IRS 201013074: Five-year amortization extension approved for an unfunded pension liability

Plain-English summary

The IRS approved a plan's request for a five-year automatic extension to amortize unfunded liabilities existing on December 1, 2008. The extension applies to eligible amortization charge bases that produced a net unfunded liability on that date and is effective for the plan year beginning December 1, 2008. The IRS stated that the plan submitted the required information and actuarial certification under section 431(d)(1). The approval was directed only to the requesting taxpayer and is not precedent.

Ruling snapshot

• Question: Did the plan qualify for a five-year extension to amortize its unfunded liabilities?
• Outcome: Approved
• Key authorities: IRC §§ 431(b)(2)(B), 431(b)(4), 431(d)(1), and 6110(k)(3)

Full text (IRS public release)

201013074

Significant Index Number 0431.00-00

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

DEC 08 2009

[illegible]

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 December 1, 2008, 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 December 1, 2008. This extension applies to the eligible amortization charge bases, established as of December 1, 2008, which result in a net 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,

201013074

(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,

[illegible]

David M. Ziegler
Manager, EP Actuarial Group 2