PLR 200229055: Pension plan may return specified employer contributions

Plain-English summary

A defined benefit pension plan sought permission to return employer contributions that were not deductible. The IRS determined that the specified contributions could be considered disallowed, to the extent not deductible, solely for applying Revenue Ruling 91-4. Returning no more than the specified amount would not harm the plan's qualified status if the return occurred within one year of the letter. The letter warns that section 4972 tax would apply if the funds were not returned by the employer's tax filing date, including granted extensions. The IRS did not validate the submitted calculations.

Ruling snapshot

• Question: May the plan return the specified employer contributions without losing qualified status?
• Outcome: Approved, subject to the amount and timing conditions
• Key authorities: IRC §§ 404, 4972; Rev. Proc. 90-49; Rev. Rul. 91-4

Full text (IRS public release)

Significant Index No. 0404.00-00

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

APR 26 2002

200229055

[illegible]

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,

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 $ which were made for the plan year commencing January 1, 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 $ 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.

200229055

2

When filing Form 5500 for the plan year commencing January 1, , a copy of this letter must be attached to the Schedule B (Actuarial Information). We have sent a copy to the Area Office If you require further assistance in this matter, please contact

Sincerely yours,

Martin L. Pippins
Manager, Actuarial Group 2