PLR 200619025: IRS changes a pension funding waiver's security deadline

Plain-English summary

The IRS had granted a conditional waiver of a pension plan's minimum funding standard for the plan year ending June 30, 2004. The waiver required an agreement with the Pension Benefit Guaranty Corporation on security for repayment, but negotiations could not be completed by the original deadline. The IRS modified its earlier ruling so that the deadline became February 1, 2006. The letter says the parties signed the final documents on January 30 and completed the security arrangement on February 1.

Ruling snapshot

• Question: Could the deadline for arranging security for repayment of a pension funding waiver be changed?
• Outcome: Approved; the deadline was changed to February 1, 2006.
• Key authorities: IRC § 412 (minimum funding standard).

Full text (IRS public release)

Significant Index No. 0412.06-00

200619025

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

FEB 14 2006

In re:

Company =

This letter constitutes notice that the conditional waiver of the minimum funding standard for the above-named Plan for the plan year ending June 30, 2004, which was granted in our ruling letter dated December 28, 2004, has been modified by changing the deadline by which an agreement must be reached with the Pension Benefit Guaranty Corporation (“PBGC”) on securing repayment of the waived amount from 120 days from the date of the original ruling letter to February 1, 2006.

According to information submitted with the request, a tentative agreement on security was being negotiated with the PBGC before the original deadline. However, the negotiations with the PBGC could not be completed before the original deadline expired. The final documents were signed on January 30, 2006, and the security arrangement was completed on February 1, 2006.

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
, to the Manager, EP Compliance Unit in _ and to your authorized representative pursuant to a power of attorney on file in this office.

2

If you require further assistance in this matter, please contact

Sincerely yours,

Carol D. Gold
Director, Employee Plans