IRS approves five-year extension for pension-plan unfunded liabilities

Plain-English summary

The IRS approved a plan's request for a five-year automatic extension to amortize specified unfunded liabilities. The extension applied to amortization charge bases established as of the stated date and was effective with the plan year beginning on the stated date. The IRS found that the plan submitted the required information and actuarial certification, including projections of an accumulated funding deficiency without the extension, a funding-improvement plan, sufficient assets for expected benefits and expenditures, and required notice. The letter was directed to the taxpayer and relied on the representations in the submission.

Ruling snapshot

• Question: Did the pension plan satisfy the requirements for a five-year extension to amortize its unfunded liabilities?
• Outcome: Approved
• Key authorities: IRC § 431(d)(1)

Full text (IRS public release)

Significant Index Number 0431 .00-00

DNiwternavrevenveseavice ©00943045

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WASHINGTON, D.C. 20224

TAX EXEMPT AND

GOVERNMENT ENTITIES JUL vA 7 2008

DIVISION

Qe TEP: RA: Az,

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

May 1,20, 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(b2(B) and 304(b}(4) of the Employee Retirement Income Security Act of 1974 ("ERISA"). This extension is effective with the plan year beginning

May 1,20 ~ This extension applies to the amortization charge bases _ as identified in your application submission, established as of May 1,20, producing a total unfunded liability of $ ‘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,

200943045

(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
and to the

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,

TT OG ET

David M. Ziegler
Manager, EP Actuarial Group 2