Amendment to Prohibited Transaction Exemption 2002-51 (PTE 2002-
51) to Permit Certain Transactions Identified in the Voluntary
Fiduciary Correction Program
[04/19/2006]
Volume 71, Number 75, Page 20135-20139
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Application No. D-11261]
RIN 1210-A05
Amendment to Prohibited Transaction Exemption 2002-51 (PTE 2002-
51) to Permit Certain Transactions Identified in the Voluntary
Fiduciary Correction Program
AGENCY: Employee Benefits Security Administration, Department of Labor.
ACTION: Adoption of Amendment to PTE 2002-51.
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SUMMARY: This document amends PTE 2002-51 (67 FR 70623 November 25,
2002), a class exemption that provides relief from certain prohibited
transaction restrictions imposed by section 4975 of the Internal
Revenue Code of 1986 (the Code) for certain eligible transactions
identified in the Department of Labor's (the Department) Voluntary
Fiduciary Correction (VFC) Program, which was adopted on March 28,
2002. This amendment is being adopted in conjunction with the
Department's adoption of the updated VFC Program (final VFC Program),
which is being published simultaneously in this 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) or 502(i) of ERISA in connection with an
investigation or civil action by the Department. The amendment affects
plans, participants and beneficiaries of such plans and certain other
persons engaging in such transactions.
EFFECTIVE DATE: The class exemption is effective May 19, 2006.
FOR FURTHER INFORMATION CONTACT: Brian J. Buyniski, Office of Exemption
Determinations, Employee Benefits Security Administration, U.S.
Department of Labor, Room N-5649, 200 Constitution Avenue, NW.,
Washington, DC 20210, (202) 693-8545 (this is not a toll free number).
SUPPLEMENTARY INFORMATION: On April 6, 2005, a notice was published in
the Federal Register (70 FR 17476) of the pendency before the
Department of a proposed amendment to PTE 2002-51. PTE 2002-51 provides
relief 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 amendment expands the relief under the
exemption to additional transactions included in the final VFC Program.
The amendment to PTE 2002-51 adopted by this notice was proposed by the
Department on its own motion pursuant to section 4975(c)(2) of the
Code, and in accordance with the procedures set forth in 29 CFR 2570,
subpart B (55 FR 32836, 32847, August 10, 1990).\1\
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\1\ Section 102 of Reorganization Plan No. 4 of 1978 (43 FR
47713, October 17, 1978, 5 U.S.C. App. 1 [1996]) generally
transferred the authority of the Secretary of the Treasury to issue
administrative 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 on the proposed amendment. The Department received two comment
letters. Upon consideration of all the comments received, the
Department has determined to grant the proposed amendment, subject to
certain modifications. These modifications and the comments are
discussed below.
Executive Order 12866 Statement
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) of the Executive
Order, a ``significant regulatory action'' is 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. OMB has
determined that the final VFC Program is significant under
[[Page 20136]]
section 3(f)(4) because it raises novel legal or policy issues arising
from the President's priorities.
The amended PTE 2002-51 provides excise tax relief for six of the
transactions identified in the final VFC Program. Parties who wish to
take advantage of the exemption must have met all of the applicable
requirements of the final VFC Program and the conditions of the
exemption. One of those conditions is receipt of a no action letter
from the Employee Benefits Security Administration (EBSA) with respect
to the transaction at issue. In conjunction with the final VFC Program,
PTE 2002-51, as amended, has also been determined to be significant
under section 3(f)(4) of the Executive Order. Accordingly the
Department has assessed the costs and benefits of this amendment to PTE
2002-51.
PTE 2002-51 provides relief 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. In general, the
exemption enhances the benefits of participation in the VFC Program by
granting relief from excise taxes under section 4975 for certain
breaches of fiduciary duty that are prohibited transactions. The
purpose of the VFC Program is to encourage the correction of breaches
of fiduciary duty, resulting in the recovery of lost earnings or
profits for the benefit of plan participants and beneficiaries. The
class exemption will have positive economic effects by eliminating
excise taxes and promoting increased participation in the VFC Program.
The amendment to PTE 2002-51 is being adopted in connection with
the final VFC Program, which is published in this issue of the Federal
Register. The class exemption has been amended to provide relief for
two additional transactions. One of the transactions was introduced in
the April 2005 VFC Program and the proposed Amendment to PTE 2002-51.
That transaction has now become effective in the amended exemption. The
transaction concerns the purchase of an asset (including real property)
by a plan where the asset has later been determined to be illiquid as
described in the final VFC Program, and/or the subsequent sale of the
illiquid asset by the plan in a transaction that was prohibited
pursuant to section 4975(c)(1) of the Code. The second transaction
included in this amendment covers the use of plan assets to pay
expenses to a service provider for services that are properly
characterized as settlor expenses, provided such payments were not
expressly prohibited in the plan documents.
The Department has assumed, based on experience, that not all
applicants who apply to the final VFC Program will take advantage of
the excise tax relief provided under the exemption, either by choice or
because the exemption does not provide relief for the transaction they
are correcting under the final VFC Program. The Department has more
specifically calculated that the number of applicants who will rely on
the class exemption will equal approximately one-fifth of the total
number of applicants, or 250 applicants (.2 x 1,250).
Paperwork Reduction Act
The amendment to PTE 2002-51 engenders no significant new paperwork
burden for the notification and other written documentation
requirements in comparison with the previous version of this exemption.
Applicants to the final VFC Program who rely on the amended class
exemption may be eligible, as well, for a new optional provision. Under
this option, qualifying applicants may choose not to send notices to
interested persons. The conditions of the optional provision are
described in detail in the amendment to PTE 2002-51. However, while
these particular parties would be relieved of the responsibility to
send notices to interested persons, they do need to provide the
Department with certain additional documentation on their calculations
and the payment they remitted to the plan when submitting their
application to the VFC Program. Documentation of the calculation of the
amount of excise tax otherwise due consists of a copy of a completed
IRS Form 5330 or equivalent written evidence containing the information
required by IRS Form 5330; proof of payment to the plan is required.
The Department has determined that the difference between the paperwork
burden of plans using the optional provision versus the burden of those
that do not is negligible.
Service providers will likely do the work on behalf of parties
relying on PTE 2002-51. For parties who do not rely on the optional
provision, service providers will prepare and send out notices to
interested persons. A copy of the notice must be provided to the
Department. As to those parties that opt not to provide notice, service
providers will submit to the Department evidence of the required
calculations described in IRS Form 5330 and evidence of the payment to
the plan of the excise tax otherwise payable along with the application
to the final VFC program. These respective tasks should require no more
than an hour for each service provider to complete. Assuming that as
many as one-fifth of the annual 1,250 applicants to the VFC Program
(250) also use the class exemption, the burden cost posed by PTE 2002-
51 equals $8,625 ($34.50 x 1 hr. x 250). One-half of the parties using
the exemption (125) are estimated to be eligible to take advantage of
PTE 2002-51's new optional provision, thereby being relieved of the
notice requirement, while the other half of the parties using the
exemption (125) are estimated as being required to send notices to
interested persons. Notices will be sent, on average, to 136 interested
persons for each plan. PTE 2002-51 permits notification of interested
persons by electronic means. The Department assumes that only 62
percent of the parties using the exemption will send notices to
interested persons by first class mail. Therefore, the total number of
notices sent by mail will be 10,540 (136 x 125 x 62 percent). The
remaining 38 percent will be delivered electronically. The total
mailing costs arising from the class exemption will equal roughly
$4,427 ($0.42 x 10,540 mailings). The Department assumes, however, that
all applicants who send interested party notices will send the
Department its copy of the notice by mail, using certified or overnight
delivery services and that this copy will be included in the
application package described above under costs for the VFC Program.
The annual mailing costs for notice to interested persons and the
Department is therefore estimated at $4,427. In sum, the burden costs
attributable to the amended PTE 2002-51 will be approximately $13,052
($8,625 + $4,427).
Persons are not required to respond to the revised information
collection unless it displays a currently valid OMB control number
1210-0118.
Description of the Exemption
Title I of ERISA, which establishes certain standards of conduct
for fiduciaries of employee benefit plans covered by ERISA, includes
provisions prohibiting fiduciaries from causing a plan to engage in
certain classes of transactions with persons defined as parties in
interest. Similarly, Title II of ERISA prohibits plans described in
section 4975(e)(1) of the Code from engaging in certain classes of
transactions with persons defined under the Code as disqualified
persons. Generally, such transactions are subject to taxation under
section 4975 of the Code.
The VFC Program was adopted by the Department on a permanent basis
in
[[Page 20137]]
March 2002.\2\ Under the VFC Program, persons who are potentially
liable for a breach of fiduciary duty can avoid the possibility of
civil investigations and/or civil actions initiated by the Department
for that breach and the imposition of civil penalties under section
502(l) or 502(i) of ERISA if they satisfy the conditions for correcting
the breach as described in the VFC Program. The VFC Program was based
on the Department's experience with the Pension Payback Program, 61 FR
9203 (March 7, 1996), and continued public interest in such correction
programs. In response to comments received on the VFC Program
requesting that the Department provide relief from the excise taxes
imposed by section 4975 of the Code for prohibited transactions, the
Department proposed a class exemption for four of the eligible
transactions described in the VFC Program. A final exemption, PTE 2002-
51, was published in the Federal Register on November 25, 2002. The
four eligible transactions described in the exemption are as follows:
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\2\ 67 FR 15062 (Mar. 28, 2002). Prior to adoption in March
2002, the VFC Program was made available on an interim basis during
which the Department invited and considered public comments on the
Program. (See 65 FR 14164, Mar. 15, 2000).
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(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 disqualified person \3\ with respect to the plan.
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\3\ The Department notes that the term ``party in interest'' was
used in the description of the eligible transactions covered under
PTE 2002-51 although that exemption provided, and this amendment
will provide, relief only from the sanctions imposed under section
4975 of the Code, which prohibits certain transactions between a
plan and a ``disqualified person.'' For purposes of clarity,
references in the exemption to a ``party in interest'' are changed
to ``disqualified person.''
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(C) The purchase or sale of an asset (including real property)
between a plan and a disqualified person at fair market value.
(D) The sale of real property to a plan by the employer and
leaseback of such property to the employer, at fair market value and
fair market rental value, respectively.
Based on growing public utilization and experience in administering
the VFC Program, EBSA decided to amend and modify the VFC Program to
expand the categories of eligible transactions and to make it more
useful to employers and others who wish to avail themselves of the
relief provided. Specifically, the VFC Program now includes relief
under Title I of ERISA for the purchase of an asset by a plan where the
asset was later determined to be illiquid as described under the final
VFC Program.
In this regard, the final VFC Program provides relief for both the
plan's original acquisition of the asset that was later determined to
be illiquid under the final VFC Program, as well as the correction
involving the sale of such asset in a transaction that violates the
prohibited transaction rules under Title I of ERISA, and section 4975
of the Code provides that all of the requirements of the final VFC
Program are met. Similarly, the class exemption has been amended to
provide relief from the excise taxes imposed by section 4975 of the
Code for both the plan's original acquisition and/or the subsequent
sale of the illiquid asset by the plan in a transaction prohibited
pursuant to section 4975(c)(1), provided all the requirements of the
class exemption are met. Moreover, as distinguished from the other
eligible transactions covered in the VFC Program \4\ and PTE 2002-51,
correction in the VFC Program for this category of eligible
transactions will involve a prohibited transaction.
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\4\ Under the VFC Program prior to the current revision,
correction could not be achieved by engaging in a new prohibited
transaction. See VFC Program, 67 FR 15073 (Mar. 28, 2002) Section
2(d).
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The other category of transactions being restructured under the
final VFC Program (see Section 7.6) includes the use of plan assets to
pay expenses, including commissions or fees, that should have been paid
by the plan sponsor, to a service provider for: (i) services provided
in connection with the administration and maintenance of the plan, in
circumstances where a plan provision requires that such plan expenses
be paid by the plan sponsor, or (ii) services provided in connection
with the establishment, design, or termination, of the plan, which
relate to the activities of the plan sponsor in its capacity as
settlor. The class exemption is being amended to provide excise tax
relief where plan assets are used to pay for services appropriately
characterized as settlor expenses, which relate to the activities of
the plan sponsor in its capacity as settlor.
Discussion of Written Comments Received
The Department received two letters commenting on the proposed
amendments to PTE 2002-51. One commenter suggested expanding the scope
of the VFC Program to include relief for plans that are subject to the
prohibited transaction excise tax described in section 4975 of the
Code, but are not subject to Title I of ERISA, including individual
retirement accounts (IRAs) described in section 408 of the Code. This
commenter suggested that certain VFC Program applicants (e.g.,
financial institutions) may have caused ERISA-covered plans, as well as
plans that are subject only to the prohibited transaction provisions of
the Code, to engage in prohibited transactions. According to the
commenter, plan officials with respect to these IRAs and certain other
plans are unable to participate in the VFC Program and, therefore, are
not eligible for relief under PTE 2002-51. Accordingly, these plan
officials must seek excise tax relief through an individual exemption
application submitted to the Department.\5\ The commenter believes that
it would be administratively convenient if the Department extended VFC
Program eligibility to encompass the full range of plans that are
subject to section 4975 of the Code. The Department has determined that
it cannot expand the VFC Program as requested by the commenter, since
it lacks jurisdiction to issue a no action letter under the VFC Program
with respect to violations of the prohibited transaction provisions
under the Code. Consequently, in light of the decision not to expand
the VFC Program to include plans only subject to section 4975 of the
Code, the Department does not believe that it would be appropriate to
modify the final exemption as requested by the commenter.
Notwithstanding the foregoing, the Department wishes to take the
opportunity to state that the grant of this amendment does not
foreclose its future consideration of individual exemption requests for
transactions involving IRAs that are outside the scope of relief
provided by both the VFC Program and the class exemption under
circumstances when, for example, a financial institution received a no
action letter applicable only to plans subject to the Program for a
transaction(s) that involved both plans and such IRAs. The Department
cannot provide assurances in advance that an individual exemption will
be issued with respect to a particular transaction involving an IRA,
however, interested persons are encouraged to contact the Department to
discuss the particular facts of their case.
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\5\ PTE 2002-51 requires that a VFC Program applicant comply
with all of the applicable requirements of the VFC Program and
receive a no action letter with respect to transactions corrected
under the VFC Program.
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[[Page 20138]]
The Internal Revenue Service (the Service) submitted a comment
requesting a modification to the current requirement in PTE 2002-51
which provides that an applicant must notify interested persons in
writing of the transactions for which relief is being sought pursuant
to the VFC Program and this exemption.\6\ The Service requested that
the notice requirement not apply in those situations where: (a) The
excise tax due under section 4975 of the Code for a failure to timely
transmit participant contributions and loan repayments is less than or
equal to $100.00; (b) the excise tax that otherwise would be owed and
payable to the United States Treasury is contributed to the plan; and
(c) the contribution is allocated to the accounts of the plan's
participants and beneficiaries in a manner consistent with the plan's
provisions concerning the allocation of plan earnings. Lastly, the
Service noted that, under the circumstances outlined above, employers
that meet the applicable conditions of the class exemption would not be
required to file a Return of Excise Taxes Related to Employee Benefit
Plans (IRS Form 5330) with the IRS. After considering the issue, the
Department has determined to modify the final exemption as requested by
the Service. The Department notes that, for the purpose of determining
whether the excise tax due under section 4975 of the Code for failing
to timely transmit participant contributions and loan repayments is
less than or equal to $100, and determining the amount to be
contributed to the plan, an applicant may calculate the excise tax that
would otherwise be imposed by section 4975 of the Code based upon the
Lost Earnings amount computed using the Online Calculator.
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\6\ The class exemption mandates that notice be provided to
interested persons of the transaction and the method of correction.
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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 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 amendment will 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 amendment 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 amendment 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 amendment is applicable to a transaction only if the
conditions specified in the class exemption are satisfied.
Amendment
Accordingly, the following amendment to Sections I and II of PTE
2002-51 is granted under the authority of section 4975(c)(2) of the
Code and in accordance with the procedures set forth in 29 CFR 2570,
subpart B (55 FR 32836, Aug. 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,
published simultaneously in this issue of the Federal Register,
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, and/or the failure to transmit participant loan
repayments to a pension plan within a reasonable time after withholding
or receipt by the employer. (See VFC Program, Section 7.1(a)).
B. Loan at a fair market interest rate to a disqualified person
with respect to a plan. (See VFC Program, Section 7.2(a)).
C. Purchase or sale of an asset (including real property) between a
plan and a disqualified person at fair market value. (See VFC Program,
Sections 7.4(a) and 7.4(b)).
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
7.4(c)).
E. Purchase of an asset (including real property) by a plan where
the asset has later been determined to be illiquid as described under
the VFC Program in a transaction which was a prohibited transaction
pursuant to section 4975(c)(1) of the Code, or in which the asset was
acquired from an unrelated third party, and/or the subsequent sale of
such asset in a transaction prohibited pursuant to section 4975(c)(1).
(See VFC Program, Section 7.4(f)).
F. Use of plan assets to pay expenses, including commissions or
fees, to a service provider (e.g., attorney, accountant, recordkeeper,
actuary, financial advisor, or insurance agent) for services provided
in connection with the establishment, design or termination of the plan
(settlor expenses) \7\, which relate to the activities of the plan
sponsor in its capacity as settlor, provided that the payment of the
settlor expense was not expressly prohibited by a plan provision
relating to the payment of expenses by the plan. (See VFC Program,
section 7.6(b)).
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\7\ See Advisory Opinion 2001-01A (Jan. 18, 2001).
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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., I.D., or I.E., 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
[[Page 20139]]
in Sections I.C., I.D., or I.E. was determined in accordance with
section 5 of the VFC Program.
D. The terms of a transaction described in Sections I.B., I.C.,
I.D., I.E., or I.F., 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 disqualified person.
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 disqualified person (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
4975(e)(2)(F) and (G) of the Code;
(c) Neither the applicant nor any affiliate (i) was a fiduciary
(within the meaning of section 3(21)(A) of ERISA and 4975(e)(3)of the
Code) 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.
G. With respect to a transaction involving a sale of an illiquid
asset under the VFC Program described in Section I.E., the plan paid no
brokerage fees, or commissions in connection with the sale of the
asset.
H. With respect to any transaction described in Section I.F., the
amount of plan assets involved in the transaction or series of related
transactions did not, in the aggregate, exceed the lesser of $10,000 or
5% of the fair market value of all the assets of the plan at the time
of the transaction.
Section III. Compliance With the VFC Program
A. The applicant has met all of the applicable requirements of the
VFC Program.
B. EBSA 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, Employee Benefits Security 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 as amended and intention
of availing itself of relief under the exemption.
C. Notwithstanding the foregoing, Section IV.A. and B. shall not
apply to a transaction described in Section I.A., provided that (i) the
applicant under the VFC Program has met all of the other Program
requirements; (ii) the amount of the excise tax that otherwise would be
imposed by section 4975 of the Code with respect to any transaction(s)
described in Section I.A. would be less than or equal to $100.00; (iii)
the amount of the excise tax that otherwise would be imposed by section
4975 of the Code was paid to the plan and allocated to the participants
and beneficiaries in the same manner as provided under the plan with
respect to plan earnings; and (iv) the applicant under the VFC Program
provides a copy of a completed IRS Form 5330 or written documentation
containing the information required by IRS Form 5330 and proof of
payment with the submission of the application to the appropriate EBSA
Regional Office. For the sole purpose of determining whether the excise
tax due under section 4975 of the Code on the ``amount involved'' with
respect to the prohibited transaction involving the failure to timely
transmit participant contributions and loan repayments is less than or
equal to $100, an applicant may calculate the excise tax due based upon
the Lost Earnings amount computed using the Online Calculator.
Signed at Washington, DC, this 12th day of April, 2006.
Ivan L. Strasfeld,
Director of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
[FR Doc. 06-3675 Filed 4-18-06; 8:45 am]
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