PLR 200133050: Employer may return certain nondeductible pension contributions

Plain-English summary

The IRS reviewed a defined benefit pension plan's request to return employer contributions made for a plan year. It ruled that contributions up to $49,756 could be treated as disallowed, to the extent they were not deductible, solely for purposes of applying Rev. Rul. 91-4. Returning no more than that amount would not harm the plan's qualified status if the reversion occurred within one year after the letter. If the amount was not returned by the employer's tax filing date, including granted extensions, § 4972 tax would apply. The ruling also required the letter to be attached to Schedule B of Form 5500.

Ruling snapshot

• Question: Could the plan return certain employer contributions without losing its qualified status?
• Outcome: Approved conditionally, for a return of no more than $49,756 within the stated period.
• Key authorities: IRC §§ 404, 4972; Rev. Rul. 91-4.

Full text (IRS public release)

200133050

Internal Revenue Service Department of the Treasury

Significant Index No. 0404.00-00 Washington, DC 20224

Contact Person:
Telephone Number:

In reference to: -
Date: EP:RA:T:A2
MAY 22 2001

In re:

Dear

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 April 1, 2000. -

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 $49,756, which were made for the plan year commencing April 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 $49,756 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)

200133050

When filing Form 5500 for the plan year commencing April 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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