PLR 201019023: IRS approves a five-year amortization extension for a pension plan

Plain-English summary

The IRS approved a pension plan's request for a five-year automatic extension to amortize unfunded liabilities existing on January 1, 2009. The extension applies to the plan year beginning January 1, 2009, and to eligible amortization charge bases established on that date that resulted in a net unfunded liability. The IRS stated that the plan met the requirements of section 431(d)(1), including certifications about projected funding deficiencies, a funding-improvement plan, sufficient assets, and required notice. The ruling is directed only to the requesting taxpayer and may not be used or cited by others as precedent.

Ruling snapshot

• Question: Did the plan qualify for an extension of the amortization period for unfunded liabilities under IRC § 431(d)(1)?
• Outcome: Approved.
• Key authorities: IRC §§ 431(b), 431(d)(1), and 6110(k)(3); ERISA §§ 304(b)(2) and 304(b)(4).

Full text (IRS public release)

Significant Index Number 0431.00-00

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

FEB 18 2010

[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 January 1, 2009, 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, 2009. This extension applies to the eligible amortization charge bases, established as of January 1, 2009, 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,

(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,

[signature]

David M. Ziegler
Manager, EP Actuarial Group 2