PLR 1023071: IRS approved a five-year extension for amortizing a pension plan's unfunded liabilities

Plain-English summary

The IRS approved a request for a five-year automatic extension to amortize a pension plan's unfunded liabilities as of July 1, 2010. The extension applies to eligible amortization charge bases established as of that date and is effective for the plan year beginning July 1, 2010. The approval states that the plan submitted the required information and an actuary's certification concerning projected funding deficiencies, a funding-improvement plan, sufficient assets, and required notice. The notice relies on IRC § 431(d)(1) and also identifies related provisions of IRC § 431 and ERISA § 304.

Ruling snapshot

• Question: Could the pension plan receive a five-year extension for amortizing its unfunded liabilities?
• Outcome: Approved
• Key authorities: IRC §§ 431(b)(2)(B), 431(b)(4), and 431(d)(1); ERISA §§ 304(b)(2)(B) and 304(b)(4); IRC § 6110(k)(3)

Full text (IRS public release)

Significant Index Number 0431.00-00

201023071

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

MAR 16 2010

[illegible routing notation]

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
July 1, 2010, 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
July 1, 2010. This extension applies to the eligible amortization charge bases,
established as of July 1, 2010.

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,

201023071

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
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,

David M. Ziegler
Manager, EP Actuarial Group 2