Title 29
SECTION 2570.34
2570.34 Information to be included in every exemption application.
§ 2570.34 Information to be included in every exemption application.(a) All applications for exemptions must contain the following information:
(1) The name(s) of the applicant(s);
(2) A detailed description of the exemption transaction including identification of all the parties in interest involved, a description of any larger integrated transaction of which the exemption transaction is a part, and a chronology of the events leading up to the transaction;
(3) The identity of any representatives for the affected plan(s) and parties in interest and what individuals or entities they represent;
(4) The reasons a plan would have for entering into the exemption transaction;
(5) The prohibited transaction provisions from which exemptive relief is requested and the reason why the transaction would violate each such provision;
(6) Whether the exemption transaction is customary for the industry or class involved;
(7) Whether the exemption transaction is or has been the subject of an investigation or enforcement action by the Department or by the Internal Revenue Service; and
(8) The hardship or economic loss, if any, which would result to the person or persons on behalf of whom the exemption is sought, to affected plans, and to their participants and beneficiaries from denial of the exemption.
(b) All applications for exemption must also contain the following:
(1) A statement explaining why the requested exemption would be -
(i) Administratively feasible;
(ii) In the interests of affected plans and their participants and beneficiaries; and
(iii) Protective of the rights of participants and beneficiaries of affected plans.
(2) With respect to the notification of interested persons required by § 2570.43:
(i) A description of the interested persons to whom the applicant intends to provide notice;
(ii) The manner in which the applicant will provide such notice; and
(iii) An estimate of the time the applicant will need to furnish notice to all interested persons following publication of a notice of the proposed exemption in the Federal Register.
(3) If an advisory opinion has been requested by any party to the exemption transaction from the Department with respect to any issue relating to the exemption transaction -
(i) A copy of the letter concluding the Department's action on the advisory opinion request; or
(ii) If the Department has not yet concluded its action on the request:
(A) A copy of the request or the date on which it was submitted together with the Department's correspondence control number as indicated in the acknowledgment letter; and
(B) An explanation of the effect of the issuance of an advisory opinion upon the exemption transaction.
(4) If the application is to be signed by anyone other than an individual party in interest seeking exemptive relief on his or her own behalf, a statement which -
(i) Identifies the individual signing the application and his or her position or title; and
(ii) Explains briefly the basis of his or her familiarity with the matters discussed in the application.
(5)(i) A declaration in the following form:
Under penalty of perjury, I declare that I am familiar with the matters discussed in this application and, to the best of my knowledge and belief, the representations made in this application are true and correct.
(ii) This declaration must be dated and signed by:
(A) The applicant, in its individual capacity, in the case of an individual party in interest seeking exemptive relief on his or her own behalf;
(B) A corporate officer or partner where the applicant is a corporation or partnership;
(C) A designated officer or official where the applicant is an association, organization or other unincorporated enterprise; or
(D) The plan fiduciary that has the authority, responsibility, and control with respect to the exemption transaction where the applicant is a plan.
(c) Specialized statements, as applicable, from a qualified independent appraiser acting solely on behalf of the plan, such as appraisal reports or analyses of market conditions, submitted to support an application for exemption must be accompanied by a statement of consent from such appraiser acknowledging that the statement is being submitted to the Department as part of an application for exemption. Such statements must also contain the following written information:
(1) A copy of the qualified independent appraiser's engagement letter with the plan describing the specific duties the appraiser shall undertake;
(2) A summary of the qualified independent appraiser's qualifications to serve in such capacity;
(3) A detailed description of any relationship that the qualified independent appraiser has had or may have with any party in interest engaging in the transaction with the plan, or its affiliates, that may influence the appraiser;
(4) A written appraisal report prepared by the qualified independent appraiser, acting solely on behalf of the plan, rather than, for example, on behalf of the plan sponsor, which satisfies the following requirements:
(i) The report must describe the method(s) used in determining the fair market value of the subject asset(s) and an explanation of why such method best reflects the fair market value of the asset(s);
(ii) The report must take into account any special benefit that the party in interest or its affiliate(s) may derive from control of the asset(s), such as from owning an adjacent parcel of real property or gaining voting control over a company; and
(iii) The report must be current and not more than one year old from the date of the transaction, and there must be a written update by the qualified independent appraiser affirming the accuracy of the appraisal as of the date of the transaction. If the appraisal report is a year old or more, a new appraisal shall be submitted to the Department by the applicant.
(5) If the subject of the appraisal report is real property, the qualified independent appraiser shall submit a written representation that he or she is a member of a professional organization of appraisers that can sanction its members for misconduct;
(6) If the subject of the appraisal report is an asset other than real property, the qualified independent appraiser shall submit a written representation describing the appraiser's prior experience in valuing assets of the same type; and
(7) The qualified independent appraiser shall submit a written representation disclosing the percentage of its current revenue that is derived from any party in interest involved in the transaction or its affiliates; in general, such percentage shall be computed by comparing, in fractional form:
(i) The amount of the appraiser's projected revenues from the current federal income tax year (including amounts received from preparing the appraisal report) that will be derived from the party in interest or its affiliates (expressed as a numerator); and
(ii) The appraiser's revenues from all sources for the prior federal income tax year (expressed as a denominator).
(d) For those exemption transactions requiring the retention of a qualified independent fiduciary to represent the interests of the plan, a statement must be submitted by such fiduciary that contains the following written information:
(1) A signed and dated declaration under penalty of perjury that, to the best of the qualified independent fiduciary's knowledge and belief, all of the representations made in such statement are true and correct;
(2) A copy of the qualified independent fiduciary's engagement letter with the plan describing the fiduciary's specific duties;
(3) An explanation for the conclusion that the fiduciary is a qualified independent fiduciary, which also must include a summary of that person's qualifications to serve in such capacity, as well as a description of any prior experience by that person or other demonstrated characteristics of the fiduciary (such as special areas of expertise) that render that person or entity suitable to perform its duties on behalf of the plan with respect to the exemption transaction;
(4) A detailed description of any relationship that the qualified independent fiduciary has had or may have with the party in interest engaging in the transaction with the plan or its affiliates;
(5) An acknowledgement by the qualified independent fiduciary that it understands its duties and responsibilities under ERISA in acting as a fiduciary on behalf of the plan rather than, for example, acting on behalf of the plan sponsor;
(6) The qualified independent fiduciary's opinion on whether the proposed transaction would be in the interests of the plan and of its participants and beneficiaries, and protective of the rights of participants and beneficiaries of such plan, along with a statement of the reasons on which the opinion is based;
(7) Where the proposed transaction is continuing in nature, a declaration by the qualified independent fiduciary that it is authorized to take all appropriate actions to safeguard the interests of the plan, and shall, during the pendency of the transaction:
(i) Monitor the transaction on behalf of the plan on a continuing basis;
(ii) Ensure that the transaction remains in the interests of the plan and, if not, take any appropriate actions available under the particular circumstances; and
(iii) Enforce compliance with all conditions and obligations imposed on any party dealing with the plan with respect to the transaction; and
(8) The qualified independent fiduciary shall submit a written representation disclosing the percentage of such fiduciary's current revenue that is derived from any party in interest involved in the transaction or its affiliates; in general, such percentage shall be computed by comparing, in fractional form:
(i) The amount of the fiduciary's projected revenues from the current federal income tax year that will be derived from the party in interest or its affiliates (expressed as a numerator); and
(ii) The fiduciary's revenues from all sources (excluding fixed, non-discretionary retirement income) for the prior federal income tax year (expressed as a denominator).
(e) Specialized statements, as applicable, from other third-party experts, including but not limited to economists or market specialists, submitted on behalf of the plan to support an application for exemption must be accompanied by a statement of consent from such expert acknowledging that the statement prepared on behalf of the plan is being submitted to the Department as part of an application for exemption. Such statements must also contain the following written information:
(1) A copy of the expert's engagement letter with the plan describing the specific duties the expert will undertake;
(2) A summary of the expert's qualifications to serve in such capacity; and
(3) A detailed description of any relationship that the expert has had or may have with any party in interest engaging in the transaction with the plan, or its affiliates, that may influence the actions of the expert.
(f) An application for exemption may also include a draft of the requested exemption which describes the transaction and parties in interest for which exemptive relief is sought and the specific conditions under which the exemption would apply.