Determination 200921034: Pension plan received a five-year amortization extension

Plain-English summary

A pension plan requested a five-year extension to amortize specified unfunded liabilities. The IRS granted the automatic extension under section 431(d)(1) for the charge bases identified in the plan's application. The plan submitted an actuary's certification that it would otherwise have an accumulated funding deficiency in the current or following nine plan years. The certification also stated that the sponsor adopted a funding-improvement plan, the plan was expected to have enough assets to pay benefits and expenses during the extended period, and the required notice was provided. The effective plan-year date and liability amount were redacted in the public release.

Ruling snapshot

• Question: Could the plan extend the amortization period for its unfunded liabilities by five years?
• Outcome: Approved: the IRS granted the requested five-year extension.
• Key authorities: IRC § 431(d)(1); ERISA § 304(b).

Full text (IRS public release)

Significant Index Number 0431.00-00
200921034
DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

Date: MAR 05 2008

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

SE:T:EP:RA:A2

Re:

Taxpayer =

Dear

This letter constitutes notice that approval has been granted for your request for a 5-year automatic extension for amortizing the unfunded liabilities as of January 1, 20[illegible] for the above-named Plan which are described in sections 431(b)(2)(B) and 431(b)(4) of the Internal Revenue Code (“Code"), and sections 304(b)(2)(B) and 304(b)(4) of the Employee Retirement Income Security Act of 1974 (“ERISA”). This extension is effective with the plan year beginning January 1, 20[illegible]. This extension applies to the amortization charge bases as identified in your application submission, established as of January 1, 20[illegible], with a total outstanding balance of $[illegible] as of that date.

The extension of the amortization periods of the unfunded liabilities of the Plan was granted in accordance with section 431(d)(1) of the Code. Section 431(d)(1)(A) of the Code requires the Secretary to extend the period of time required to amortize any unfunded liability of a plan for a period of time (not in excess of 5 years) if the Plan submits an application meeting the criteria stated in section 431(d)(1)(B). The plan has submitted the required information to meet the criteria in section 431(d)(1)(B), including a certification from the plan's actuary that

(i) absent the extension under subparagraph (A), the plan would have an accumulated funding deficiency in the current plan year or any of the 9 succeeding plan years, (ii) the plan sponsor has adopted a plan to improve the plan's funding status,

200921034

2

(iii) the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended, and

(iv) the notice required under paragraph (3)(A) has been provided.

We have sent a copy of this letter to the Manager,
to the Manager, and to your
authorized representative pursuant to a power of attorney on file in this office.

This ruling is directed only to the taxpayer 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.

If you require further assistance in this matter, please contact Sincerely yours,

David M. Ziegler
Manager, EP Actuarial Group 2