Internal Revenue Service (the Service) all applicable excise

taxes arising under section 4975(a) of the Code through December 31,

1996. Weiss has agreed that within 60 days of the publication in the

Federal Register of a notice granting the exemption proposed herein,

she will make final payment to the Service of any remaining unpaid

excise taxes applicable under section 4975(a) of the Code by reason of

the Rental Arrangement through the date of the sale.

9. Weiss represents that the sale transaction will occur as soon as

possible after the publication in the Federal Register of a notice

granting the exemption proposed herein, if granted. Weiss represents

that proposed transaction is favorable to the Plan because the sale

will be a one-time cash transaction and the Plan will incur no expenses

as a result of the sale. In addition, it is represented the sale is in

the best interests of the participants and beneficiaries because the

Plan is presently in the process of terminating and the sale will

provide liquidity to the Plan allowing it to pay benefits.

10. In summary, the applicant represents that the proposed

transaction satisfies the 408(a) of the Act for the following

reasons:(a) The transaction will enable the termination of an ongoing

prohibited transaction, the Rental Arrangement; (b) the Plan will

receive cash for the Property in the amount of no less than its

original acquisition cost and no less than its fair market value as of

the sale date; (c) the sale will be a one-time cash transaction and the

Plan will incur no expenses

[[Page 39030]]

related to the sale; (d) as a part of the transaction, the Plan will

receive the difference between the rents actually paid under the Rental

Arrangement and the rents due, with interest, in accordance with the

Assessment; and (e) Weiss will have paid all applicable excise taxes

under section 4975(a) of the Code with respect to the Rental

Arrangement which remain unpaid at the time of the sale transaction.

For Further Information Contact: Ms. Janet L. Schmidt of the

Department, telephone (202) 219-8883. (This is not a toll-free number.)

Martin D. Ross Individual Retirement Account (the IRA) Located in Boca

Raton, Florida

[Application No. D-10451]

Proposed Exemption

The Department is considering granting an exemption 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). If the exemption is granted, 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 March 4, 1996 sale by the IRA of certain debentures (the

Debentures) to Mr. Martin D. Ross (Mr. Ross), a disqualified person

with respect to the IRA, provided the following conditions were

satisfied: (1) The sale of the Debentures by the IRA was a one-time

transaction for cash; (2) the IRA received no less than the fair market

value of the Debentures as of the time of the sale; and (3) as soon as

Mr. Ross became aware that the transaction was prohibited, he reversed

the transaction.5

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\5\ Pursuant to 29 CFR 2510.3-2(d), the IRA is not within the

jurisdiction of Title I of the Act. However, there is jurisdiction

under Title II of the Act pursuant to section 4975 of the Code.

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Effective Date: If the proposed exemption is granted, the exemption

will be effective March 4, 1996.

Summary of Facts and Representations

1. Mr. Ross is the only participant in the IRA, and has sole

investment responsibility under the IRA. His wife, Bonnie P. Ross, is

his currently designated beneficiary. The IRA is sponsored by Mesirow

Financial, Inc. (Mesirow) of Chicago, Illinois. The total value of

assets of the IRA as of December 31, 1996 was approximately $704,000.

2. The Debentures were originally purchased by the IRA on April 7,

1994 at their fair market value of $200,000. In early March, 1996, the

Debentures, which were 7% convertible subordinate debentures of BLC

Financial Services, Inc. (BLC), accounted for almost 50% of the IRA's

assets. Mr. Ross wished to diversify the IRA's assets and instructed

Mr. Berkson, his broker at Mesirow, to sell the Debentures at their

fair market value to his personal account at Mesirow. The applicant

represents that had Mr. Ross been aware that such a sale was a

prohibited transaction under section 4975 of the Code, he would not

have instructed the sale of the Debentures to himself.

3. However, on March 4, 1996, Mr. Ross sold the Debentures from the

IRA to his personal account for the fair market value of the

Debentures, $200,000. The fair market value of the Debentures,

$200,000, was based on a letter from BLC to Mesirow dated February 27,

1996. The applicant represents that the parties first became aware in

late 1996 that the sale was a prohibited transaction. In mid-December,

1996, Mesirow's compliance department distributed a memorandum from the

New York Stock Exchange (NYSE) outlining the requirements for ``sales''

between related parties, and Mr. Berkson asked the compliance

department whether the sale from the IRA to Mr. Ross met the

requirements for a ``sale'' under the NYSE's rules, not knowing that

the sale was a prohibited transaction. When Mesirow's compliance

department became aware of the March 4, 1996 sale, it determined that

the sale was a prohibited transaction.

4. The Debentures were converted into 740,742 shares of BLC common

stock (the Stock), and Mr. Ross received the Stock on June 13, 1996. On

December 31, 1996, the fair market value of the Stock was about

$509,000. Therefore, the appreciation in the value of the Stock

occurred between March 4, 1996 and December 31, 1996.

5. When Mr. Ross learned on December 29, 1996, that the March 4,

1996 sale of the Debentures by the IRA was a prohibited transaction, he

immediately instructed Mr. Berkson to cancel the March 4, 1996

transaction. At this point, Mesirow reversed the transaction. The

applicant represents that this December 29, 1996 reversal was a

``correction'' of the March 4, 1996 prohibited transaction within the

meaning of Treas. Reg. Section 53.4941(e)-1(c), and therefore does not

constitute a separate prohibited transaction. 6 The

applicant represents that since the sale of the Debentures on March 4,

1996 by the IRA was for their fair market value, and the December 29,

1996 cancellation reversed the transaction in its entirety, there was

no intent to benefit the IRA or Mr. Ross by canceling the transaction.

The applicant states that Mr. Ross did not cancel the March 4, 1996

transaction because the Stock had appreciated, but rather because he

was informed that the March 4 sale had been a prohibited transaction.

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\6\ The Department expresses no opinion herein as to whether the

December 29, 1996 sale of the Stock by Mr. Ross to the IRA

constituted a correction within the meaning of Treas. Reg. section

53.4941(e)-1(c).

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6. In summary, the applicant represents that the subject

transaction satisfied the criteria contained in section 4975(c)(2) of

the Code because: (a) The March 4, 1996 sale was a one-time transaction

for cash; (b) the IRA received no less than the fair market value of

the Debentures as of the time of the sale; (c) as soon as Mr. Ross

became aware that the transaction was prohibited, he reversed the

transaction; and (d) Mr. Ross is the only participant in his IRA, and

he determined that the subject transaction (and its subsequent

cancellation) were appropriate for and in the best interest of his IRA,

and he desired that the transactions be consummated with respect to his

IRA.

Notice to Interested Persons: Because Mr. Ross is the only

participant in his IRA, it has been determined that there is no need to

distribute the notice of proposed exemption to interested persons.

Comments and requests for a hearing are due 30 days after publication

of this notice in the Federal Register.

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 of disqualified

person from certain other provisions of the Act and/or the Code,

including any prohibited transaction provisions to which the exemption

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

[[Page 39031]]

employees of the employer maintaining the plan and their beneficiaries;

(2) Before an exemption may be granted under section 408(a) of the

Act and/or section 4975(c)(2) of the Code, the Department must find

that the exemption is administratively feasible, in the interests of

the plan and of its participants and beneficiaries and protective of

the rights of participants and beneficiaries of the plan;

(3) The proposed exemptions, if granted, will be supplemental to,

and not in derogation of, any other provisions of the Act and/or 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; and

(4) The proposed exemptions, if granted, will be subject to the

express condition that the material facts and representations contained

in each application are true and complete, and that each application

accurately describes all material terms of the transaction which is the

subject of the exemption.

Signed at Washington, DC, this 16th day of July, 1996.

Ivan Strasfeld,

Director of Exemption Determinations Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 97-19130 Filed 7-18-97; 8:45 am]

BILLING CODE 4510-29-P