SEC Division of Investment Management staff letter: Mutual of America Life Insurance Company — SEC — US

IJUN 1 7 '993
PUBLIC
RESPONSE OF THE OFFICE OF Our Reference ~o. IP-4-93 INSURANCE PRODUCTS Mutual of Ameri~a Life DIVISION OF INVESTMENT MANAGEMENT Insurance Company Your letters of January 5, 1993 and July 22, 1992 request

assurance that we would not recommend enforcement action to the

Commission if Mutual of America Life Insurance Company (the

"Company") offers a group variable accumulation annuity contract

("Contract") in connection with certain church-sponsored, defined

benefit pension plans meeting the requirements of Section 414(e)

of the Internal Revenue Code of 1986, as amended (the "Code"),

without registering the Contract or the issuing separate account

under the federal sec~rities laws. 1/ Specifically, as explained

in your letters, the Company intends to rely on the exemptions

from registration afforded in connection with the funding of certain qualified plans under Section 3 (a) (2) of the Securities Act of 1933 ("Securities Act"), Section 3 (a) (12) of the Securities Exchange Act of 1934 ("Exchange Act") i and Section

3 (c) (11) of the Investment Company Act of 1940 ("Investment Company Act"). You represent that the Company will not issue a

Contract unless it bel ieves, upon reasonable inquiry, that the

pension plan board or other body making the decision to invest in

the Contract has such knowledge and experience in financial and

business matterg that it is able to rèpresent adequately its

interest and those of persons participating in the plan or has

obtained the advice of a person (other than the Company) who, by

virtue of knowledge and experience in financial matters, is able

to represent adequately the interest of the plan and participants

in such plan.

On the basis of the facts and representations' in your

letters, and without necessarily agreeing with your legal

analysis, the Division of Investment Management will not

recommend enforcement action to the Commission if the Company

offers the Contract as proposed without registering the separate

account under the Investment Company Act. This position is based

particularly on the following conditions:

(1) the separate account will be used for no other purpose

than to fund (i) the Church-sponsored pension plans and (ii)

plans meeting the requirements of Sections 401 or 404(a) (2) of the Code i

1/ Your letter of July 22, 1992 indicates that your request is

the same in all material respects as a no-action letter

granted to Aetna Life Insurance Company (avail. May 21, 1984). Please be advised that i consistent with the position taken in that letter and in accordance with note 2 of your

July 22 letter i this response does not in any way address

the applicability of Section 3 (a) (8) of the Securities Act

to any interest held in the Company's general account.

i:
(2) the Company will limit its offer or sale of the Contract to churkh-sponsored pension plans which are functionally

equivalent to section 401 (a) plans and which do not involve

the exercise of individual employee discretion, particularly

wi th respect to choosing investment vehicles to fund the plans, allocating funds among subaccounts, or making

wi thdrawals under the Contract i (3) the Contract will not be offered or sold in connection

with retirement plans described in sections 403 (b) or 408 of

the Code ¡and

(4) no part of the corpus or income of the church-sponsored plans shall be used or diverted to any purpose other than

for the exclusive benefit of the employers' employees or

their beneficiaries prior to the satisfaction of all the

plans' liabilities to such employees and beneficiaries.

The Division of Corporation Finance has asked us to advise

you that, based on the facts presented, but without necessarily

concurring in your analysis, that Division will not recommend any

enforcement action to the Commission if the Company, in reliance

upon your opinion as counsel that registration is not required,

offers and sells the Contract to the church-sponsored pension

plans as described in your letters without complying with the

registration provisions of the Securities Act. In reaching this

position, the Division of corporation Finance particularly notes

that the Company will offer the Contract to church-sponsored

pension plans only if such plans meet the conditions outlined in

your letters.

The Division of Market Regulation has asked us to advise you

that the staff will not recommend enforcement action to the

Commission under the Securities Exchange Act if the Company

treats the Contract as an "exempted security" as defined in

section 3(a)(12)(A)(iv) of that Act.

Because these positions are based on the representations in

your letters, different facts or conditions might require a

different conclusion. Further i this response only expresses the

Divisions' positions on enforcement action and does not purport

to express any I~ conclusion on the questions presented. .- \ /7 i-~, lI / , /7.:' ,- ~', Jí' " i:, i j, ' (I, i I C Ie '/ ~, L l'

i Attorney / i Joyce M. Pickholz ( /

~~ l ""/ i- . --.. // I
/ i

, June 17, 1993

ACT~J9 . rJ-? /9~ô UNITED STATES SECTION 8((/) (I)) SECURITIES AND EXCHANGE COMMISSION .'

RULE WASHINGTON. D.C. 20549 PUBLIC ~/ po ~A DIVISION OF AVAILABILITY . (0 - !)-t"J rMENT MANAGEMENT J-"ne 17, 1993

steven B. Boehm, Esq.

Sutherland, Asbill & Brennan

1275 Pennsylvania Avenue, N.W.

Washington, D. C. 20004-2404

Re: Mutual of America Life Insurance Company

Dea r Mr. Boehm:

Enclosed is our response to your letters of July 22, 1992

and January 5, 1993. By incorporating our answer into the

enclosed photocopy of your letters, we avoid having to recite or

summarize the facts involved.

In any future correspondence on this matter, please refer to our Reference No. IP-4-93. Sincerely, /' "" Wendell M. Faria .,, Deputy Chief Office of Insurance Products

Enclosure

. ,l.

i
SUTHERLAND, ASBILL & BRENNAN
1275 PENNSYLVANIA AVENUE, N. W.
';ABLE: SUTAB WASHINGTON WASHINGTON, D. C. 2004-2404 999 PEACHTREE STREET. N.E. TELEX: 89-501 ATLANTA, GEORGIA 30309-3996

FACSIMILE: (202) 383-0100 1404' 853-BOOO (2021637-3593 January 5, 1993

DAVID R. WOODWARD ,/ .: .'. DIRECT LINE: (202) 383-0170 _ /. ".:'.' c...'. "'/ :,/L:/' 1933 Act - 3 (a) (2) ." i ... - '.. ~ ( ~ /l/ i 1/,,'... -;". " .. .'_ (,/ (/c .. \ ' , .' 1940 Act - 3 (c) (11) /', ,; l ,;? /.1/ ,,-' ., // J. l ../ . 1'",,;' /.:~ _.;'_J ..,,"/ . / '

/.' . Joyce M. pickholz

Office of Insurance Products and

Legal Compl iance

Division of Investment Management

Securities and Exchange Commission

450 Fifth Street, N. W.

Room 10163, Mail stop 10-6

Washington, D. C. 20549
Re: Mutual of America Life InsuranceCompany--Offers

and Sales of Group Annuity Contract to Church

Pension Plans

Dear Ms. pickholz:
Pursuant to our telephone conversation on December 24,

1992, this letter clarifies our letter of July 22, 1992, which,

on behalf of our client, Mutual of America Life Insurance Company

("Mutual of America"), requested a letter from the staff (the

"Staff") of the Securities and Exchange commission. (the

"Commission") stating that the Staff will not recommend that the

Commission take any enforcement action if Mutual of America

issues a group variable accumulation annuity contract (the

"Contract") to dertain church-sponsored pension plans under the

circumstances set forth in that letter without complying with the

registration provisions of the Securities Act of 1933 and offers

interests in a separate account (the "Separate Account") under

the Contract without registration under the provisions of the

Investment Company Act of 1940.

In accordance with our conversation, this letter

clarifies three points in our July 22 letter. First, this will

confirm that Mutual of America will limit its offer and sale of

the Contract to church pension plans which are functionally

equivalent to section 401 (a) plans and which do not involve the

exercise of individual employee discretion with respect to

involvement in the Contract.

Second, we represent that the Separate Account will be

used for no other purpose than funding (i) the churCh-sponsored

pension plans described in our July 22 letter and (ii) Section

401 and 404 (a) (2) plans and their contracts.

, Joyce M. Pickholz
J-anUâL ý-s,-9-3
Third, the Contract will not be offered in connection

with retirement plans described in sections 403 (b) and 408 of the

Internal Revenue Code of 1986.

If you have any other questions concerning this request, please call Gregory J . Lyons at (202) 383-0660 or the

undersigned at (202) 383-0170.

~¡.r' truly you.r, s '!
U¡t¿J~
David R. Woodward

cc: Robert L.D. Colby/Division of Market Regulation

Cecilia D. Blye/Division of Corporation Finance

Roger Napoleon/Mutual of America

Gregory J. Lyons

SUTHERLAND, ASBILL & BRENNAN
1275 PENNSYL~AN-',A-A~E.NUE,,_hlW

':ABLE: SUTAB WASHINGTON WASHI~GTON, D. C. 2004-2404 999 PEACHTREE STREET, N.E. TELEX: 89-501 ATLANTA. GEORGIA 30309-3996

FACSIMILE: (202) 383-0100 (404) 853-8000 (202) 6.37-3593

DAVID R. WOODWARD
DIRECT LINE: (2021 383-0170 1933 Act - 3 (a) (2) 1940 Act - 3 (c) (11)

Office of Insurance Products and

Legal Compliance

Division of Investment Management

Securities and Exchange Commission

450 Fifth Street, N.W.

~~/0?b
Room 10167, Mail stop 10-6

Washington, D.C. 20549
. o'!... 0:._. .
Re: Mutual of America Life Insurance Company--Offers

and Sales of Group Annuity Contract to Church

Pension Plans

Dear Mr. Kirsch:
On behalf of our client, Mutual of America Life

Insurance Company ("Mutual of America"), we respectfully request

a letter from the staff (the "Staff") of the Securities and

Exchange Commission (the "Commission") that the Staff will not

recommend that the Commission take any enforcement ,action if

Mutual of America issues a group variable accumulation annuity

contract (the "Contract") to certain church-sponsored pension

plans under the circumstances set forth below without complying

with the registration provisions of the Securities Act of 1933

(the "1933 Act") and offers interests in a separate account (the

"Separate Account") under the Contract without registration under

the provisions of the Investment Company Act of 1940 (the "1940

Act"). We believe that the request should be granted because it

is consistent with a prior no-action position taken by the Staff

and because no pub
I ic pol icy interest would be served by requiring registration in this situation.

Mutual of America is an insurance company organized

under the laws of the State of New York. It offers and sells

pension, retirement, and related benefits on a group and

individual basis for employees of not-for-profit, social welfare,

charitable, religious, educational, and government organizations.

The Separate Account is divided into nine distinct subaccounts,

each of which corresponds to a different investment alternative.

Assets allocated to a subaccount are invested at net asset value

in an underlying investment company. Four subaccounts invest in

funds of a registered, affiliated investment company of Mutual of America. Five subaccounts currently invest in shares of registered, unaffiliated investment companies. Prospectuses for

each of the investment companies in which Separate Account

invests are distributed to plan sponsors or board of trustees of

plans which are prospective purchasers together with a general

descriptive brochure for the Contract.

The assets of the Separate Account are the property of . Mutual of America. The Separate Account assets attributable to

the Contract are not chargeable with liabilities arising out of

any other business Mutual of America may conduct. The income,

capital gains ~ and capital losses of the Separate Account are

credited to or charged against the net assets held in the Separate Account without regard to the income~ capital gains~ and

capital losses arising out of any other business that Mutual of

America may conduct.Y Mutual of America and the Separate

Account are subject to supervision and regulation by the

Superintendent of Insurance of the State of New York, and by the

insurance regulatory authorities of each state in which Mutual of

America is licensed to do business.

The Contract is designed to fund benefits provided by

defined benefit pension plans that are qualified under section

401 (a) of the Internal Revenue Code (the "Code"), or that al-low

the deduction of the employer's contributions under Section

Y See New York Insurance Law § 4240, authorizing life insurance companies domiciled in New York to establish separate accounts in

conjunction with certain annuity and life insurance products, and

New York Insurance Department Regulations 47 (11 NYCRR 50), 77

(11 NYCRR 54), 127 (ii NYCRR 44) ,and 128 (ll NYCRR 97), setting

forth the standards under which insurers may establ ish and

maintain such accounts. section 4240(a) (12) states that, "if and

to the extent so provided in the applicable agreements, the

assets in a separate account shall not be chargeable with

liabilities arising out of any other business of the insurer."

Section 7435 of the Insurance Law, dealing with insolvent

insurers, states that assets in separate accounts maintained

under section 4240 are not to be treated as part of the estate of

the insurer and that separate account contract liabilities will be satisfied out of assets in. the separate account. sections 4240(a) (12) and 7435 have been interpreted by the New York

Insurance Department to cause the assets in a separate account

established pursuant to section 4240 to retain their separate

the event of the insolvency of the issuing insurer, to

the extent provided in the policies or contracts issued in

connection with the separate account. Thus, a liquidator of an

insurer could not use the separate account assets to make up any

deficiency in the insurer's general account except to the extent

permi tted by such pol icies and contracts.

status in

404 (a) (2) of the Code, by providing monthly annuity payments which begin at a future date. The Contract permits contributions

to be made, generally, in such amounts and at such times as may

be required to fund a plan. Contributions may be accumulated on

a completely variable basis, a completely fixed basis, or a

combination variable and fixed basis. A plan may choose to

allocate its contributions among the nine subaccounts of the

Separate Account or Mutual of America's general account (the

"General Account").Y Amounts accumulated under the Contract

may be applied to provide monthly annuity payments to

participants under a plan. Annuity payments made under the

Contract are made on a fixed basis only. The Contract is offered

without registration under the 1933 Act in reliance upon the

exemption provided for under Section 3 (a) (2) of that Act, and the

Separate Account is not registered under the 1940 Act in reliance

upon the exemption provided under section 3 (c) (11) of that Act. certain large defined benefit retirement plans

sponsored by churches have expressed an interest in investing in

the Contract. Benefits under these plans are funded entirely by

employer contributions. Each plan provides in whole or in part

for defined benefits which must be paid to plan participants

regardless of the investment performance of the plan's assets.

The choice and supervision of investments for each church pension

plan are made or are approved by the plan's pension board. with

respect to each plan, either the plan's pension board is

comprised of persons with significant financial sophistication

and investment experience, or the board has access to

professional investment advisers in connection with investment

decisions. No such investment adviser is or will be affiliated

wi th Mutual of America.
Mutual of America proposes to offer the Contract,

including both General Account and Separate Account investment

facilities, to certain of these church pension plans, subject to

the following conditions:

The plan must be a "church plan" as that term is

defined under Section 414 (e) of the Codei

Y By this letter, Mutual of America does not seek any

assurances from the Staff as to the application of Section

3 (a) (8) to any interest in the General Account.

C~i~~ord E. Kirsch

The plan must have been establ ished by an employer

for the exclusive benefit of its employees~ or their

beneficiaries for the purpose of distributing to such employees

or their beneficiaries the corpus and income of the funds

accumulated under such plan, and under such plan it must be

impossible prior to the satisfaction of all liabilities with

respect to such employees and their beneficiaries, for any part

of the corpus or income to be used for, or diverted to, purposes

other than the exclusive benefit of such employees or their beneficiaries;
3. The church plan pension board or plan sponsor, and

not individual plan participants, will be responsible for

choosing investment vehicles to be used to fund the plan,

including, if applicable, the Contract and for making any

decision to allocate funds among subaccounts or to withdraw funds from the Contract.

Mutual of America must have reasonable grounds to

believe and, after making reasonable inquiry, shall believe

immediately prior to issuance of the Contract that the church

plan pension board or other body making the decision to invest in

the Contract has such knowledge and experience in financial and

business matters that it is able to represent adequately its interest and those of persons participating in the' plan, or, in connection with entering into the proposed Contract, has obtained

the advice of a person (other than Mutual of America, any

affiliate of Mutual of America, or any person with a material

business relationship with Mutual of America) who is, by virtue

of knowledge and experience in financial and business matters,

able to represent adequately the interests of the plan and

participants in such plan; and

The plan must have assets of at least $10 million.

DISCUSSION
section '3 (a) (2) of the 1933 Act exempts from the
registration provisions of that Act any security arising out of a

contract issued by an insurance company in connection with an

~ section 414 (e) (3) (B) of the Code defines the term "employee"

to include "a duly ordained, commissioned, or licensed minister

of a church in the exercise of his ministry regardless of the

source of his compensation." Thus, even if a participant in a

church pension plan is not directly paid by the church or

association of churches sponsoring the plan, that participant is

nonetheless deemed an employee for purposes of section 414 (e) .

July 2 2~1-9-9-2

employee benefit plan qualified under section 401 of the Internal Revenue Code and with certain governmental plans defined in Section 414 (d) of the Internal Revenue Code. Section 3 (c) (11) of the 1940 Act provides a similar exemption under that Act for

interests in insurance company separate accounts.Y

In connection with these exemptions, Mutual of America has not been able to determine whether particular church pension plans meet the qualification requirements under Section 401(a) of the Code because most church pension plans, unlike most private pension plans, do not obtain letters from the Internal Revenue Service to confirm their status under section 401 (a) . Furthermore, it is not entirely clear how the application of the

requirements of section 401 (a) should be applied to church

pension plans. The unique nature of church employment

arrangements prevents many church pension plans from satisfying

all of the technical Section 401 (a) requirements applicable to

private pension plans. Nonetheless, even if it cannot be

conclusively shown that a church pension plan meets all of the

Section 401 (a) eligibility requirements, we believe that neither

the Contract nor the Separate Account, if offered pursuant to the

conditions described in this letter, needs to be registered under the 1933 Act or the 1940 Act to satisfy'the policies underlying the exemptions provided by Section 3 (a) (2) and 3 (c) (11) of those Acts.

The Requested No-Action Position is Consistent
with the Policies Underlying the Section 3 (a) (2) and Section 3 (c) (11) Exemptions The section 3 (a) (2) and 3 (c) (11) exemptions are based on the ability of certain qualified pension plans to fend for

themselves in evaluating potential investment vehicles. The

exemptions contemplate that investment decisions for the plans

will be made by a plan sponsor or a board of plan trustees, which

is presumed to possess such financial sophistication and

bargaining power that it can protect the interests of plan

participants without the need for an issuer to incur the expenses

of complying with the specified disclosure and other procedures

Y section 3 (c) (11) of the 1940 Act contains an exemption from

the definition of "investment company" that is essentially

parallel to the one provided in Section 3(a) (2) of the 1933 Act,

except that Section 3 (c) (11) also includes separate accounts that fundH.R.10 plans.

required by registration.~ Finally, the administrative rules that preceded the enactment of the section 3 (a) (2) and 3 (c) (11) exemptions were premised upon the assumption that the qualified plans to which unregistered investment vehicles could be sold would be large, and that the risk of paying defined benefits would fallon the employer.~ ' Mutual of America proposes to offer the Contract. to

certain church pension plans under conditions that are intended

that such offer will be made only to those plans that

are functionally equivalent to the qualified plans described in

to assure

sections 3 (a) (2) and 3 (c) (11) in terms of the protections afforded participants which obviate the need for registration.

Thus, Mutual of America i s offer would be 1 imi ted to plans under which a church pension board (or other plan sponsor), and not

individual plan participants, is responsible for choosing

investments to be used to fund the plan, including, if applicable, the Contract.

Additionally, Mutual of America must have reasonable

grounds to believe that the church pension board or other plan

representative responsible for deciding to invest in the Contract

has such knowledge and experience in financial and business

matters that it is able to represent adequately its interest and

those of participants in the plan. A further condition limiting

Mutual of. America i s offer of Contract only to church pension plans with assets in excess of $10 million provides additional

assurances with respect to the financial sophistication of the

plans and their ability to exercise bargaining power in

protection of their interests. Each church pension plan will be

composed of individuals with experience in managing such

investments or will have access to the advice of a professional

investment adviser with respect to its investment under the

Contract.
~ See, SEC Division of Investment Management, Protecting

Investors: A Half Century of Investment Company Requlation,

Chapter 3, text at note 51 (p.132) (May 1992). For example, the

bill adding qualified employee benefit plans managed by insurance

to the section 3 (a) (2) exemption in 1970 specifically

excluded H.R. 10 (or Keogh) Plans from the exemption "because of

their fairly complex nature as an equity investment and the

likelihood that they could be sold to self-employed persons,

unsophisticated in the securities field." Senate Report No. 9l184 (May 21, 1969) accompanying the Investment Company Amendments

Act of 1970. 1970 U.S. Code Congo and Admin. News 4897, 4922.

companies
~ Id. at text following note 40 (p. 130) .

Finally, Mutual of America is subject to supervision

and regulation by the Superintendent of Insurance of the State of

New York, and by the insurance regulatory authorities of each

state in which Mutual of America is licensed to do business.

Mutual of America will furnish each church plan the. same

materials it currently furnishes to all employee benefit plans

that are qualified under Section 401 of the Code or that allows

deduction of the employer's contributions under Section 404 (a) (2) of the Code. The materials will include the Contract itself, explanatory materials prepared in connection therewith,

prospectuses for the investment companies iii which the Separate

Account invests, and any other material requested by the plan

relating to the operation of the Contract.

The Requested No-Action position is Consistent

with the Commissions's Policy

The Staff has previously granted no-action relief under sections 3 (a) (2) of the 1933 Act and 3 (c) (11) of the 1940 Act to allow insurance contract funding of church pension plans in

circumstances materially the same as those described in this

letter. In that case, the plans at issue were functionally

equivalent to section 401(a) qualified plans, even though they

did not meet all of the technical requirements of Section 401 (a)

of the Code.

In Aetna Life Insurance Company (avail. May 21, 1984)

the Staff of the Division of Investment Management granted no-

action relief in connection with facts that are materially the

same as those set forth herein. In that instance, the Staff took

a no-action position with respect to Aetna's proposed offer and

sale of variable annuity contracts to certain Section 414 (e)

qualified church pension plans with assets over $10 million and a

financially sophisticated board of trustees which made or approved all investment decisions for their plan, including the decision to invest in an Aetna annuity contract. The Staff recognized that the conditions under which the Aetna contracts would be offered satisfied the policy of ensuring investor protection that underlies Section 3 fa) (2) of the 1933 Act and section 3 (c) (11) of the 1940 Act. The conditions under which Mutual of America will offer the Contract to church pension plans are subject to the same material requirements as set forth in the Aetna letter. Congress similarly recognized the policy underlying

section 3 (a) (2) when it extended the exemption provided by that
section to governmental plans qualified under Section 414 (d) of

JUly 22, 19-9-2

the Code.Y In a letter to Senator William Proxmire, the

Chairman of the Senate Committee on Banking, Housing and Urban

Affairs, Harold M. Williams, then Chairman of the Commission,

explained the purpose of such amendments as, follows:

section 414 (d) of the Internal Revenue Code provides

special tax treatment for state and local employee

benefit plans, and was added to the Code in 1978 in

recognition of the fact that it is often difficult if

not impossible for such plans to meet all the qualifi~

cation requirements of Section 401. . . . Section 1 of

the Bill would make exemption from registration for

bank and insurance company funding of public pension

plans turn upon the plans' compliance with the

substance of section 401 as it is material to the

operation of the securities laws, rather than on their

compliance with all the technical requirements of that

Section. Thus, it would provide an exemption from

registration for bank and insurance company funding of

section 414 (d) plans which have been established for

the exclusive purpose of providing retirement benefits

to employees or their beneficiaries and whose funds are

segregated and cannot be diverted to other

purposes. . . .

section 414(e) church plans, like section 414(d)

governmental plans, are essentially modified 401 (a) qualified

plans and are subject to all the provisions of Section 401 (a)

certain provisions from which they are specifically

exempted by the Code. The flush language immediately following

other than

states that certain provisions of section

401(a) apply only to pension plans that are subject to Code

section 411. Church plans, like section 414 (d) governmental

plans, áre not subject to section 411,Y which sets forth

section 401 (a) (30)

certain minimum vesting standards that must be met by 401 (a) qualified plans. Therefore church plans qualify for the

Y As pointed out in the supplemental no-action request letter of Aetna Life Insurance dated February 8, 1984, at no time during

the legislative consideration of the 1980 amendments to section

3 (a) (2) was there any discussion of including or excluding church plans from those amendments. Accordingly, one cannot infer from the failure to include such plans in those amendments that

Congress had concluded it would be inappropriate to extend the

exemption to such plans.

Y Code section 411 (e) (1) (B) .

selective exemptions set forth in that Section.V Thus, unlike

pension plans that are subject to Section 411, church plans need not:

provide a joint and survivor annuity benefit or a

pre-retirement survivor annuity benefit if a partici pant dies before retirement;~
2. ensure that participants will receive a benefit,

after a merger or consolidation of the church plan's

trust with another trust, that is equal to or greater

than the benefit to which the participant would have

been entitled immediately prior to the merger or consolidation;lll
3. restrict a participant's ability to assign his or

her benefits;rY

begin benefit payments (unless the participant

elects otherwise) within 60 days of a participant's

65th birthday, tenth year anniversary of plan coverage,

or termination of employment; 131

prohibit decrease of plan benefit payments as a

result of social security payment increases ;.19

prohibit reduction of employer-provided benefits

as a result of a participant's withdrawal of benefits

attributable to his employee contributions;XV or

in the case of a defined benefit plan, obtain

approval of the Pension Benefit Guaranty Corporation to

V The selective exemptions are from provisions paragraphs (11) , (12) , (13) , (14) , (15) , (19) , and (20) of section 401 (a) . ~ Code Section 401 (a) (11) . 11 Code Section 401(a) (12). rY Code Section 401(a) (13). W Code Section 40l(a) (14). W Code section 401(a) (15). XV Code Section 401 (a) (19) .

JUlY 2-¿;9-gi

make a qualified total distribution upon plan

termination. W
Further, like section 414 (d) iovernmental plans, church

plans are exempt from Code Section 410,IU which provides that

401 (a) qualified plans must meet certain minimum participation

standards, requiring, among other things, that eligible employees

over age 21 with more than one year of service with an employer

be entitled to participate in the employer's pension plan.

None of these exemptions would cause a church plan to

fail to provide the basic securities-related protections in the

investment of plan assets that. are afforded participants in a 401 (a) plan. These exempti6nsmerely relate to the timing and form of vesting and payment of benefits under pension plans.

Indeed, as noted, section 414 (d) governmental plans, which are

specifically exempted under Sections 3 (a) (2) and 3 (c) (11), enjoy precisely the same exemptions from Code sections 401(a), 410, and

411 as do section 414 (e) church plans. 18/ Thus, the church plans to which the Contract will be issued are required to

provide the same basic protections to plan participants that the

Commission and Congress have recognized as forming the basis of

the exemptions provided by Section 3 (a) (2) of the 1933 Act and
Section 3 (c) (11) of the 1940 Act.

section 401(a) (1) requires that contributions under the

plan be made by the employer, employees, or both, for the purpose

of distributing to such employees or their beneficiaries the

corpus and income accumulated under such plan. The church

pension plans to which the Contract will be offered will be

funded entirely by employer contributions. section 401 (a) (2) requires that, under the trust formed pursuant to the plan, it

must be impossible, prior to satisfaction of all liabilities with

respect to employees and their beneficiaries under the trust, for

any part of the corpus or income to be used for, or diverted to,

purposes other than for the exclusive benefit of such employees

or their beneficiaries. The church pension plans to which Mutual

of America will offer the Contract will comply with this

requirement as well as with every other provision of section

401 (a) other than those specifically noted above.

W Code section 401 (a) (20) .
1U Code section 410(c) (1) (B). li See Code sections 410(c) (1) (A) and 411(e) (1) (A) and the flush

language immediately following Code section 401 (a) (30) .

In addition to the Aetna no-action letter, the Staff has previously extended the applicability of Section 3 (a) (2) in instances where the protections afforded investors were similar

to the protection~ ensured by that section. The Staff issued a numer of exemptive orders to H.R. 10 ~lans that were not literally covered by section 3 (a) (2).~ The H.R.10 plans that were the subject of those orders were each sponsored either by an

employer engaged in furnishing a service of a type involving

"such knowledge or experience in financial and business matters

that the employer (was) able to represent adequ~tely its

interests and those of its employees,"~ or by an employer that

received the advice of experts who were financially

sophisticated.~ The position taken in those orders was later

made generally applicable and codified as Rule 180.

Thus, the church pension plans described in this letter

will have the same characteristics which Congress and the

Commission have acknowledged to be the basis for the Section

3 (a) (2) and 3 (c) (11) exemptions of insurance company funding of employee benefit plans. Further, those church pension plans will

meet the section 401 (a) requirements that Congress and the

Commission have deemed to be most material to the federal securities laws. Therefore, we respectfully request that the

Staff issue a letter stating that it will not recommend that the

Commission take any action if Mutual of America offers and sells

the Contract to church pension plans under the conditions

described in this letter without compliance with the registration

provisions of the 1933 Act, and, in the case of the Separate

Account offered under the Contract, without compliance with the

provisions of the 1940 Act.

~ Those plans were already covered by section 3 (c) (11) of the 1940 Act which, unlike Section 3 (a) (2), does not exclude H.R.10 plans from its exemption.

201 Release No. 33-6247, 21 SEC Docket 132 (October 14, 1980) i Rule 180(a) (2) (i). ~ See~, Sidley & Austin, Release No. 33-6052 (April 6, 1979); Stroock. Stroock & Lavan, Release No. 33-6063 (April 27,

1979) i Morrison & Forester Retirement Plan, Release No. 33-6226

(July 21, 1980); Monroe Clinic Emplovees' Retirement Plan,

Release No. 33-6174 (Jan. 9, 1980).

If you require any additional information or have any

questions concerning this request, please call Gregory J. Lyons

at (202) 383-0660 or the undersigned at (202) 383-3170.

R. Woodward

cc: Roger NapoleanjMutual of America

Gregory J. Lyons

SUTHERLAND, ASBILL & BRENi-A~

1275 PENNSYLVANIA AVENUE, N. W.

CABLE: SUTA8 WASHINGTON
WASlfNGTO:S, D. C, 200-240 999 PEACHTREE STREET. N.E, TELEX: 89-501 ATLANTA. GEORGIA 30309-3996 FACSIMILE: (202) 383-0100 1.04. 853-8000 '202' 637-3593 January 5, 1993

DAVID R. WOODWARD
DIRECT LINE: (2021 383-0170 1934 Act - § 3 (a) (12) Robert L. D. Colby Chief Counsel OFFICE OF CH'IEF COUNSEL Division of Market Regulation Securities and Exchange Commission JAN 05 1992

450 Fifth Street, N. W.

Room 7115, Mail stop 5-1
C:VISION OF MARKET REGULATION
Washington, D.C. 20549

Re: Mutual of America Life Insurance Company--Offers

and Sales of Group Annuity Contract to Church

Pension Plans

Dear Mr. Colby:

On behalf of our client, Mutual of America Life

Insurance Company ("Mutual of America"), we have attached copies

of two letters to the Division of Investment Management

requesting a letter from the staff (the "Staff") of the

Securities and Exchange Commission (the "Commi.ssion") that the

Staff will not recommend that the Commission take any enforcement

action under the Securities Act of 1933 ("1933 Act") or the

Investment Company Act of
1940 ("1940 Act") if Mutual of America issues a group variable accumulation annuity contract (the "Contract") to certain church-sponsored pension plans under the

circumstances described in the attached letters.

We are expanding our no-action request to ask for

assurance that the Staff will not recommend that the Commission

take any enforcement action under the Securities Exchange Act of

1934 (" 1934 Act") if Mutual of
America treats the Contract as an

"exempted security" under the 1934 Act as defined in Section

3 (a) (12) (A) (iv) of that Act.

We believe that the expanded request should be granted

because the definition of "exempted security" in Section

3 (a) (12) (A) (iv) refers to conditions that are virtually identical

to those contained in Section 3 (a) (2) of the 1933 Act exempting

certain securities from the registration requirements of that

Act, and Section 3 (c) (11) of the 1940 Act excluding certain pooled investment vehicles from that Act's definition of "investment company." (See Interfirst Bank Dallas, pub. avail. Apr. 4, 1983). Moreover, the expanded request is consistent with prior no-action positions taken by the Staff.

.... #
,
.
Robert L. o. Colby

January 5, 1993

In The Idaho First National Bank (pub. avail. Oct. 11,

1988) and Interfirst Bank Dallas, supra, the Staff took no-action

positions with respect to Section 3 (a) (12) in connection with the

operation, without registration under the 1933 or 1934 Acts, of

bank collective trust funds which receive~ assets from

governental plans that were not qualified under section 401(a)

of the Internal Revenue Code of 1986 ("Code"). Those situations

are similar to the Separate Account's receipt of assets from

church-sponsored pension plans as described in Mutual of

America's attached no-action request. In this connection,

,Mutl.al of America represents that the church pension plans to which the Contract will be offered will not be funded in any part

by an annuity contract described in Code Section 403 (b) or tode

section 408.

Additionally, we note that, for the same reasons

expressed in the attached no-action request concerning the 1933

Act and 1940 Act, no public policy interest would be served by

refusing to treat the Contract as an "exempted security" under

the 1934 Act.

If you require any' additional information or have any

questions concerning this request, please call Gregory J. Lyons

at (202) 383-0660 or the undersigned at (202) 383-0170.

Very truly yours,

jftJ
David R. Woodward

cc: Joyce M.Pickholz/Division of Investment Management

Cecilia D. Blye/Division of Corporation Finance

Roger Napoleon/Mutual of America

Gregory J. Lyons

Enclosures