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Federal Register / Vol. 63, No.

77 / Wednesday, April 22, 1998 / Notices 19955

DEPARTMENT OF LABOR (b) They are in the interests of the attributable to plan investment in the
plans and their participants and commingled entity, which are in excess
Pension and Welfare Benefits beneficiaries; and of $50 million, or
Administration (c) They are protective of the rights of (2) In the case of two or more Plans
the participants and beneficiaries of the which are not maintained by the same
[Prohibited Transaction Exemption 98–17; plans. employer, controlled group of
Exemption Application No. D–10412, et al.] corporations or employee organization
Metropolitan Life Insurance Company (the Unrelated Plans), whose assets are
Grant of Individual Exemptions; (MetLife) Located in New York, NY commingled for investment purposes in
Metropolitan Life Insurance Company [Prohibited Transaction Exemption 98– a group trust or any other form of entity
17; Exemption Application No. D– the assets of which are ‘‘plan assets’’
AGENCY: Pension and Welfare Benefits
10412] under the Plan Asset Regulation, which
Administration, Labor.
entity has purchased a MetLife Trust
ACTION: Grant of Individual Exemptions. Exemption GIC, the foregoing $25 million
SUMMARY: This document contains Section I. Covered Transactions requirement is deemed satisfied if such
exemptions issued by the Department of The restrictions of sections 406(a), trust or other entity has aggregate assets
Labor (the Department) from certain of 406(b)(1) and (b)(2) of the Act and the which are in excess of $25 million;
the prohibited transaction restrictions of sanctions resulting from the application provided that the fiduciary responsible
the Employee Retirement Income of section 4975 of the Code, by reason for making the investment decision on
Security Act of 1974 (the Act) and/or of section 4975(c)(1)(A) through (E) of behalf of such group trust or other
the Internal Revenue Code of 1986 (the the Code, shall not apply, effective April entity—
(i) Is neither the sponsoring employer,
Code). 1, 1997, to (1) the purchase or retention
a member of the controlled group of
Notices were published in the Federal by an employee benefit plan (the Plan);
corporations, the employee
Register of the pendency before the and (2) the sale or continuation by
organization, nor an affiliate,
Department of proposals to grant such MetLife or an affiliate (collectively, (ii) Has full investment responsibility
exemptions. The notices set forth a MetLife) of a synthetic guaranteed with respect to Plan assets invested
summary of facts and representations investment contract (the MetLife Trust therein, and
contained in each application for GIC) entered into between the Plan and (iii) Has total assets under its
exemption and referred interested MetLife under which MetLife management and control, exclusive of
persons to the respective applications guarantees (the Guarantee) certain the $25 million threshold amount
for a complete statement of the facts and amounts (the Guaranteed Value). attributable to Plan investment in the
representations. The applications have This exemption is conditioned upon commingled entity, which are in excess
been available for public inspection at the following requirements as set forth of $50 million.
the Department in Washington, D.C. The below in Section II. (c) Prior to the execution of the
notices also invited interested persons MetLife Trust GIC, the Plan fiduciary
Section II. General Conditions
to submit comments on the requested receives a full and detailed written
exemptions to the Department. In (a) The decision to enter into a disclosure of all material features
addition the notices stated that any MetLife Trust GIC is made on behalf of concerning the MetLife Trust GIC,
interested person might submit a a participating Plan in writing by a including—
written request that a public hearing be fiduciary of such Plan which is (1) A Letter of Agreement between
held (where appropriate). The independent of MetLife. MetLife and the Plan fiduciary which
applicants have represented that they (b) Only Plans with total assets having stipulates the relevant provisions of the
have complied with the requirements of an aggregate market value of at least $25 GIC, the applicable fees and the rights
the notification to interested persons. million are permitted to purchase and obligations of the parties;
No public comments and no requests for MetLife Trust GICs; provided however (2) Investment Guidelines defining
a hearing, unless otherwise stated, were that— the manner in which an investment
received by the Department. (1) In the case of two or more Plans manager will manage a MetLife Trust
The notices of proposed exemption which are maintained by the same GIC;
were issued and the exemptions are employer, controlled group of (3) A copy of the Investment
being granted solely by the Department corporations or employee organization Management Agreement between
because, effective December 31, 1978, (the Related Plans), whose assets are MetLife and the Plan fiduciary;
section 102 of Reorganization Plan No. commingled for investment purposes in (4) Information explaining in a
4 of 1978 (43 FR 47713, October 17, a single master trust or any other entity manner calculated to be understood by
1978) transferred the authority of the the assets of which are ‘‘plan assets’’ a Plan fiduciary that, if a MetLife
Secretary of the Treasury to issue under 29 CFR 2510.3–101 (the Plan affiliated manager underperforms or if
exemptions of the type proposed to the Asset Regulation), which entity has adverse market conditions occur, the
Secretary of Labor. purchased a MetLife Trust GIC, the interest rate that is credited (the
foregoing $25 million requirement is Credited Rate) to a MetLife Trust GIC
Statutory Findings deemed satisfied if such trust or other account (the Account) may be as low as
In accordance with section 408(a) of entity has aggregate assets which are in 0 percent;
the Act and/or section 4975(c)(2) of the excess of $25 million; provided that, if (5) The pertinent features of a MetLife
Code and the procedures set forth in 29 the fiduciary responsible for making the conventional GIC (the MetLife
CFR Part 2570, Subpart B (55 FR 32836, investment decision on behalf of such Conventional GIC) that a Plan fiduciary
32847, August 10, 1990) and based upon master trust or other entity is not the may obtain upon the discontinuance of
the entire record, the Department makes employer or an affiliate of the employer, a MetLife Trust GIC, including an
the following findings: such fiduciary has total assets under its explanation that, although a MetLife
(a) The exemptions are management and control, exclusive of Conventional GIC will offer a guarantee
administratively feasible; the $25 million threshold amount of principal, it may have a credited rate
19956 Federal Register / Vol. 63, No. 77 / Wednesday, April 22, 1998 / Notices

as low as 0 percent for the duration of the maturity date, no future extensions million.1 MetLife states that in some
the contract; and will occur. situations, a Plan fiduciary may act on
(6) Copies of the proposed exemption (i) Prior to a Plan fiduciary’s decision behalf of a trust in which a number of
and grant notice with respect to the regarding the extension of a maturity Plans participate. Although the trust
exemptive relief provided herein. date for a MetLife Trust GIC for one may have assets in excess of $25
(d) Upon the selection by a Plan additional year, MetLife informs such million, MetLife indicates that the
fiduciary of a MetLife Trust GIC, a Plan fiduciary of the new reset rate for individual Plans may not have total
participant in a Plan that provides for the Credited Rate. assets which would satisfy the
participant investment selection (the (j) MetLife maintains books and minimum threshold amount.
Section 404(c) Plan) is given a summary records of each MetLife Trust GIC Therefore, MetLife requests that the
of the pertinent features of the transaction for a period of six years. Department clarify that the scope of the
documents listed above in paragraphs Such books and records are subject to Notice be expanded to include a
(c)(1), (c)(2) and (c)(5) of this Section II, annual audit by independent, certified fiduciary (e.g., an independent
which are deemed appropriate for public accountants. investment manager) acting on behalf of
distribution to such participant, a trust with assets in excess of $25
including a disclosure that the MetLife EFFECTIVE DATE: If granted, this million regardless of the asset totals of
Trust GIC may have a Credited Rate as exemption is effective as of April 1, the individual Plans participating in the
low as 0 percent. 1996. trust. In MetLife’s view, such trust
(e) Subsequent to a Plan’s investment For a more complete statement of the fiduciary would have the same level of
in a MetLife Trust GIC, the Plan facts and representations supporting the sophistication as a fiduciary of a Plan
fiduciary and, if applicable, the Plan Department’s decision to grant this with assets in excess of $25 million. If
participant, upon such participant’s exemption, refer to the notice of this change is made, MetLife also
request, receive the following ongoing proposed exemption (the Notice) requests that various references in the
disclosures regarding such investment: published on October 20, 1997 at 62 FR Notice to Plan sponsors should be
(1) A monthly report consisting of a 54471. construed to include fiduciaries of trusts
Guaranteed Value Statement, which Written comments and references to Plans should be
specifies the affected Plan’s MetLife construed to include trusts.
Trust GIC balance for the prior month, The Department received one written In response to these comments, the
contributions, withdrawals, transfers, comment with respect to the Notice and Department acknowledges that the use
interest earned, the current month’s no requests for a public hearing. The of the term ‘‘Plan’’ in the Notice should
ending balance for the MetLife Trust comment, which was submitted by be construed to include trusts and other
GIC, the current interest rate and a MetLife, suggested modifications to the commingled investment vehicles which
summary of transactions; operative language of the Notice and have assets (either individually or
(2) A quarterly report consisting of a recommended certain changes to the aggregated within the investment
Market Value Statement, which Summary of Facts and Representations vehicle) in excess of $25 million.
specifies the prior quarter’s ending (the Summary) of the Notice. Presented Further, the term ‘‘Plan fiduciaries’’ and
market value for a Plan’s MetLife Trust below are the modifications requested ‘‘Plan sponsors’’ should be construed to
GIC, contributions, withdrawals, the by MetLife and the Department’s include fiduciaries of such trusts or
fees paid to MetLife, investment accompanying responses. Also commingled investment vehicles.
income, realized capital gains and/or presented are amendments to the Notice In addition, in recognition of the fact
losses from sales, changes in unrealized made by the Department. that individual Plans investing in a
appreciation of assets, the current commingled entity may not be able to
1. Operative Language Changes meet the $25 million threshold amount
quarter’s ending market value and rate
of return, and a summary of a. Exemptive Language on their own in order to acquire a
transactions; and MetLife Trust GIC, the Department has
MetLife notes that under the caption decided to permit the aggregation of
(3) An annual portfolio listing or letter
‘‘Proposed Exemption,’’ the exemptive Plan assets within the pooled vehicle in
describing key events, depending upon
language of the Notice does not provide order to satisfy the threshold amount.
its arrangements with a Plan fiduciary.
(f) As to each Plan, the combined total exemptive relief for any payment by However, to ensure the sophistication of
of all fees and charges imposed under a MetLife to a Plan pursuant to MetLife’s the fiduciary who is making the
MetLife Trust GIC is not in excess of Guarantee. Because a Plan would be decision on behalf of Plans to invest in
‘‘reasonable compensation’’ within the required to receive payment under a a MetLife Trust GIC, the Department has
meaning of section 408(b)(2) of the Act. MetLife Trust GIC arrangement if certain imposed certain additional
(g) Each MetLife Trust GIC conditions are met, MetLife assumes the requirements for pooled arrangements
specifically provides an objective Department would consider such involving the assets of either related
method for determining the fair market payment as part of the exempted Plans (i.e., the Related Plans) or
value of the securities owned by the arrangement. unrelated Plans (i.e., the Unrelated
Plan pursuant to such GIC. The Department agrees that the Plans). These additional requirements
(h) Each MetLife Trust GIC has a payment by MetLife to a Plan pursuant are described as follows:
predefined maturity date or dates to the Guarantee is subsumed under the (1) Related Plans. With respect to two
selected by the Plan fiduciary and transactions exempted. Therefore, the or more plans, which are maintained by
agreed to by MetLife. However, in no Department does not believe any the same employer, controlled group of
event does a MetLife Trust GIC have a modification to the exemptive language corporations or employee organization,
maturity date exceeding five years. A is warranted.
Plan fiduciary may extend the maturity b. Condition (b)
1 MetLife represents that in instances of a start-

date for an additional year upon an up situation, a Plan might not have assets totaling
Condition (b) of the Notice requires a $25 million. Nevertheless, MetLife explains that it
affirmative written decision made would still allow the Plan to invest in a MetLife
annually by such fiduciary. Once a Plan Plan investing in a MetLife Trust GIC to Trust GIC as long as the Plan reached the $25
fiduciary does not affirmatively extend have assets that are in excess of $25 million threshold within the year.
Federal Register / Vol. 63, No. 77 / Wednesday, April 22, 1998 / Notices 19957

whose assets are invested in a master fiduciary responsible for making the a participant may obtain upon request
trust or any other form of plan asset investment decision on behalf of such master pursuant to section 2550.404c–
look-through entity, which entity has trust or other entity is not the employer or 1(b)(2)(i)(B)(2)(ii) of the Section 404(c)
an affiliate of the employer, such fiduciary
purchased a MetLife Trust GIC from Regulation include financial statements
has total assets under its management and
MetLife, the Department notes that the control, exclusive of the $25 million and reports and any other materials
$25 million threshold may be satisfied threshold amount attributable to plan relating to investment alternatives
by aggregating the assets of the investing investment in the commingled entity, which available under the Plan to the extent
Plans within the pooled vehicle. In this are in excess of $50 million, or provided to the Plan. MetLife further
regard, the Department also notes that (2) In the case of two or more Plans which explains that the Section 404(c)
an employer may retain an independent are not maintained by the same employer, Regulation imposes no additional
investment manager to manage all or a controlled group of corporations or employee obligation on the administrator to
portion of plan assets invested in a organization (the Unrelated Plans), whose
furnish or make available materials
assets are commingled for investment
master trust. Under these circumstances, relating to the companies in which the
purposes in a group trust or any other form
the fiduciary must have total assets of entity the assets of which are ‘‘plan assets’’ equity fund invests. Therefore, MetLife
under its management and control, under the Plan Asset Regulation, which wishes to have the Notice amended to
exclusive of the $25 million threshold entity has purchased a MetLife Trust GIC, the state that the disclosure required for
amount attributable to plan investment foregoing $25 million requirement is deemed participants in a Section 404(c) Plan
in the commingled entity, which are in satisfied if such trust or other entity has which offers a MetLife Trust GIC as an
excess of $50 million. aggregate assets which are in excess of $25 investment option, particularly where
(2) Unrelated Plans. For two or more million; provided that the fiduciary the MetLife Trust GIC is one of a
plans which are not maintained by the responsible for making the investment
decision on behalf of such group trust or number of contracts within a designated
same employer, controlled group of investment alternative, is that required
other entity—
corporations or employee organization, by the Section 404(c) Regulation and
(i) Is neither the sponsoring employer, a
whose assets are invested in a group member of the controlled group of other existing regulations.
trust or other plan asset look-through corporations, the employee organization, nor
entity, which entity has purchased a The Department notes that when an
an affiliate,
MetLife Trust GIC, the $25 million investment option, such as a MetLife
(ii) Has full investment responsibility
threshold will apply to the aggregate with respect to Plan assets invested Trust GIC, is offered by a fiduciary
assets of such entity so long as the therein, and under a Section 404(c) Plan to
fiduciary responsible for making the (iii) Has total assets under its management participants as part of the Plan’s stable
investment decision on behalf of the and control, exclusive of the $25 million value portfolio and a party in interest to
group trust or other plan asset look- threshold amount attributable to Plan an investing Plan is providing the
through entity is not the sponsoring investment in the commingled entity, which investment, the acquisition of the
are in excess of $50 million.’’ contract by the plan fiduciary is beyond
employer, a member of the controlled
group of corporations, the employee c. Conditions (d) and (e) the scope of the Section 404(c)
organization, or an affiliate, and such Regulation. In providing exemption
MetLife believes the disclosure relief for this type of transaction in a
fiduciary has full investment requirements in the Notice for
responsibility 2 with respect to the plan participant-directed plan, the
participants in Section 404(c) Plans go Department typically requires, among
assets invested therein. Also, the beyond the scope of the disclosure
fiduciary must have total assets under other things, that the Plan fiduciary
requirements of section 404(c) of the Act provide the participant with full and
its management and control, exclusive and the Department’s accompanying
of the $25 million threshold amount complete disclosures regarding the
regulation (the Section 404(c) nature of the investment. These
attributable to plan investment in the Regulation).3 MetLife explains that
commingled entity, which are in excess disclosures will ensure that the
funding vehicles, such as the MetLife directing Plan participant has given
of $50 million. Trust GIC, are typically part of a Plan’s
Accordingly, Condition (b) of Section informed consent to the investment and
larger ‘‘stable value’’ or ‘‘fixed income’’ continues to be apprised about the
II has been revised to read as follows:
funding option. MetLife believes that to ramifications of the investment.
‘‘(b) Only Plans with total assets having an mandate disclosure for one funding
aggregate market value of at least $25 million vehicle within a Plan’s stable value After considering MetLife’s comment,
are permitted to purchase MetLife Trust the Department has decided that a
GICs; provided however that—
portfolio may create an administrative
hardship for a Plan fiduciary as well as Section 404(c) Plan participant should,
(1) In the case of two or more Plans which
are maintained by the same employer, present a competitive barrier for at a minimum, receive from the
controlled group of corporations or employee MetLife. appropriate fiduciary, summaries of the
organization (the Related Plans), whose As an alternative, MetLife suggests pertinent features of: the Letter of
assets are commingled for investment that the existing provisions of the Agreement between MetLife and the
purposes in a single master trust or any other Section 404(c) Regulation govern the Plan fiduciary, particularly the
entity the assets of which are ‘‘plan assets’’ disclosure provided or made available disclosure that the MetLife Trust GIC
under 29 CFR 2510.3–101 (the Plan Asset may have a Credited Rate as low as 0
Regulation), which entity has purchased a
to a Section 404(c) Plan if a MetLife GIC
MetLife Trust GIC, the foregoing $25 million Trust is included in the Plan’s offerings. percent; the Investment Guidelines and
requirement is deemed satisfied if such trust According to MetLife, under the Section the MetLife Conventional GIC. However,
or other entity has aggregate assets which are 404(c) Regulation, participants must be the Department has decided to delete
in excess of $25 million; provided that, if the provided with descriptions of each paragraphs (2) and (3) of Condition (d)
designated investment alternative but of the proposal relating to disclosure of
2 For purposes of this exemption, the term ‘‘full not with descriptions of separate the operative language of the proposed
investment responsibility’’ means that the fiduciary investments forming a part of the and/or final exemptions. Therefore,
responsible for making the investment decision has
and exercises discretionary management authority investment alternative. The documents Condition (d), which has been
over all of the assets of the group trust or other plan redesignated herein as Section II(d), has
assets look-through entity. 3 29 CFR 2550.404(c)–1. been revised to read as follows:
19958 Federal Register / Vol. 63, No. 77 / Wednesday, April 22, 1998 / Notices

(d) Upon the selection by a Plan fiduciary the Plan fiduciary and agreed to by MetLife. references to the duration and yield-to-
of a MetLife Trust GIC, a participant in a Plan However, in no event does a MetLife Trust maturity in the text imply that the
that provides for participant investment GIC have a maturity date exceeding five source for these two inputs is the
selection (the Section 404(c) Plan) is given a years. A Plan fiduciary may extend the
Account rather than a third-party
summary of the pertinent features of the maturity date for an additional year upon an
documents listed above in paragraphs (c)(1), affirmative written decision made annually benchmark index. Therefore, MetLife
(c)(2) and (c)(5) of this Section II, which are by such fiduciary. Once a Plan fiduciary does requests that in part (a) of the second
deemed appropriate for distribution to such not affirmatively extend the maturity date, no sentence of the first paragraph of
participant, including a disclosure that the future extensions will occur. Representation 12, the words ‘‘of assets
MetLife Trust GIC may have a Credited Rate in the Account’’ be deleted and the
as low as 0 percent.4 e. Condition (i)
following paragraphs be inserted after
Condition (e) of the Notice pertains to Condition (i) of the Notice states that part (c) of the representation:
ongoing disclosures that will be MetLife will inform a Plan fiduciary of
If a Plan fiduciary has determined to
provided to a Plan fiduciary and, if the new reset rate for the Credited Rate extend a maturity date (as described in
applicable, Plan participants in a prior to the fiduciary’s affirmation of the Representation 13), the Yield-to-Maturity
Section 404(c) Plan subsequent to a maturity date. To reflect the fact that component will be the yield-to-maturity of an
Plan’s investment in a MetLife Trust MetLife will inform a Plan fiduciary of external index (as described in
GIC. Such written disclosures include the new reset rate for the Credited Rate Representation 8) unless specifically
monthly, quarterly, or annual reports. prior to a Plan fiduciary’s decision to requested by the Plan with MetLife’s consent.
These documents may also be made extend a maturity date for a MetLife MetLife represents that it will not calculate
the yield-to-maturity of the index. Rather,
available to a Plan participant upon Trust GIC for one year or to decline such
such calculation will be made by the index
such participant’s request. extension, the Department has revised provider. Once a Plan fiduciary has
However, after careful consideration Condition (i). determined not to extend a maturity date, the
of MetLife’s comment, the Department (i) Prior to a Plan fiduciary’s decision Yield-to-Maturity component will be the
has decided not to modify Condition (e). regarding the extension of a maturity date for yield of a Treasury security with a
The Department believes that the a MetLife Trust GIC for one additional year, comparable duration relative to the assets in
condition, as proposed, provides MetLife informs such Plan fiduciary of the the Account.
flexibility to the Plan fiduciary by not new reset rate for the Credited Rate. The Credited Rate will not be affected by
requiring that mandatory disclosures the length of time that MetLife has managed
2. Changes to the Summary a MetLife Trust GIC Account.
automatically be provided to each
participant. Rather, the participant may With the exception of MetLife’s In addition, MetLife requests that the
obtain copies of such reports at his or suggested change to the Credited Rate last sentence of the second paragraph of
her request. formula, which is discussed below in Representation 12 be deleted and
Part 2.b., the Department has made the replaced with the following language:
d. Condition (h) following substantive modifications to The amortization period or Duration will
Condition (h) of the Notice provides the Summary. be no longer than the period specified in the
that each MetLife Trust GIC will have a a. Representation 7 MetLife Trust GIC. If a Plan fiduciary has
predefined maturity date or dates determined to extend a maturity date (as
selected by a Plan fiduciary and agreed MetLife states a possible described in Representation 13), it typically
to by MetLife. Upon further interpretation of the language of will be the duration of the index (as
consideration of Condition (h), the Representation 7 would not allow for described in Representation 8) unless
the designation of an investment specifically requested by the Plan with
Department believes it is appropriate to MetLife’s consent. MetLife further represents
restrict the maximum number of years manager other than MetLife or an
affiliated sub-manager other than State that the duration of the index will be
that a MetLife Trust GIC may remain in calculated by the index provider. Once a Plan
effect before the Plan can realize the Street Research and Management has determined not to extend a maturity date,
Guaranteed Value. Therefore, MetLife Company (State Street Research). the Duration is the period from the effective
has agreed to cap the maturity date for Because MetLife wishes to be able to date of the Credited Rate reset until the
a MetLife Trust GIC at five years. This, designate other investment managers maturity date or the average maturity date.
together with the ability of a fiduciary and affiliated sub-managers by mutual
agreement with the Plan sponsor, even c. Representation 13
to annually affirmatively extend the
though there is presently no affiliate to Representation 13 of the Summary
maturity date for an additional year,
designate as a sub-manager, MetLife describes the manner in which the
should ensure that the Plan will have
requests that the second sentence in maturity date mechanism for a MetLife
greater investment flexibility and will
Representation 7 be redrafted as follows: Trust GIC will operate. Under the
enable the utilization of third-party
However, by mutual agreement with the procedure set forth in Representation
benchmark indices having 4–6 year
Plan sponsor, MetLife may designate State 13, a MetLife Trust GIC may continue
durations. (For a discussion of the
Street Research or another affiliated indefinitely since there are no
revised procedure for extending or
investment manager as investment manager restrictions placed on the number of
locking in the maturity date for a
or sub-manager with respect to some or all years the instrument may remain in
MetLife Trust GIC under Condition (h), of the assets in an Account. effect. Also, during an annual
see Part 2.c. below of this grant notice).
Thus, based upon the foregoing, the In addition, in the third sentence of notification period, MetLife is required
Department has revised Condition (h) of Representation 7, MetLife requests that to afford the Plan fiduciary an
the Notice as follows: the words ‘‘investment manager or’’ be opportunity to ‘‘affirm’’ the maturity
inserted before the word ‘‘sub- date in writing. If the Plan fiduciary
(h) Each MetLife Trust GIC has a does nothing, the MetLife Trust GIC will
manager.’’
predefined maturity date or dates selected by continue for another year and the
b. Representation 12 notification procedure will be repeated
4 Paragraphs (c)(1), (c)(2) and (c)(5) of Section II
pertain to the Letter of Agreement, the Investment
MetLife requests that certain technical each year. Assuming, however, the Plan
Guidelines and the pertinent features of the MetLife changes be made to the description of fiduciary ‘‘affirms’’ the maturity date,
Conventional GIC. the Credited Rate because it believes the the MetLife Trust GIC will mature
Federal Register / Vol. 63, No. 77 / Wednesday, April 22, 1998 / Notices 19959

within the prescribed time frame additional year only. A Plan fiduciary which Finally, the Department notes that
selected by the Plan fiduciary from the elects to extend the maturity date in this MetLife’s comments with respect to the
anniversary date of such MetLife Trust manner will be given another opportunity to Notice also contained certain minor
GIC. do so one month before the next anniversary clarifications to information included in
date of the MetLife Trust GIC.
In order to provide additional the Summary. Rather than restate these
The notification procedure will be
safeguards, the Department has decided repeated, and the opportunity to extend the modifications in this grant notice, the
to revise this procedure in its entirety. maturity date for one more year will be given Department wishes to acknowledge all
Specifically, the Department has prior to each subsequent anniversary date, of the technical clarifications made by
proposed that the Plan fiduciary make provided the fiduciary has elected to extend MetLife to the information in question.
an affirmative decision to extend the the maturity date before the immediately For further information regarding
maturity date for a MetLife Trust GIC. preceding anniversary date. Each extension MetLife’s comment letter or other
Additionally, the Department has elected by the fiduciary will be for only one matters discussed herein, interested
determined that a MetLife Trust GIC year beyond the maturity date, including any persons are encouraged to obtain copies
extensions previously in effect. Thus, at no of the two exemption application files
will never have a maturity date that is
time will a MetLife Trust GIC have a maturity (Exemption Application No. D–10241
in excess of five years. A MetLife Trust date that is more than five years from the
GIC may be extended, however, on an anniversary date.
and Exemption Application No. D–
annual basis, for only one year as long Upon the maturity of a MetLife Trust GIC, 10412) the Department is maintaining in
as the Plan fiduciary provides advance MetLife represents that if the Market Value this case. The complete application
written notice to MetLife agreeing to the of the assets invested in the MetLife Trust files, as well as all supplemental
extension. If, however, the Plan GIC is less than the Guaranteed Value (as submissions received by the
fiduciary does not inform MetLife, in described in Representation 11), it will make Department, are made available for
writing, prior to the anniversary date of up the difference.9 public inspection in the Public
the intention to extend the maturity d. Representation 20(b). MetLife Documents Room of the Pension and
date, the date will not be extended by represents that although the conversion Welfare Benefits Administration, Room
one year and the MetLife Trust GIC will of a MetLife Trust GIC to a MetLife N–5638, U.S. Department of Labor, 200
mature within the maximum five year Conventional GIC has been discussed Constitution Avenue, N.W.,
time frame. As noted above, MetLife with the Department primarily in the Washington, D.C. 20210.
will repeat the notification procedure context of Guaranteed Value exceeding Accordingly, after consideration of
over successive annual periods if the Market Value, it wishes to clarify that the entire record, including MetLife’s
Plan fiduciary determines that each the MetLife Conventional GIC may still comment letter, the Department has
such extension is appropriate. Should be selected regardless of the relative determined to grant the exemption as
the Plan fiduciary decide not to extend levels of Guaranteed and Market Values. modified herein.
the maturity date on an anniversary In some cases, MetLife notes that a Plan FOR FURTHER INFORMATION CONTACT: Ms.
date, no further annual notifications fiduciary holding a MetLife Trust GIC Jan D. Broady of the Department,
will be required of MetLife. with Market Value in excess of telephone (202) 219–8881. (This is not
Besides the foregoing changes, the Guaranteed Value may consider the a toll-free number.)
Department emphasizes the fact that the MetLife Conventional GIC the most Consolidated Associations of Railroad
Guaranteed Value for a MetLife Trust prudent alternative available. If this Employees Health Care Plan (the Plan)
GIC will not always reflect the amount fiduciary believes that interest rates are Located in Topeka, Kansas
of the initial contribution but may be about to decline, such fiduciary may
adjusted for contributions and decide to lock in the gain by selecting [Prohibited Transaction Exemption 98–
withdrawals. this investment option. Because ‘‘any 18; Exemption Application No. L–
Therefore, Representation 13 has been market value loss or gain * * * will be 10527]
revised to read as follows: amortized over the period ending with Exemption
13. Although each MetLife Trust GIC will the final maturity date of the MetLife
Conventional GIC,’’ MetLife explains The restrictions of section 406(a) of
have a defined maturity date or dates
that the Plan fiduciary will have secured the Act shall not apply, effective June
selected by the Plan fiduciary and agreed to
by MetLife, in no event will a MetLife Trust an above market rate of return 10, 1997 to: (1) the current leasing (the
GIC have a maturity date exceeding five guaranteed for an extended fixed period. Lease) of certain real property (the
years. However, such date may be extended Property) by the Plan to Century Health
Therefore, to cover the full range of
if specifically requested, in writing, by the Solutions, Inc. (Century), a party in
situations in which a MetLife
Plan fiduciary. Each such extension of the interest with respect to the Plan; (2) the
maturity date will be subject to a one year Conventional GIC will be offered,
proposed new leasing of substantially
limitation as described below. MetLife requests that the words ‘‘at a
the same Property by the Plan to
One month before the anniversary date of time when there are losses and’’ be
Century (or its successor in name)
the MetLife Trust GIC, MetLife will notify the deleted in the first sentence of
effective April 1, 1998 (the New Lease);
Plan fiduciary, in writing, of the impending Representation 20(b). Similarly, and for
anniversary of such MetLife Trust GIC, as and (3) the possible future sale of the
clarification, MetLife requests that the Property by the Plan to Century (or its
well as the new reset rate for the Credited following sentence be substituted for the
Rate, and afford the fiduciary the opportunity successor in name) pursuant to a right
first sentence of Footnote 16: of first refusal under the terms of the
to notify MetLife that it will extend the
maturity date. If the Plan fiduciary does not The Department notes that the decision by Lease, provided the following
inform MetLife, in writing, prior to the a Plan fiduciary to convert a MetLife Trust conditions are satisfied: (a) the Property
anniversary date of the intention to extend GIC into a MetLife Conventional GIC is represents no more than 25% of the
the maturity date, the date will not be subject to the provisions of section 404 of the value of the Plan’s assets; (b) the terms
extended by one year and the original Act, as are all Plan investment decisions.
maturity date will remain in effect. If, on the
of the Lease are, and will remain, at
other hand, the Plan fiduciary informs 9 MetLife notes that the procedures governing the
least as favorable to the Plan as those
MetLife, in writing, prior to the anniversary maturity date of a MetLife Trust GIC will not affect
obtainable in an arm’s-length
date of the intention to extend the maturity the ability of a Plan fiduciary to discontinue such transaction with an unrelated party; (c)
date, the date will be extended for one investment as described in Representation 19.’’ the fair market rental value is
19960 Federal Register / Vol. 63, No. 77 / Wednesday, April 22, 1998 / Notices

determined on an annual basis by a FOR FURTHER INFORMATION CONTACT: Gary prudent fashion in accordance with
qualified, independent appraiser; (d) the H. Lefkowitz of the Department, section 404(a)(1)(B) of the Act; nor does
Plan’s independent fiduciary has telephone (202) 219–8881. (This is not it affect the requirement of section
determined that the transaction is a toll-free number.) 401(a) of the Code that the plan must
appropriate for the Plan and in the best operate for the exclusive benefit of the
Thornton, Hegg, Reif, Johnston & Dolan
interests of the Plan’s participants and employees of the employer maintaining
Profit Sharing Plan and Trust (the Plan)
beneficiaries; (e) the Plan’s independent the plan and their beneficiaries;
Located in Alexandria, Minnesota (2) These exemptions are
fiduciary will continue to monitor the
transaction and the conditions of the [Prohibited Transaction Exemption No. supplemental to and not in derogation
exemption and take whatever action is 98–19; Application No. D–10563] of, any other provisions of the Act and/
necessary to enforce the Plan’s rights or the Code, including statutory or
Exemption administrative exemptions and
under the Lease; and (f) the Plan’s
independent fiduciary acts to ensure The restrictions of sections 406(a) and transactional rules. Furthermore, the
that any sale of the Property by the Plan 406(b)(1) and (b)(2) of the Act and the fact that a transaction is subject to an
to Century is properly effected under sanctions resulting from the application administrative or statutory exemption is
the terms of the Lease, pursuant to of section 4975 of the Code, by reason not dispositive of whether the
Century’s right of first refusal in the of section 4975(c)(1)(A) through (E) of transaction is in fact a prohibited
event the Plan receives a bona fide offer the Code, shall not apply to the sale (the transaction; and
from a third party to purchase the Sale) by the Plan of certain real property (3) The availability of these
Property, and Century is not in default (the Property) to Robert M. Hegg, (Mr. exemptions is subject to the express
on any of its obligations under the Hegg), a party in interest with respect to condition that the material facts and
Lease. the Plan; provided the following representations contained in each
For a more complete statement of the conditions are satisfied: application accurately describes all
facts and representations supporting the (A) The terms and conditions of the material terms of the transaction which
Department’s decision to grant this transaction are no less favorable to the is the subject of the exemption.
exemption, refer to the notice of Plan than those which the Plan would Signed at Washington, D.C., this 17th day
proposed exemption published on receive in an arm’s-length transaction of April, 1998.
February 26, 1998 at 63 FR 9867. with an unrelated party; Ivan Strasfeld,
(B) The Sale is a one-time transaction Director of Exemption Determinations,
Written Comments
for cash; Pension and Welfare Benefits Administration,
The only written comments received (C) The Plan incurs no expenses from U.S. Department of Labor.
by the Department with respect to the the Sale; and [FR Doc. 98–10693 Filed 4–21–98; 8:45 am]
proposed exemption were submitted by (D) The Plan receives as consideration
BILLING CODE 4510–29–P
the applicant, which sought clarification from the Sale the greater of either the
with respect to two points. First, the fair market value of the Property as
applicant represented that the New determined by a qualified, independent
Lease would likely be for fewer square appraiser on the date of the Sale, or an LEGAL SERVICES CORPORATION
feet of the Property than under the amount equal to the funds expended by Notice of Availability of 1999
Lease, and sought clarification that the the Plan in acquiring and maintaining Competitive Grant Funds
exemption as proposed would still the Property, less any income produced
apply to the New Lease. With respect to by the Property. AGENCY: Legal Services Corporation.
the New Lease, the Department notes For a more complete statement of the ACTION: Solicitation for Proposals for the
that the exemption would apply to a facts and representations supporting the Provision of Civil Legal Services.
lease of fewer square feet in the same Department’s decision to grant this
Property provided all conditions of the exemption, refer to the Notice of SUMMARY: The Legal Services
exemption are satisfied. Secondly, the Proposed Exemption published on Corporation (LSC or Corporation) is the
applicant requested clarification that the February 26, 1998, at 63 FR 9868. national organization charged with
exemption would still apply if Century FOR FURTHER INFORMATION CONTACT: Mr.
administering federal funds provided
reorganized as a for-profit corporation, C. E. Beaver of the Department, for civil legal services to the poor.
or changed its name, or both. The The Corporation hereby announces
telephone (202) 219–8881. (This is not
applicant represented that this change the availability of competitive grant
a toll-free number.)
in name will never occur in connection funds and is soliciting grant proposals
with a sale of the underlying assets of General Information from interested parties who are
Century to an unrelated third party. The The attention of interested persons is qualified to provide effective, efficient
applicant requested that the operative directed to the following: and high quality civil legal services to
language of the exemption be modified (1) The fact that a transaction is the eligible clients in the states and
to extend relief to Century or its subject of an exemption under section territories by service area(s) identified
successor in name. The operative 408(a) of the Act and/or section below. The exact amount of
language of the exemption has been 4975(c)(2) of the Code does not relieve congressionally appropriated funds and
amended accordingly to reflect the a fiduciary or other party in interest or the date, terms and conditions of their
possible name change. disqualified person from certain other availability for calendar year 1999 have
The Department has considered the provisions to which the exemptions not been determined.
entire record, including the comment does not apply and the general fiduciary DATES: Request for Proposals (RFP) will
submitted by the applicant, and has responsibility provisions of section 404 be available after May 15, 1998. Notice
determined to grant the exemption as of the Act, which among other things of Intent to Compete is due July 1, 1998.
proposed, with the one change as require a fiduciary to discharge his Grant proposals must be received at LSC
described above. duties respecting the plan solely in the offices by 5:00 p.m. EDT, July 22, 1998.
EFFECTIVE DATE: This exemption is interest of the participants and ADDRESSES: Legal Services
effective June 10, 1997. beneficiaries of the plan and in a Corporation—Competitive Grants, 750