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 April 1, 2009. The extension applied to eligible amortization charge bases established as of that date and was effective for the plan year beginning April 1, 2009. The approval was based on the plan's submission of the required information 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); 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

201025088

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

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   (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,

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