PLR 200328044: Return of specified pension contributions approved

Plain-English summary

An employer asked about returning contributions made to its defined benefit pension plan for the plan year beginning in 2002. The IRS determined that $143,916 in contributions could be considered disallowed solely for purposes of Rev. Rul. 91-4. A return of no more than that amount would not harm the plan's qualified status if it occurred within one year of the letter. The letter cautioned that the § 4972 tax would apply if the money was not returned by the employer's tax filing date, including granted extensions. The IRS did not verify the calculations submitted with the request.

Ruling snapshot

• Question: Could the employer recover specified plan contributions without jeopardizing the pension plan's qualified status?
• Outcome: Approved within the stated dollar limit and one-year period.
• Key authorities: Rev. Proc. 90-49; Rev. Rul. 91-4; IRC § 4972.

Full text (IRS public release)

Significant Index No. 0404.00-00
200328044

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

APR 17 2003

Re:

Dear

This letter is in response to the request, dated February 10, 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 $143,916, 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 $143,916 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). This letter is sent to you pursuant to instructions in a power of attorney (Form 2848) on file. We have sent a copy to the plan sponsor, and to the

2 200328044

If you have any questions. regarding this matter, please contact

. Also, please refer written replies to

Sincerely yours,

Martin L. Pippins, Manager
Employee Plans Actuarial Group 2