PLR 1025087: 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 February 1, 2009. The extension applied to eligible amortization charge bases identified in the application and was effective for the plan year beginning February 1, 2009. The approval was based on the plan's required submission and an actuary's certification concerning projected funding deficiencies, a funding-improvement plan, sufficient assets, and required notice. The letter states that it was directed only to the requesting taxpayer and was not precedent for others.

Ruling snapshot

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

Full text (IRS public release)

Significant Index Number 0431.00-00

201025087

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

APR 02 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
February 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
February 1, 2009. This extension applies to the eligible amortization charge
bases as identified in your application submission, established as of February 1,
2009.

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,

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 [redacted], to the [redacted] and to your
authorized representative pursuant to a power of attorney on file in this office.

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,

[handwritten signature]
David M. Ziegler
Manager, EP Actuarial Group 2