Determination 201001029: Minimum funding waiver denied for a terminating plan

Plain-English summary

The IRS denied a plan's request to waive the minimum funding standard for the plan year ending December 31, 2007. The agency explained that the plan was being terminated after the company's assets had been liquidated in bankruptcy, so it was not reasonable to expect the plan to continue only if the waiver were granted. The request was finalized after the taxpayer did not schedule a conference within the stated 21-day period.

Ruling snapshot

• Question: Could the plan receive a waiver of the minimum funding standard under IRC § 412(d)(1)?
• Outcome: Denied
• Key authorities: IRC §§ 412(d)(1) and 412(d)(2)(D); Rev. Proc. 2009-4, § 12.01

Full text (IRS public release)

201001029

Significant Index No. 0412.06-00

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

OCT 13 2009

Re:

Company =

Dear

This letter is to inform you that your request for a waiver of the minimum funding standard for the Plan for the plan year ending December 31, 2007, has been denied.

In a letter dated September 2, 2009, you were informed that your request for a waiver of the minimum funding standard had been tentatively denied and were offered a conference of right in accordance with section 12.01 of Rev. Proc. 2009-4, 2009-1 I.R.B. 118. Our primary reason for the tentative denial was that the Pension Benefit Guaranty Corporation (“PBGC”) had informed us that the assets of the Company had been liquidated as part of a bankruptcy filing and that the Plan was in the process of being terminated. Section 412(d)(1) of the Code (as in effect prior to the Pension Protection Act of 2006 [“PPA”]) provides that, if an employer is unable to satisfy the minimum funding standard without experiencing a temporary substantial business hardship and application of the standard would be adverse to the interests of plan participant's in the aggregate, then the minimum funding standard for the plan year in question may be waived. Section 412(d)(2)(D) provides that one of the factors taken into account in determining temporary substantial business hardship is that it is reasonable to expect that the plan will be continued only if the waiver is granted. However, it is not reasonable to expect that the Plan will be continued only if your requests for a waiver of the minimum funding standard for the Plan for the plan year ending December 31, 2007, is granted since the Plan is being terminated.

Our letter dated September 2, 2009, stated that if you did not contact us to schedule a conference within 21 days, we would finalize our ruling denying your request for a waiver of the minimum funding standard for the Plan for the plan year ending December 31, 2007. As of September 23, 2009, we have not heard from you or your authorized representative. Accordingly, your request for a waiver of the minimum funding standard for the Plan for the plan year ending December 31, 2007, has been denied.

201001029

2

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

to the Manager.

and to your

authorized representative pursuant to a power of attorney (Form 2848) on file with this office. If you require further assistance concerning this matter, please contact

Sincerely yours,

Andrew E. Zuckerman, Director
Employee Plans Rulings & Agreements