PLR 200549016: Plan funding waiver requests withdrawn; excise tax waivers granted

Plain-English summary

A company had requested a waiver of its retirement plan's minimum funding standard and a change to an earlier funding waiver. It withdrew those requests, and the IRS closed that part of the case. The IRS granted waivers of the 100 percent excise tax under section 4971(b) for the plan's funding deficiencies, to the extent the deficiencies remained uncorrected. The company had also asked the Pension Benefit Guaranty Corporation to approve a distress termination of the plan; that request was still pending when the IRS issued the letter.

Ruling snapshot

• Question: What happened to the plan's funding waiver requests and its request for excise tax waivers?
• Outcome: Funding waiver requests withdrawn; 100 percent excise tax waivers granted.
• Key authorities: IRC § 4971(b); ERISA § 3002(b).

Full text (IRS public release)

Significant Index No. 4971.02-00
200549016

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

SEP 15 2005

[redacted] (“Plan”)

Company = [redacted]

This letter constitutes notice that pursuant to your request of December 12, 2003, as modified by your authorized representative’s letter dated April 28, 2005:

1. Your requests for a waiver of the minimum funding standard for the above-
   named plan for the plan year ending [redacted], and for a modification of the waiver of the minimum funding standard received by the Plan for the plan year ending [redacted], in a letter dated [redacted] have been withdrawn, and the case has been closed by this office.

2. Waivers of the 100 percent tax under § 4971(b) of the Internal Revenue Code
   (“Code”) have been granted for the above-named plan for the plan years ending
   [redacted].

The waivers of the 100 percent tax have been granted in accordance with § 3002(b) of the Employee Retirement Income Security Act (“ERISA”). The amounts for which the waivers have been granted are equal to 100 percent of the accumulated funding deficiencies in the funding standard account as of [redacted], the end of the plan years for which the waivers have been granted, to the extent such funding deficiencies have not been corrected.

200549016

The Company is a designer, manufacturer, and distributor of apparel fasteners and industrial fasteners, and has been is continuous operation since [redacted]. The Company’s major customers are in the textile, marine, electrical equipment, and sporting good industries. According to information submitted by your authorized representative, the Company filed a request with the Pension Benefit Guaranty Corporation to effect a distress termination of the Plan on [redacted]. This request is still pending final approval.

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.

We have sent a copy of this letter to the Manager, EP Classification in [redacted], to the Manager, EP Compliance Unit in [redacted] and to your authorized representative pursuant to a power of attorney on file in this office.

If you require further assistance in this matter, please contact [redacted].

Sincerely yours,

[signature]

Carol D. Gold
Director, Employee Plans