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Rev. Proc. 75-26


Rev. Proc. 75-26; 1975-1 C.B. 722

DATED
DOCUMENT ATTRIBUTES
  • Cross-Reference

    26 CFR 601.201: Rulings and determination letters.

    (Also Part I, Section 4975.)

  • Code Sections
  • Language
    English
  • Tax Analysts Electronic Citation
    not available
Citations: Rev. Proc. 75-26; 1975-1 C.B. 722

Amplified by Rev. Proc. 93-23

Rev. Proc. 75-26 1

Section 1. Purpose.

The purpose of this Revenue Procedure is to set forth the general procedures of the Department of Labor and the Internal Revenue Service for the processing of applications for exemption under section 408(a) of the Employee Retirement Income Security Act of 1974 (Public Law 93-406), hereinafter referred to as "the Act," and section 4975(c)(2) of the Internal Revenue Code of 1954 as added by the Act.

Sec. 2. Background and Definitions.

.01 Section 408(a) of the Act provides that the Secretary of Labor may grant a conditional or unconditional exemption respecting any fiduciary or transaction, or class of fiduciaries or transactions, from all or part of the restrictions imposed by sections 406 and 407(a) of the Act.

Section 4975(c)(2) of the Code provides that the Secretary of the Treasury or his delegate may grant a conditional or unconditional exemption respecting any disqualified person or transaction, or class of disqualified persons or transactions, from all or part of the restrictions imposed by section 4975(c)(1) of the Code.

.02 The Secretary of Labor has delegated his functions under section 408(a) of the Act to the Assistant Secretary of Labor for Labor-Management Relations.

.03 The Secretary of the Treasury has delegated his functions under section 4975(c)(2) of the Code to the Commissioner of Internal Revenue.

.04 Unless otherwise provided in this procedure, the term "Secretary" shall mean the Assistant Secretary of Labor for Labor-Management Relations and the Commissioner of Internal Revenue collectively.

.05 If an exemption or application for an exemption relates solely to section 408(a) of the Act, the term "Secretary" shall mean the Assistant Secretary of Labor for Labor-Management Relations.

.06 If an exemption or application for exemption relates solely to section 4975(c)(2) of the Code, the term "Secretary" shall mean the Commissioner of Internal Revenue.

.07 The terms "party in interest" or "disqualified person" include a fiduciary.

.08 Each application considered by the Secretary will be assigned an identifying number. Such number may be referred to in lieu of the description required by section 4.06(12) of this Revenue Procedure.

Sec. 3. Persons Who May Apply for Exemptions.

.01 An exemption proceeding under this Revenue Procedure may be initiated by either Secretary on his own motion.

.02 An exemption proceeding under this Revenue Procedure shall be initiated by the Secretary upon the application of:

(1) Any party in interest or disqualified person with respect to a plan, who is or may be a party to the prohibited transaction or transactions for which an exemption is sought; or

(2) In the case of an application for exemption with respect to a class of fiduciaries, class of disqualified persons, or class of transactions, in addition to any person described in paragraph (1) above, an association or organization representing parties in interest or disqualified persons who may be parties to such prohibited transaction or transactions.

.03 An application by or for a person described in 3.02(1) or 3.02(2) must be signed by the applicant or by his authorized representative. If the application is signed by a representative of the applicant, he must be:

(1) an attorney who is a member in good standing of the bar of the highest court of any State, possession, territory, Commonwealth, or the District of Columbia, and who files with the Service a written declaration that he is currently qualified as an attorney and he is authorized to represent the principal;

(2) a certified public accountant who is duly qualified to practice in any State, possession, territory, Commonwealth, or the District of Columbia, and who files with the Service a written declaration that he is currently qualified as a certified public accountant and he is authorized to represent the principal; or

(3) a person, other than an attorney or certified public accountant, enrolled to practice before the Internal Revenue Service, and who files with the Internal Revenue Service a written declaration that he is currently enrolled (including in the declaration either his enrollment number or the expiration date of his enrollment card) and that he is authorized to represent the principal. (See Treasury Department Circular No. 230. Revised, 1966-2 C.B. 1171, as amended, 1967-1 C.B. 433, and 1970-2 C.B. 644, for the rules on who may practice before the Internal Revenue Service.) The above requirements do not apply to an individual representing his full time employer, or to a bona fide officer, administrator, trustee, etc., representating a corporation, trust, estate, association, or organized group including a labor organization.

.04 An application for exemption relating to an individual transaction will not ordinarily be considered separately if a class exemption which would encompass the individual transaction either (1) has been the subject of an exemption proceeding or (2) is under consideration by the Secretary.

Sec. 4. Instructions to Applicants.

.01 If an exemption is sought under both section 408(a) of the Act and section 4975(c)(2) of the Code, two copies of the applications shall be filed with: Exemption Application (Dual), Office of Employee Benefits Security, Labor-Management Services Administration, U.S. Department of Labor, Washington, D.C. 20216 and two copies shall be filed with: Internal Revenue Service, Attention E:EP:T, 1111 Constitution Avenue, N.W., Washington, D.C. 20224.

.02 If an exemption is sought solely under section 408(a) of the Act and not under 4975(c)(2) of the Code, two copies of the application shall be filed with: Exemption Application, Office of Employee Benefits Security, Labor-Management Services Administration, U.S. Department of Labor, Washington, D.C. 20216.

.03 If an exemption is sought with respect to an individual retirement account described in section 408(a) of the Code, or an individual retirement annuity described in section 408(b) of the Code, or any other transaction covered solely by section 4975(c)(1) of the Code and not under section 406 or 407(a) of the Act, two copies of the application shall be filed with: Internal Revenue Service, Attention E:EP:T, 1111 Constitution Avenue, N.W., Washington, D.C. 20224.

.04 Any exemption application which is filed solely under section 408(a) of the Act with respect to a transaction which would also be prohibited under the corresponding provisions of section 4975(c)(1) of the Code, and any application which is filed solely under section 4975(c)(2) of the Code with respect to a transaction which would also be prohibited under the corresponding provisions of section 406 of the Act, shall be treated as an application for exemption under both section 408(a) of the Act and section 4975(c)(2) of the Code.

.05 An application submitted under this Revenue Procedure shall contain all of the information specified in subsection .06 if such application is for an exemption other than for a class of transactions, class of fiduciaries, or class of disqualified persons. If the application is for a class of transactions, class of fiduciaries, or class of disqualified persons, the application need contain only the information required under paragraphs (4) through (10), (16), and (17) of subsection .06. If any of the information specified in subsection .06 cannot be furnished, an explanation of why it cannot be furnished shall be provided.

.06 Information to be submitted with application for exemption.

(1) The name and type of plan or plans (e.g. pension, profit-sharing, or welfare plan);

(2) The Employer Identification Number (EIN), the Plan Number (PN) used by the plan in reporting to the Internal Revenue Service on Form 4848, and the WP number, if one was assigned under the Welfare and Pension Plans Disclosure Act;

(3) The estimated number of plan participants;

(4) A detailed description of the transaction and the fiduciary or disqualified person, or class thereof, for which an exemption is requested;

(5) The possible violation or violations of the prohibited transaction provisions for which exemptions are requested;

(6) Whether such transaction or transactions have been already entered into or are transactions which the parties intend to enter into if the exemption is granted; (7) Whether the transaction or transactions are customary for the industry or class involved;

(8) The hardship or economic loss, if any, which would result to the person or persons on whose behalf the exemption is sought, to the plan, and to its participants and beneficiaries from denial of the application;

(9) At the option of the applicant, a draft setting forth the exemption proposed by the applicant;

(10) A statement explaining why such exemption would be:

(a) Administratively feasible;

(b) In the interest of the plan or plans which would be affected if the exemption were granted and of their participants and beneficiaries; and

(c) Protective of the rights of the participants and beneficiaries of the affected plan or plans;

(11) Whether, to the best knowledge of the applicant, the plan or trust has ever been found by the appropriate Secretary or by a court to have violated the exclusive benefit rule of section 401(a) of the Code, or to have engaged in a prohibited transaction under section 503(b) of the Code or corresponding provisions of prior law, section 4975(c)(1) of the Code, or sections 406 or 407(a) of the Act;

(12) Whether, to the best knowledge of the applicant, any relief under section 408(a) of the Act or section 4975(c)(2) of the Code has been requested by, or provided to, the applicant or any of the parties on behalf of whom the exemption is sought and, if so, a description of such relief (see section 2.08 of this Revenue Procedure);

(13) Whether, to the best knowledge of the applicant, the applicant or any of the parties to the transaction sought to be exempted is currently, or has been within the last five years, a defendant in any lawsuit concerning such person's conduct as a fiduciary, party in interest, or disqualified person with respect to any plan;

(14) Whether, to the best knowledge of the applicant, the affected plan or plans have experienced any reportable events under section 4043 of the Act;

(15) Whether, to the best knowledge of the applicant, a notice of intent to terminate has been filed respecting the affected plan or plans under section 4041 of the Act;

(16) With respect to the notification of interested persons in accordance with section 7 of this Revenue Procedure, the applicant shall include the following: (a) A description of the interested persons to whom notice will be provided;

(b) The manner by which such notice will be provided; and

(c) The time period within which such notice will be given (see section 7.03 of this Revenue Procedure);

(17) A certification by the applicant that, to the best of the applicant's knowledge, the application is accurate and complete.

Sec. 5. Conferences.

.01 The applicant shall indicate whether a conference is desired in the event the Secretary contemplates not granting the requested exemption. Any such conference shall be held in Washington, D.C.

.02 If more than one applicant has requested an exemption with respect to the same or similar classes of transactions, and the Secretary contemplates not granting the exemption, and if more than one applicant has requested a conference, such conferences will be scheduled, insofar as possible, as a joint conference with all such applicants present.

.03 An applicant is entitled to only one conference. If an application falls within section 4.01 of this Revenue Procedure, such conference shall be a joint conference with representatives of both the Department of Labor and the Internal Revenue Service.

.04 In any case in which a hearing is held, an applicant shall not be entitled to a conference.

Sec. 6. Publication of Notice in the Federal Register.

.01 Before granting an exemption under this Revenue Procedure, the Secretary shall publish notice of the pendency of such exemption in the FEDERAL REGISTER, stating the earliest date upon which a decision may be entered.

.02 The notice shall provide that any interested person may, within the period of time specified therein, submit to the Secretary in writing any comments relating to the proposed exemption, including a statement of the nature of the person's interest in the matter.

.03 Where the exemption involves one or more transactions described in section 406(b) of the Act or section 4975(c)(1)(E) or (F) of the Code between a plan and a fiduciary, the notice shall also provide that any interested person may, within the period of time specified therein, request that a hearing be held, stating the reasons for requesting such a hearing and the nature of the person's interest in the matter.

Sec. 7. Notification of Interested Persons.

.01 If a notice is published in the FEDERAL REGISTER in accordance with section 6 of this Revenue Procedure, the applicant shall give adequate notice to interested persons of the pendency of the exemption. If the Secretary deems the notice that the applicant proposes to give to interested persons pursuant to section 4.06(16) of this Revenue Procedure to be inadequate, the Secretary shall, prior to the publication of the pendency of the exemption, specify in writing to the applicant the notice that would be considered to be adequate, and shall secure the applicant's written confirmation that such notice will be provided.

.02 The notice specified in section 4.06(16) shall not be considered adequate unless:

(1) It contains a copy of the notice of pendency of such exemption published in the FEDERAL REGISTER in accordance with section 6.01 of this Revenue Procedure;

(2) It timely informs interested persons of their right to comment (and in the case of transactions prohibited by section 406(b) of the Act or section 4975(c)(1)(E) or (F) of the Code, of their right to request a hearing), within the period set forth in the notice of the pendency of the exemption; and

(3) In the case of a plan or plans, any of the participants of which are members of one or more employee organizations within the meaning of section 3(4) of the Act, it provides such organizations a copy of such notice.

.03 No exemption will be granted unless the applicant provides evidence satisfactory to the Secretary that adequate notice was timely provided to interested persons.

Sec. 8. Inaccuracies, Changes of Fact, and Documentation.

.01 If any material fact contained in the application or any documents or testimony adduced by the applicant in support thereof is discovered by the applicant to be inaccurate, or if any such fact substantially changes, the applicant shall promptly notify the Secretary in writing and, in the case of an inaccuracy, shall include a statement of the reasons for such inaccuracy.

.02 The Secretary may require the applicant to provide such documentation as is considered necessary to verify the statements contained in the application.

Sec. 9. Effect of Exemptions.

.01 An exemption which is granted shall be effective to the extent and under the conditions described in such exemption. Except in the case of an exemption granted with respect to a class of fiduciaries or disqualified persons, or class of transactions, an exemption may be relied upon only by the parties so exempted or the parties to the transaction so exempted.

.02 The Secretary may at any time revoke or limit an exemption. Before ordering any such revocation or limitation, the Secretary shall give the applicant and any persons who filed comments or testified at a hearing with respect to the application for exemption at least 30 days notice of the proposed revocation or limitation, including the reasons therefor, and an opportunity to comment with respect to such revocation or limitation.

.03 Except in rare or unusual circumstances, any revocation or limitation of an exemption will not be given retroactive effect, if the party or parties covered by the exemption have relied in good faith upon the exemption, and such retroactive revocation or limitation would result in significant injury to them. Retroactive revocation or limitation may be ordered, however, with respect to one or more parties covered by the exemption where there has been a misstatement or omission of a material fact with respect to the exemption. In addition, retroactive revocation or limitation may be ordered where there has been a substantial change in a material fact with respect to the exemption and such change has not been reported as required by section 8.01 of this Revenue Procedure; but such revocation or limitation will not be made retroactive prior to the time of such substantial change of material fact.

Sec. 10. Public Inspection.

Applications for exemption (including documents submitted in support of such applications) and all comments and records of hearings and conferences (if any) pertaining thereto shall be open to public inspection at the Internal Revenue Service National Office Reading Room, 1111 Constitution Avenue, N.W., Washington, D.C. 20224, except that applications submitted under section 4.02 of this Revenue Procedure shall be open to public inspection at the Office of Employee Benefits Security, Labor-Management Services Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20216.

Sec. 11. Effective Date.

This Revenue Procedure is effective on April 25, 1975.

1 Also released as TIR-1367, dated April 25, 1975.

DOCUMENT ATTRIBUTES
  • Cross-Reference

    26 CFR 601.201: Rulings and determination letters.

    (Also Part I, Section 4975.)

  • Code Sections
  • Language
    English
  • Tax Analysts Electronic Citation
    not available
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