Adoption of Amendment to Prohibited Transaction Exemption 2006-06; (PTE 2006-06) For Services Provided in Connection With the Termination of Abandoned Individual Account Plans, 58629-58631 [E8-23429]

Download as PDF Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Notices Missouri) 1027–1035 S. Main St., Joplin, 08001024 DEPARTMENT OF THE INTERIOR National Park Service St. Louis Independent City Farm and Home Savings and Loan Association, 1001 Locust St., St. Louis (Independent City), 08001025 National Register of Historic Places; Notification of Pending Nominations and Related Actions Nominations for the following properties being considered for listing or related actions in the National Register were received by the National Park Service before September 20, 2008. Pursuant to section 60.13 of 36 CFR Part 60 written comments concerning the significance of these properties under the National Register criteria for evaluation may be forwarded by United States Postal Service, to the National Register of Historic Places, National Park Service, 1849 C St. NW., 2280, Washington, DC 20240; by all other carriers, National Register of Historic Places, National Park Service, 1201 Eye St. NW., 8th floor, Washington DC 20005; or by fax, 202–371–6447. Written or faxed comments should be submitted by October 22, 2008. J. Paul Loether, Chief, National Register of Historic Places/ National Historic Landmarks Program. Chiricahua National Monument Historic Designed Landscape, (Historic Park Landscapes in National and State Parks MPS) 12856 E. Rhyolite Canyon Rd., Willcox, 08001020 COLORADO Weld County Clubhouse—Student Union, (New Deal Resources on Colorado’s Eastern Plains MPS) Between 18th & 19th Sts., & 8th & 10th Aves., Greeley, 08001021 LOUISIANA Assumption Parish LaBarre House, 4371 LA 1, Napoleonville, 08001019 MARYLAND Montgomery County Krieger, Seymour, House, 9739 Brigadoon Dr., Bethesda, 08001022 MISSOURI mstockstill on PROD1PC66 with NOTICES Greene County Ambassador Apartments, (Springfield MPS) 1235 E. Elm St., Springfield, 08001023 VerDate Aug<31>2005 18:23 Oct 06, 2008 Jkt 217001 SOUTH DAKOTA McPherson County Leola Post Office, 741 Sherman St., Leola, 05000627 [FR Doc. E8–23663 Filed 10–6–08; 8:45 am] BILLING CODE 4312–51–P DEPARTMENT OF LABOR Employee Benefits Security Administration RIN 1210–ZA12 Cochise County Inter-State Grocer Company Building, (Historic Resources of Joplin, Pierce County McChord Field Historic District, McChord AFB, Tacoma, 08001026 A request for removal has been made for the following resource: [Application Number D–11404] ARIZONA Jasper County WASHINGTON Adoption of Amendment to Prohibited Transaction Exemption 2006–06; (PTE 2006–06) For Services Provided in Connection With the Termination of Abandoned Individual Account Plans Employee Benefits Security Administration, U.S. Department of Labor. ACTION: Adoption of Amendment to PTE 2006–06. AGENCY: SUMMARY: This document amends PTE 2006–06 (71 FR 20856, Apr. 21, 2006), a prohibited transaction class exemption issued under the Employee Retirement Income Security Act of 1974 (ERISA). Among other things, PTE 2006–06 permits a ‘‘qualified termination administrator’’ (QTA) of an individual account plan that has been abandoned by its sponsoring employer to select itself to provide services to the plan in connection with the plan’s termination, and to pay itself fees for those services. In response to changes to the Internal Revenue Code of 1986 (the Code) enacted as part of the Pension Protection Act (PPA) of 2006, PTE 2006–06 is amended to require, as a condition of relief under the exemption, that benefits for a missing, designated nonspouse beneficiary be directly rolled over into an inherited individual retirement plan that fully complies with Code requirements. This amendment also conforms to the Department’s final PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 58629 rule amending regulations concerning the Termination of Abandoned Individual Account Plans at 29 CFR 2578.1 (the QTA Regulation), and the Safe Harbor for Distributions from Terminated Individual Account Plans at 29 CFR 2550.404a–3 (the Safe Harbor Regulation), which appears elsewhere in this issue of the Federal Register. The amendment to the class exemption affects plans, participants and beneficiaries of such plans and certain persons engaging in such transactions. DATES: Effective Date: The class exemption is effective November 6, 2008. FOR FURTHER INFORMATION CONTACT: Brian Buyniski, Office of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor, (202) 693–8545 (this is not a toll-free number). SUPPLEMENTARY INFORMATION: On February 15, 2007, a notice was published in the Federal Register (72 FR 7461) of the pendency before the Department of a proposed amendment to PTE 2006–06. This class exemption (which was granted in connection with the Department’s QTA Regulation, the Department’s Safe Harbor Regulation and the Department’s regulation relating to the Special Terminal Report for Abandoned Individual Account Plans at 29 CFR 2520.103–13,) provides an exemption from the restrictions of section 406(a)(1)(A) through (D), section 406(b)(1) and (b)(2) of the Employee Retirement Income Security Act of 1974 (ERISA or the Act) and from the taxes imposed by section 4975(a) and (b) of the Internal Revenue Code of 1986 (the Code), by reason of section 4975(c)(1)(A) through (E) of the Code. The Department is granting the amendment on its own motion pursuant to section 408(a) of ERISA and section 4975(c)(2) of the Code, and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 10, 1990).1 The notice of pendency gave interested persons an opportunity to comment or request a public hearing on the proposal. No comments were received by the Department, nor were there any requests for a public hearing, in connection with the proposal. Accordingly, the amendment to the class exemption is adopted without change. The Department amends the class exemption to reflect amendments to the 1 Section 102 of the Reorganization Plan No. 4 of 1978 (5 U.S.C. app. at 214 (2000) generally transferred the authority of the Secretary of the Treasury to issue administrative exemptions under section 4975 of the Code to the Secretary of Labor. E:\FR\FM\07OCN1.SGM 07OCN1 58630 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Notices Code that were adopted by enactment of the Pension Protection Act (PPA) of 2006 (Pub. L. 109–280, Aug. 17, 2006). Among other things, section 829 of the PPA amended Code section 402(c) to permit the direct rollover of a deceased plan participant’s benefit from an eligible retirement plan to an individual retirement plan established for the designated nonspouse beneficiary of such participant. In this connection, the Department amends its regulatory safe harbor for distributions from a terminated individual account plan, including an abandoned plan, to require that a deceased participant’s benefit be directly rolled over to an inherited individual retirement plan established to receive a distribution on behalf of a missing, designated nonspouse beneficiary. Similarly, the Department, on its own motion, amends PTE 2006– 06 to ensure conformity with the amended Abandoned Plan Regulations.2 As noted in the proposed amendment, the Department interprets the term ‘‘account’’ (other than an individual retirement plan) in section I(b)(1)(ii) and the term ‘‘other account’’ in section I(b)(3) and (4) of PTE 2006–06 to include an ‘‘inherited individual retirement plan’’ as used in the amended Safe Harbor Regulation in the context of a distribution to a nonspouse beneficiary that does not qualify for small account treatment under the regulatory safe harbor. Consequently, the exemption, prior to amendment, provided relief to a QTA that selected itself as the provider of an inherited individual retirement plan under the Safe Harbor Regulation. Accordingly, the Department has amended the covered transactions described in section I(b)(ii) of PTE 2006–06 to expressly provide that a distribution on behalf of a missing nonspouse beneficiary would qualify for exemptive relief only if directly rolled into an individual retirement plan that satisfies the requirements of new section 402(c)(11) of the Code.3 mstockstill on PROD1PC66 with NOTICES 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 2 See in this issue of the Federal Register Amendments to Safe Harbor for Distributions from Terminated Individual Account Plans and Termination of Abandoned Individual Account Plans to Require Inherited Individual Retirement Plans for Missing Nonspouse Beneficiaries. 3 See also I.R.S Notice 2007–07, 2007–5 I.R.B. 395. VerDate Aug<31>2005 18:23 Oct 06, 2008 Jkt 217001 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. Pursuant to the terms of the Executive Order, it has been determined that this action is not ‘‘significant’’ within the meaning of section 3(f) of the Executive Order, and, therefore, is not subject to review by OMB. Paperwork Reduction Act The information collections included in PTE 2006–06 are currently approved, together with information collections included in the safe harbor and termination of abandoned plans regulations, by the Office of Management and Budget (OMB) under OMB control number 1210–0127. This approval is currently scheduled to expire on June 20, 2009. The specific burden for the exemption includes a recordkeeping requirement for a QTA that terminates an abandoned plan and chooses to distribute the account balances of nonresponsive participants and beneficiaries into proprietary or affiliated individual retirement plans. These amendments do not make any changes to the information collections of the exemption. Accordingly, the Department has not made a submission for OMB approval in connection with the amendments. Background PTE 2006–06 is comprised of five sections. Section I describes the transactions that are covered by the exemption. Section II contains conditions for the provision of termination services and the receipt of fees. Section III contains the conditions for distributions. Section IV contains the general recordkeeping provisions imposed on the QTA, and section V contains definitions. Section I(b) of the exemption currently provides relief from the restrictions of sections 406(a)(1)(A) PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 through (D), 406(b)(1) and 406(b)(2) of the Act and the taxes imposed by section 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(A) through (E) of the Code, for a QTA to use its authority in connection with the termination of an abandoned individual account plan to designate itself or an affiliate as provider of an individual retirement plan 4 or other account to receive the account balance of a participant or beneficiary who does not provide direction as to the disposition of such assets. The other accounts currently permitted by the exemption include: An account (other than an individual retirement plan, as described in paragraph (d)(1)(ii) of the Safe Harbor Regulation) for a distribution made to a distributee other than a participant or spouse; or an interest-bearing, federally insured bank or savings association account maintained in the name of the participant or beneficiary for distributions of $1,000 or less, as described in section (d)(1)(iii) of the Safe Harbor Regulation. C. Discussion of the Amendment Section 829 of the PPA amended section 402(c) of the Code to permit the direct rollover of a deceased participant’s benefit from an eligible retirement plan to an individual retirement plan established on behalf of a designated nonspouse beneficiary of such participant.5 These rollover distributions would not trigger immediate tax consequences and mandatory tax withholding for the nonspouse beneficiary. Accordingly, in light of the favorable changes to the Code, the Department is amending both PTE 2006–06 and the Safe Harbor Regulation to require that a deceased participant’s benefit be directly rolled over to an inherited individual retirement plan established to receive the distribution on behalf of a missing, designated nonspouse beneficiary. General Information The attention of interested persons is directed to the following: (1) The fact that a transaction is the subject of an exemption under section 408(a) of ERISA and section 4975(c)(2) of the Code does not relieve a fiduciary, 4 For purposes of the class exemption, the term ‘‘individual retirement plan’’ means an individual retirement plan described in section 7701(a)(37) of the Code. 5 Section 829 of the Pension Protection Act requires that the individual retirement plan established on behalf of a nonspouse beneficiary must be treated as an inherited individual retirement plan within the meaning of Code § 408(d)(3)(C) and must be subject to the applicable mandatory distribution requirement of Code § 401(a)(9)(B). E:\FR\FM\07OCN1.SGM 07OCN1 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Notices or other party in interest or 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 and the general fiduciary responsibility provisions of section 404 of ERISA which require, among other things, that a fiduciary act prudently and discharge his or her duties respecting the plan solely in the interests of the participants and beneficiaries of the plan. Additionally, the fact that a transaction is the subject of an exemption does not 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) This exemption does not extend to transactions prohibited under section 406(b)(3) of the Act or section 4975(c)(1)(F) of the Code; (3) In accordance with section 408(a) of the Act and section 4975(c)(2) of the Code, the Department finds that the exemption is administratively feasible, in the interests of the plan and of its participants and beneficiaries, and protective of the rights of participants and beneficiaries of such plans; (4) The amendment is applicable to a particular transaction only if the transaction satisfies the conditions specified in the exemption; and (5) The amendment is supplemental to, and not in derogation of, any 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. Amendment Under section 408(a) of the Act and section 4975(c)(2) of the Code and in accordance with the procedures set forth in 29 CFR 2570, Subpart B (55 FR 32836, 32847, August 10, 1990), the Department amends PTE 2006–06 as set forth below: Exemption * * * mstockstill on PROD1PC66 with NOTICES I. Covered Transactions * * * (b) * * * (1) Designate itself or an affiliate as: (i) Provider of an individual retirement plan; (ii) provider, in the case of a distribution on behalf of a designated beneficiary (as defined by section 401(a)(9)(E) of the Code) who is not the surviving spouse of the deceased participant, of an inherited individual retirement plan (within the meaning of VerDate Aug<31>2005 18:23 Oct 06, 2008 Jkt 217001 section 402(c)(11) of the Code) established to receive the distribution on behalf of the nonspouse beneficiary under the circumstances described in section (d)(1)(ii) of the Safe Harbor Regulation for Terminated Plans (29 CFR section 2550.404a–3) (the Safe Harbor Regulation); or (iii) provider of an interest bearing, federally insured bank or savings association account maintained in the name of the participant or beneficiary, in the case of a distribution described in section (d)(1)(iii) of the Safe Harbor Regulation, for the distribution of the account balance of the participant or beneficiary of the abandoned individual account plan who does not provide direction as to the disposition of such assets; V. Definitions * * * (b) The term ‘‘individual retirement plan’’ means an individual retirement plan described in section 7701(a)(37) of the Code. For purposes of section III of this exemption, the term ‘‘individual retirement plan’’ shall also include an inherited individual retirement plan (within the meaning of section 402(c)(11) of the Code) established to receive a distribution on behalf of a nonspouse beneficiary. Notwithstanding the foregoing, the term individual retirement plan shall not include an individual retirement plan which is an employee benefit plan covered by Title I of ERISA. Signed at Washington, DC, this 26th day of September, 2008. Ivan L. Strasfeld, Director, Office of Exemption Determinations. [FR Doc. E8–23429 Filed 10–6–08; 8:45 am] BILLING CODE 4510–29–P 58631 109% of the prior year and 106% of the second prior year for the same period. This causes Alaska to be triggered ‘‘off’’ an EB period. After the week ending October 11, 2008, workers who exhaust their regular UI benefits will no longer be eligible to collect up to an additional 13 weeks of UI benefits under this program. Information for Claimants The duration of benefits payable in the EB Program, and the terms and conditions on which they are payable, are governed by the Federal-State Extended Unemployment Compensation Act of 1970, as amended, and the operating instructions issued to the states by the U.S. Department of Labor. In the case of a state ending an EB period, the State Workforce Agency will furnish a written notice to each individual who is currently filing a claim for EB of the forthcoming end of the EB period and its effect on the individual’s rights to EB (20 CFR 615.13(c)(4)). FOR FURTHER INFORMATION CONTACT: Scott Gibbons, U.S. Department of Labor, Employment and Training Administration, Office of Workforce Security, 200 Constitution Avenue, NW., Frances Perkins Bldg., Room S– 4231, Washington, DC 20210, telephone number (202) 693–3008 (this is not a toll-free number) or by e-mail: gibbons.scott@dol.gov. Signed in Washington, DC, this 29th day of September, 2008. Brent R. Orrell, Deputy Assistant Secretary of Labor for Employment and Training. [FR Doc. E8–23637 Filed 10–6–08; 8:45 am] BILLING CODE 4510–FW–P DEPARTMENT OF LABOR DEPARTMENT OF LABOR Employment and Training Administration Notice of a Change in Status of an Extended Benefit (EB) Period for Alaska Employment and Training Administration, Labor. ACTION: Notice. AGENCY: SUMMARY: This notice announces a change in benefit period eligibility under the EB Program for Alaska. The following change has occurred since the publication of the last notice regarding the State’s EB status: • Based on data reported by the Bureau of Labor Statistics on September 19, 2008, Alaska triggered ‘‘off’’ EB. Alaska’s 3-month total unemployment rate for June, July and August fell to PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 Employment and Training Administration Notice of a Change in Status of an Extended Benefit (EB) Period for North Carolina Employment and Training Administration, Labor. ACTION: Notice. AGENCY: SUMMARY: This notice announces a change in benefit period eligibility under the EB Program for North Carolina. The following change has occurred since the publication of the last notice regarding the State’s EB status: • Based on data reported by the Bureau of Labor Statistics on September 19, 2008, North Carolina’s 3-month E:\FR\FM\07OCN1.SGM 07OCN1

Agencies

[Federal Register Volume 73, Number 195 (Tuesday, October 7, 2008)]
[Notices]
[Pages 58629-58631]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-23429]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Application Number D-11404]
RIN 1210-ZA12


Adoption of Amendment to Prohibited Transaction Exemption 2006-
06; (PTE 2006-06) For Services Provided in Connection With the 
Termination of Abandoned Individual Account Plans

AGENCY: Employee Benefits Security Administration, U.S. Department of 
Labor.

ACTION: Adoption of Amendment to PTE 2006-06.

-----------------------------------------------------------------------

SUMMARY: This document amends PTE 2006-06 (71 FR 20856, Apr. 21, 2006), 
a prohibited transaction class exemption issued under the Employee 
Retirement Income Security Act of 1974 (ERISA). Among other things, PTE 
2006-06 permits a ``qualified termination administrator'' (QTA) of an 
individual account plan that has been abandoned by its sponsoring 
employer to select itself to provide services to the plan in connection 
with the plan's termination, and to pay itself fees for those services. 
In response to changes to the Internal Revenue Code of 1986 (the Code) 
enacted as part of the Pension Protection Act (PPA) of 2006, PTE 2006-
06 is amended to require, as a condition of relief under the exemption, 
that benefits for a missing, designated nonspouse beneficiary be 
directly rolled over into an inherited individual retirement plan that 
fully complies with Code requirements. This amendment also conforms to 
the Department's final rule amending regulations concerning the 
Termination of Abandoned Individual Account Plans at 29 CFR 2578.1 (the 
QTA Regulation), and the Safe Harbor for Distributions from Terminated 
Individual Account Plans at 29 CFR 2550.404a-3 (the Safe Harbor 
Regulation), which appears elsewhere in this issue of the Federal 
Register. The amendment to the class exemption affects plans, 
participants and beneficiaries of such plans and certain persons 
engaging in such transactions.

DATES: Effective Date: The class exemption is effective November 6, 
2008.

FOR FURTHER INFORMATION CONTACT: Brian Buyniski, Office of Exemption 
Determinations, Employee Benefits Security Administration, U.S. 
Department of Labor, (202) 693-8545 (this is not a toll-free number).

SUPPLEMENTARY INFORMATION: On February 15, 2007, a notice was published 
in the Federal Register (72 FR 7461) of the pendency before the 
Department of a proposed amendment to PTE 2006-06. This class exemption 
(which was granted in connection with the Department's QTA Regulation, 
the Department's Safe Harbor Regulation and the Department's regulation 
relating to the Special Terminal Report for Abandoned Individual 
Account Plans at 29 CFR 2520.103-13,) provides an exemption from the 
restrictions of section 406(a)(1)(A) through (D), section 406(b)(1) and 
(b)(2) of the Employee Retirement Income Security Act of 1974 (ERISA or 
the Act) and from the taxes imposed by section 4975(a) and (b) of the 
Internal Revenue Code of 1986 (the Code), by reason of section 
4975(c)(1)(A) through (E) of the Code.
    The Department is granting the amendment on its own motion pursuant 
to section 408(a) of ERISA and section 4975(c)(2) of the Code, and in 
accordance with the procedures set forth in 29 CFR part 2570, subpart B 
(55 FR 32836, 32847, August 10, 1990).\1\ The notice of pendency gave 
interested persons an opportunity to comment or request a public 
hearing on the proposal. No comments were received by the Department, 
nor were there any requests for a public hearing, in connection with 
the proposal. Accordingly, the amendment to the class exemption is 
adopted without change.
    The Department amends the class exemption to reflect amendments to 
the

[[Page 58630]]

Code that were adopted by enactment of the Pension Protection Act (PPA) 
of 2006 (Pub. L. 109-280, Aug. 17, 2006). Among other things, section 
829 of the PPA amended Code section 402(c) to permit the direct 
rollover of a deceased plan participant's benefit from an eligible 
retirement plan to an individual retirement plan established for the 
designated nonspouse beneficiary of such participant. In this 
connection, the Department amends its regulatory safe harbor for 
distributions from a terminated individual account plan, including an 
abandoned plan, to require that a deceased participant's benefit be 
directly rolled over to an inherited individual retirement plan 
established to receive a distribution on behalf of a missing, 
designated nonspouse beneficiary. Similarly, the Department, on its own 
motion, amends PTE 2006-06 to ensure conformity with the amended 
Abandoned Plan Regulations.\2\
---------------------------------------------------------------------------

    \1\ Section 102 of the Reorganization Plan No. 4 of 1978 (5 
U.S.C. app. at 214 (2000) generally transferred the authority of the 
Secretary of the Treasury to issue administrative exemptions under 
section 4975 of the Code to the Secretary of Labor.
    \2\ See in this issue of the Federal Register Amendments to Safe 
Harbor for Distributions from Terminated Individual Account Plans 
and Termination of Abandoned Individual Account Plans to Require 
Inherited Individual Retirement Plans for Missing Nonspouse 
Beneficiaries.
---------------------------------------------------------------------------

    As noted in the proposed amendment, the Department interprets the 
term ``account'' (other than an individual retirement plan) in section 
I(b)(1)(ii) and the term ``other account'' in section I(b)(3) and (4) 
of PTE 2006-06 to include an ``inherited individual retirement plan'' 
as used in the amended Safe Harbor Regulation in the context of a 
distribution to a nonspouse beneficiary that does not qualify for small 
account treatment under the regulatory safe harbor. Consequently, the 
exemption, prior to amendment, provided relief to a QTA that selected 
itself as the provider of an inherited individual retirement plan under 
the Safe Harbor Regulation. Accordingly, the Department has amended the 
covered transactions described in section I(b)(ii) of PTE 2006-06 to 
expressly provide that a distribution on behalf of a missing nonspouse 
beneficiary would qualify for exemptive relief only if directly rolled 
into an individual retirement plan that satisfies the requirements of 
new section 402(c)(11) of the Code.\3\
---------------------------------------------------------------------------

    \3\ See also I.R.S Notice 2007-07, 2007-5 I.R.B. 395.
---------------------------------------------------------------------------

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. 
Pursuant to the terms of the Executive Order, it has been determined 
that this action is not ``significant'' within the meaning of section 
3(f) of the Executive Order, and, therefore, is not subject to review 
by OMB.

Paperwork Reduction Act

    The information collections included in PTE 2006-06 are currently 
approved, together with information collections included in the safe 
harbor and termination of abandoned plans regulations, by the Office of 
Management and Budget (OMB) under OMB control number 1210-0127. This 
approval is currently scheduled to expire on June 20, 2009. The 
specific burden for the exemption includes a recordkeeping requirement 
for a QTA that terminates an abandoned plan and chooses to distribute 
the account balances of nonresponsive participants and beneficiaries 
into proprietary or affiliated individual retirement plans. These 
amendments do not make any changes to the information collections of 
the exemption. Accordingly, the Department has not made a submission 
for OMB approval in connection with the amendments.

Background

    PTE 2006-06 is comprised of five sections. Section I describes the 
transactions that are covered by the exemption. Section II contains 
conditions for the provision of termination services and the receipt of 
fees. Section III contains the conditions for distributions. Section IV 
contains the general recordkeeping provisions imposed on the QTA, and 
section V contains definitions.
    Section I(b) of the exemption currently provides relief from the 
restrictions of sections 406(a)(1)(A) through (D), 406(b)(1) and 
406(b)(2) of the Act and the taxes imposed by section 4975(a) and (b) 
of the Code, by reason of section 4975(c)(1)(A) through (E) of the 
Code, for a QTA to use its authority in connection with the termination 
of an abandoned individual account plan to designate itself or an 
affiliate as provider of an individual retirement plan \4\ or other 
account to receive the account balance of a participant or beneficiary 
who does not provide direction as to the disposition of such assets. 
The other accounts currently permitted by the exemption include: An 
account (other than an individual retirement plan, as described in 
paragraph (d)(1)(ii) of the Safe Harbor Regulation) for a distribution 
made to a distributee other than a participant or spouse; or an 
interest-bearing, federally insured bank or savings association account 
maintained in the name of the participant or beneficiary for 
distributions of $1,000 or less, as described in section (d)(1)(iii) of 
the Safe Harbor Regulation.
---------------------------------------------------------------------------

    \4\ For purposes of the class exemption, the term ``individual 
retirement plan'' means an individual retirement plan described in 
section 7701(a)(37) of the Code.
---------------------------------------------------------------------------

 C. Discussion of the Amendment

    Section 829 of the PPA amended section 402(c) of the Code to permit 
the direct rollover of a deceased participant's benefit from an 
eligible retirement plan to an individual retirement plan established 
on behalf of a designated nonspouse beneficiary of such participant.\5\ 
These rollover distributions would not trigger immediate tax 
consequences and mandatory tax withholding for the nonspouse 
beneficiary. Accordingly, in light of the favorable changes to the 
Code, the Department is amending both PTE 2006-06 and the Safe Harbor 
Regulation to require that a deceased participant's benefit be directly 
rolled over to an inherited individual retirement plan established to 
receive the distribution on behalf of a missing, designated nonspouse 
beneficiary.
---------------------------------------------------------------------------

    \5\ Section 829 of the Pension Protection Act requires that the 
individual retirement plan established on behalf of a nonspouse 
beneficiary must be treated as an inherited individual retirement 
plan within the meaning of Code Sec.  408(d)(3)(C) and must be 
subject to the applicable mandatory distribution requirement of Code 
Sec.  401(a)(9)(B).
---------------------------------------------------------------------------

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of ERISA and section 4975(c)(2) of the Code does 
not relieve a fiduciary,

[[Page 58631]]

or other party in interest or 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 and the general fiduciary responsibility provisions of section 
404 of ERISA which require, among other things, that a fiduciary act 
prudently and discharge his or her duties respecting the plan solely in 
the interests of the participants and beneficiaries of the plan. 
Additionally, the fact that a transaction is the subject of an 
exemption does not 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) This exemption does not extend to transactions prohibited under 
section 406(b)(3) of the Act or section 4975(c)(1)(F) of the Code;
    (3) In accordance with section 408(a) of the Act and section 
4975(c)(2) of the Code, the Department finds that the exemption is 
administratively feasible, in the interests of the plan and of its 
participants and beneficiaries, and protective of the rights of 
participants and beneficiaries of such plans;
    (4) The amendment is applicable to a particular transaction only if 
the transaction satisfies the conditions specified in the exemption; 
and
    (5) The amendment is supplemental to, and not in derogation of, any 
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.

Amendment

    Under section 408(a) of the Act and section 4975(c)(2) of the Code 
and in accordance with the procedures set forth in 29 CFR 2570, Subpart 
B (55 FR 32836, 32847, August 10, 1990), the Department amends PTE 
2006-06 as set forth below:

Exemption * * *

I. Covered Transactions * * *

    (b) * * *
    (1) Designate itself or an affiliate as: (i) Provider of an 
individual retirement plan; (ii) provider, in the case of a 
distribution on behalf of a designated beneficiary (as defined by 
section 401(a)(9)(E) of the Code) who is not the surviving spouse of 
the deceased participant, of an inherited individual retirement plan 
(within the meaning of section 402(c)(11) of the Code) established to 
receive the distribution on behalf of the nonspouse beneficiary under 
the circumstances described in section (d)(1)(ii) of the Safe Harbor 
Regulation for Terminated Plans (29 CFR section 2550.404a-3) (the Safe 
Harbor Regulation); or (iii) provider of an interest bearing, federally 
insured bank or savings association account maintained in the name of 
the participant or beneficiary, in the case of a distribution described 
in section (d)(1)(iii) of the Safe Harbor Regulation, for the 
distribution of the account balance of the participant or beneficiary 
of the abandoned individual account plan who does not provide direction 
as to the disposition of such assets;

V. Definitions * * *

    (b) The term ``individual retirement plan'' means an individual 
retirement plan described in section 7701(a)(37) of the Code. For 
purposes of section III of this exemption, the term ``individual 
retirement plan'' shall also include an inherited individual retirement 
plan (within the meaning of section 402(c)(11) of the Code) established 
to receive a distribution on behalf of a nonspouse beneficiary. 
Notwithstanding the foregoing, the term individual retirement plan 
shall not include an individual retirement plan which is an employee 
benefit plan covered by Title I of ERISA.

    Signed at Washington, DC, this 26th day of September, 2008.
Ivan L. Strasfeld,
Director, Office of Exemption Determinations.
 [FR Doc. E8-23429 Filed 10-6-08; 8:45 am]
BILLING CODE 4510-29-P