PLR 200323044: Return of pension contributions approved up to $584,000

Plain-English summary

An employer asked whether it could recover contributions to its defined benefit pension plan for the plan year beginning January 1, 2002. The IRS determined that $584,000 could be treated as disallowed solely for purposes of Revenue Ruling 91-4. Returning no more than that amount within one year of the letter would not harm the plan's qualified status. The letter warned that an excise tax under section 4972 would apply if the money was not returned by the employer's tax filing date, including granted extensions. The IRS did not approve the accuracy of the calculations submitted with the request.

Ruling snapshot

• Question: Could the employer recover specified pension contributions without affecting the plan's qualified status?
• Outcome: Approved a return of up to $584,000 within one year of the letter.
• Key authorities: Rev. Proc. 90-49; Rev. Rul. 91-4; IRC § 4972.

Full text (IRS public release)

200323044

Significant Index No. 0404.00-00

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

MAR 12 2003

[illegible handwritten notation]

Re:

Dear

This letter is in response to your request, dated January 27, 2003, with respect to the above-referenced defined benefit pension plan pursuant to Rev. Proc. 90-49, 1990-2 C.B. 620, for the plan year commencing January 1, 2002.

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. This ruling is directed only to the organization 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.

Based upon the information submitted, we have determined that contributions amounting to $584,000, which were made for the plan year commencing January 1, 2002, may be considered as disallowed solely for the purpose of applying Rev. Rul. 91- 4, 1991-1 C.B. 57. Therefore, the return of contributions not exceeding $584,000 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.

When filing Form 5500 for the plan year commencing January 1, 2002, a copy of this letter must be attached to the Schedule B (Actuarial Information). A copy of this letter should be sent to the enrolled actuary servicing the plan. We have sent a copy to the

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200323044

If you have any questions regarding this matter, please contact

Also, please refer written replies to

Sincerely yours,
Martin L. Pippins
Martin L. Pippins, Manager
Employee Plans Actuarial Group 2