§ 2570.35 Information to be included in applications for individual exemptions only. ( a ) Except as provided in paragraph (c) of this section, every application for an individual exemption must include, in addition to the information specified in § 2570.34, the following information: ( 1 ) The name, address, email address, telephone number, and type of plan or plans to which the requested exemption applies;
( 2 ) The Employer Identification Number (EIN) and the plan number (PN) used by such plan or plans in all reporting and disclosure required by the Department (individuals should not submit Social Security numbers);
( 3 ) Whether any plan or trust affected by the requested exemption is currently under investigation for violation of, or has ever been found by the Department, the Internal Revenue Service, or by a court to have violated, the exclusive benefit rule of Code section 401(a), Code section 4975(c)(1), ERISA sections 406 or 407(a), or 5 U.S.C. 8477(c)(3), including a description of the circumstances surrounding such violation;
( 4 ) Whether any relief under ERISA section 408(a), Code section 4975(c)(2), or 5 U.S.C. 8477(c)(3) has been requested by, or provided to, the applicant or any parties in interest (or their affiliates) involved in the exemption transaction and, if so, the exemption application number or the prohibited transaction exemption number;
( 5 ) Whether the applicant or any party in interest (or its affiliates) involved in the exemption transaction is currently, or has been within the last five years, a defendant in any lawsuits or criminal actions concerning its conduct as a fiduciary or party in interest with respect to any plan (other than lawsuits with respect to a routine claim for benefits), and a description of the circumstances of the lawsuits or criminal actions;
( 6 ) ( i ) Whether the applicant (including any person described in § 2570.34(b)(6)(ii)) or any of the parties in interest involved in the exemption transaction has, within the last 13 years, been: ( A ) Convicted or released from imprisonment, whichever is later, as a result of any felony involving abuse or misuse of such person's position or employment with an employee benefit plan or a labor organization; any felony arising out of the conduct of the business of a broker, dealer, investment adviser, bank, insurance company, or fiduciary; income tax evasion; any felony involving the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds or securities; conspiracy or attempt to commit any such crimes or a crime of which any of the foregoing crimes is an element; or any crime identified in ERISA section 411, regardless of whether the conviction occurred in a U.S. or foreign jurisdiction; or
( B ) Convicted by a foreign court of competent jurisdiction or released from imprisonment, whichever is later, as a result of any crime, however denominated by the laws of the relevant foreign government, that is substantially equivalent to an offense described in paragraph (a)(6)(i)(A) of this section and a description of the circumstances of any such conviction in paragraph (a)(6)(i)(A) or this paragraph (a)(6)(i)(B); and
( ii ) For purposes of this paragraph (a), a person shall be deemed to have been “convicted” from the date of the judgment of the trial court (or the date of the judgment of any court in a foreign jurisdiction that is the equivalent of a U.S. Federal or state trial court), regardless of whether that judgment remains under appeal and regardless of whether the foreign jurisdiction considers a trial court judgment final while under appeal;
( 7 ) Whether, within the last five years, any plan affected by the exemption transaction, the applicant, or any party in interest (or its affiliates) involved in the exemption transaction, has been under investigation or examination by, or has been engaged in litigation or a continuing controversy with, the Department, the Internal Revenue Service, the Justice Department, the Pension Benefit Guaranty Corporation, the Federal Retirement Thrift Investment Board, or any other regulatory body involving compliance with provisions of ERISA, FERSA, the Code, or any other Federal or state law involving: ( i ) Compliance with provisions of ERISA or FERSA;
( ii ) Representation of or position or employment with any employee benefit plan, including investigations or controversies involving ERISA or the Code, or any other Federal or state law;
( iii ) Conduct of the business of a broker, dealer, investment adviser, bank, insurance company, or fiduciary;
( iv ) Income tax evasion; or
( v ) Any felony or conspiracy involving the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds or securities. If so, the applicant must provide a brief statement describing the investigation, examination, litigation, or controversy. The Department reserves the right to require the production of additional information or documentation concerning any of the matters in this paragraph (a)(7). In this regard, a denial of the exemption application may result from an applicant's failure to provide additional information requested by the Department;
( 8 ) Whether any plan affected by the requested exemption has experienced a reportable event under ERISA section 4043, and, if so, a description of the circumstances of any such reportable event;
( 9 ) Whether a notice of intent to terminate has been filed under ERISA section 4041 with respect to any plan affected by the requested exemption, and, if so, a description of the circumstances for the issuance of the notice;
( 10 ) Names, addresses, phone numbers, and email addresses of all parties in interest (or their affiliates) involved in the exemption transaction;
( 11 ) The estimated number of participants and beneficiaries in each plan affected by the requested exemption as of the date of the application;
( 12 ) The percentage of the fair market value of the total assets of each affected plan that is involved in the exemption transaction. If the exemption transaction includes the acquisition of an asset by the plan, the fair market value of the asset to be acquired must be included in both the numerator and denominator of the fraction;
( 13 ) Whether the exemption transaction has been consummated or will be consummated only if the exemption is granted;
( 14 ) If the exemption transaction has already been consummated: ( i ) The circumstances which resulted in plan fiduciaries causing the plan(s) to engage in the exemption transaction before obtaining an exemption from the Department;
( ii ) Whether the exemption transaction has been terminated;
( iii ) Whether the exemption transaction has been corrected as defined in Code section 4975(f)(5);
( iv ) Whether Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, has been filed with the Internal Revenue Service with respect to the exemption transaction; and
( v ) Whether any excise taxes due under Code section 4975(a) and (b), or any civil penalties due under ERISA section 502(i) or (l) by reason of the exemption transaction have been paid. If so, the applicant should submit documentation (*e.g.,* a canceled check) demonstrating that the excise taxes or civil penalties were paid;
( 15 ) The name of every person who has authority or investment discretion over any plan assets involved in the exemption transaction and the relationship of each such person to the parties in interest involved in the exemption transaction and the affiliates of such parties in interest;
( 16 ) Whether the assets of the affected plan(s) are invested, directly or indirectly, in: ( i ) loans to any party in interest (or its affiliates) involved in the exemption transaction;
( ii ) Property leased to any party in interest (or its affiliates) involved in the exemption transaction; or
( iii ) Securities issued by any party in interest (or its affiliates) involved in the exemption transaction, and, if such investments exist, a statement for each of these three types of investments which indicates: ( A ) The type of investment to which the statement pertains;
( B ) The aggregate fair market value of all investments of this type as reflected in the plan's most recent annual report;
( C ) The approximate percentage of the fair market value of the plan's total assets as shown in such annual report that is represented by all investments of this type; and
( D ) The statutory or administrative exemption covering these investments, if any;
( 17 ) The approximate aggregate fair market value of the total assets of each affected plan;
( 18 ) The person(s) or entity who will bear the costs of: ( i ) The exemption application;
( ii ) Any commissions, fees, or costs associated with the exemption transaction, and any related transaction; and
( iii ) Notifying interested persons;
( 19 ) Whether an independent fiduciary is or will be involved in the exemption transaction and, if so, the names of the persons who will bear the cost of the fee payable to such fiduciary; and
( 20 ) Any prior transaction between: ( i ) The plan or plan sponsor; and
( ii ) Any party in interest (or its affiliates) involved in the exemption transaction.
( b ) Each application for an individual exemption must also include: ( 1 ) True copies of all contracts, deeds, agreements, and instruments, as well as relevant portions of plan documents, trust agreements, and any other documents bearing on the exemption transaction;
( 2 ) A discussion of the facts relevant to the exemption transaction that are reflected in the documents listed in paragraph (b)(1) of this section and an analysis of their bearing on the requested exemption;
( 3 ) A copy of the most recent financial statements of each plan affected by the requested exemption; and
( 4 ) A net worth statement with respect to any party that is providing a personal guarantee with respect to the exemption transaction.
( c ) Special rules for applications for individual exemption involving pooled funds are as follows: ( 1 ) The information required by paragraphs (a)(8) through (12) of this section is not required to be furnished in an application for individual exemption involving one or more pooled funds.
( 2 ) The information required by paragraphs (a)(1) through (7) and (13) through (19) of this section and by paragraphs (b)(1) through (3) of this section must be furnished in reference to the pooled fund, rather than to the plans participating therein. (For purposes of this paragraph (c)(2), the information required by paragraph (a)(16) of this section relates solely to other pooled fund transactions with, and investments in, parties in interest involved in the exemption transaction which are also sponsors of plans which invest in the pooled fund.)
( 3 ) The following information must also be furnished— ( i ) The estimated number of plans that are participating (or will participate) in the pooled fund; and
( ii ) The minimum and maximum limits imposed by the pooled fund (if any) on the portion of the total assets of each plan that may be invested in the pooled fund.
( 4 ) Additional requirements for applications for individual exemptions involving pooled funds in which certain plans participate are as follows: ( i ) This paragraph (c)(4) applies to any application for an individual exemption involving one or more pooled funds in which any plan participating therein— ( A ) Invests an amount which exceeds 20 percent of the total assets of the pooled fund; or
( B ) Covers employees of: ( 1 ) The party sponsoring or maintaining the pooled fund, or any affiliate of such party; or
( 2 ) Any fiduciary with investment discretion over the pooled fund's assets, or any affiliate of such fiduciary.
( ii ) The exemption application must include, with respect to each plan described in paragraph (c)(4)(i) of this section, the information required by paragraphs (a)(1) through (3), (5) through (7), (10), (12) through (16), (18), and (19) of this section. The information required by this paragraph (c)(4)(ii) must be furnished in reference to the plan's investment in the pooled fund (*e.g.,* the names, addresses, phone numbers, and email addresses of all fiduciaries responsible for the plan's investment in the pooled fund (paragraph (a)(10) of this section), the percentage of the assets of the plan invested in the pooled fund (paragraph (a)(12) of this section), whether the plan's investment in the pooled fund has been consummated or will be consummated only if the exemption is granted (paragraph (a)(13) of this section, etc.)).
( iii ) The information required by this paragraph (c)(4) is in addition to the information required by paragraphs (c)(2) and (3) of this section relating to information furnished by reference to the pooled fund.
( 5 ) The special rule and the additional requirements described in paragraphs (c)(1) through (4) of this section do not apply to an individual exemption request solely for the investment by a plan in a pooled fund. Such an application must provide the information required by paragraphs (a) and (b) of this section.
( d ) ( 1 ) Generally, the Department will consider exemption requests for retroactive relief only when: ( i ) The safeguards necessary for the grant of a prospective exemption were in place at the time the parties entered into the exemption transaction; and
( ii ) The plan and its participants and beneficiaries have not been harmed by the exemption transaction. An applicant for a retroactive exemption must demonstrate that the responsible plan fiduciaries acted in good faith by taking all appropriate steps necessary to protect the plan from abuse, loss, and risk at the time of the exemption transaction. An applicant should further explain and describe whether the exemption transaction could have been performed without engaging in a prohibited exemption transaction, and whether the goals of the transaction could have been achieved through an alternative transaction that served the aims of the plan equally well.
( 2 ) Among the factors that the Department will consider in making a finding that an applicant acted in good faith include the following: ( i ) The involvement of an independent fiduciary before an exemption transaction occurs who acts on behalf of the plan and is qualified to negotiate, approve, and monitor the exemption transaction; provided, however, the Department may consider, at its sole discretion, an independent fiduciary's appointment and retrospective review after completion of the exemption transaction due to exigent circumstances;
( ii ) The existence of a contemporaneous appraisal by a qualified independent appraiser or reference to an objective third party source, such as a stock or bond index;
( iii ) The existence of a bidding process or evidence of comparable fair market transactions with unrelated third parties;
( iv ) That the applicant has submitted an accurate and complete exemption application that contains documentation of all necessary and relevant facts and representations upon which the applicant relied. In this regard, the Department will accord appropriate weight to facts and representations which are prepared and certified by a source independent of the applicant;
( v ) That the applicant has submitted evidence that the plan fiduciary did not engage in an act or transaction with respect to which the fiduciary should have known, consistent with its ERISA fiduciary duties and responsibilities, was prohibited under ERISA section 406 and/or Code section 4975. In this regard, the Department will accord appropriate weight to the submission of a contemporaneous, reasoned legal opinion of counsel, upon which the plan fiduciary relied in good faith before engaging in the act or transaction;
( vi ) That the applicant has submitted a statement of the circumstances which prompted the submission of the application for exemption and the steps taken by the applicant about the exemption transaction upon discovery of the violation;
( vii ) That the applicant has submitted a statement, prepared and certified by an independent person familiar with the types of transactions for which relief is requested, demonstrating that the terms and conditions of the exemption transaction (including, in the case of an investment, the return in fact realized by the plan) were at least as favorable to the plan as that obtainable in a similar transaction with an unrelated party; and
( viii ) Such other undertakings and assurances with respect to the plan and its participants that may be offered by the applicant which are relevant to the criteria under ERISA section 408(a) and Code section 4975(c)(2).
( 3 ) The Department, as a general matter, will not consider requests for retroactive exemptions if transactions or conduct with respect to which an exemption is requested resulted in a loss to the plan, as determined pursuant to the facts existing at the time of the exemption application. In addition, the Department will not consider requests for exemptions if the transactions are inconsistent with the general fiduciary responsibility provisions of ERISA sections 403 or 404 or the exclusive benefit requirements of Code section 401(a).