PLR 200133049: Superseding ruling permits return of pension contributions

Plain-English summary

The IRS issued a superseding ruling for a defined benefit pension plan and considered whether employer contributions could be returned under Rev. Proc. 90-49. It ruled that contributions totaling no more than $90,000, consisting of $45,000 for the 1999 plan year and $45,000 for the 2000 plan year, could be treated as disallowed to the extent they were not deductible for purposes of Rev. Rul. 91-4. The return would not harm the plan's qualified status if completed within one year after the letter. If the contributions were not returned by the employer's tax filing date, including granted extensions, § 4972 tax would apply.

Ruling snapshot

• Question: Could specified employer contributions be returned without adversely affecting the pension plan's qualified status?
• Outcome: Approved conditionally, for a return of no more than $90,000 within the stated period.
• Key authorities: IRC §§ 404, 4972; Rev. Proc. 90-49; Rev. Rul. 91-4.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury

Significant Index No. 0404.00-00 200133049

Washington, DC 20224

Person to Contact:
Telephone Number:

Refer Reply to:
TEP:RA:T:A2
MAY 22 2001

In re:

This letter is in response to your request with respect to the above-referenced defined benefit pension plan pursuant to Revenue Procedure 90-49 for the plan year commencing January 1, 2000, and supersedes our ruling letter dated April 20, 2001.

Rev. Proc. 90-49 sets forth the procedure whereby, under certain circumstances, a disallowance of the deduction of employer contributions to a qualified defined benefit pension plan may be obtained; thereby, fulfilling a condition under which such contributions could revert to the employer.

Based upon the information submitted, we have determined that contributions amounting to $90,000, $45,000 of which were made for the plan year commencing January 1, 1999, and
$45,000 of which were made for the plan year commencing January 1, 2000, may be considered as disallowed, to the extent that they are not deductible, solely for the purpose of applying Rev. Rul. 91-4, 1991-1 C.B. 57. Therefore, the return of contributions not exceeding $90,000 would not adversely affect the qualified status of the plan, provided this reversion occurs no later than one year from the date of this letter. (However, if it is not returned by your tax filing date, including extensions filed for and granted, the tax under section 4972 would apply.) In granting this approval, we are not expressing any opinion as to the accuracy or acceptability of any calculations or other material submitted with your request.

This ruling is directed only to the taxpayer that requested it. Section 6110(k)(3) of the Internal Revenue Code provides that it may not be used or cited by others as precedent.

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(2)
200133049

When filing Form 5500 for the plan year commencing January 1, 2000, a copy of this letter must be attached to the Schedule B (Actuarial Information). We have sent a copy to the

Sincerely yours,

Martin L. Pippins
Manager, Actuarial Group 2

Tax Exempt & Government Entities
Division

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