PLR 200401016: IRS denies hospital pension funding waiver

Plain-English summary

A hospital sought a waiver of the minimum funding standard for its defined benefit pension plan's year beginning October 1, 2000. It had significant income losses and had filed for Chapter 11 reorganization. The IRS found that the information supplied did not show its hardship was temporary. After the hospital did not arrange a conference within the time allowed, the IRS made its tentative denial final.

Ruling snapshot

• Question: Did the hospital qualify for a waiver of its pension plan's minimum funding standard?
• Outcome: Denied: the IRS found no showing that the hardship was temporary and finalized its tentative denial.
• Key authorities: IRC § 412 (minimum funding standard).

Full text (IRS public release)

Significant Index No. 0412.06-00

DEPARTMENT OF THE TREASURY
200401016
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

OCT 10 2003

T:EP:RA:T:A1

This letter constitutes notice that with respect to the above-named defined benefit pension plan, your request for a waiver of the minimum funding standard for the plan year beginning October 1, 2000, has been denied.

The information furnished indicates that the Hospital experienced significant income losses during the fiscal years ending September 30, 1999, and September 30, 2000. The information furnished also indicates that the Hospital filed Chapter 11 for Reorganization in the bankruptcy court on November 17, 1999.

The information furnished failed to demonstrate that the hardship was temporary, and a denial of the request was proposed. The Hospital was informed of our tentative denial and was offered a conference of right by letter dated August 19, 2003. You were given 21 days to have a conference concerning our proposed denial. The 21-day period stated in our letter has passed. You have not communicated with us to arrange a conference. Therefore, our tentative denial is now final.

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

A copy of this letter is being furnished to your authorized representative pursuant to a power of attorney (Form 2848) on file. A copy of this letter is also being sent to the Manager, Employee Plans Classification in

200401016

2

If you have any questions on this ruling letter, please contact

Sincerely yours,

Norman Greenberg, Manager
Employee Plans Actuarial Group 1