PLR 1044030: IRS approved a five-year extension for amortizing a 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. The extension applied to the eligible amortization charge bases established as of October 1, 2009, and was effective with the plan year beginning on that date. The IRS stated that the plan met the requirements of IRC § 431(d)(1), including an actuary's certification about projected funding deficiencies, a plan to improve funding, sufficient assets, and required notice. The approval was directed only to the requesting taxpayer.

Ruling snapshot

• Question: Did the plan qualify for a five-year extension to amortize its unfunded liabilities?
• Outcome: Approved
• Key authorities: IRC §§ 304, 431, and 6110; ERISA §§ 304(b)(2)(B) 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

COMMISSIONER
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

AUG 10 2010

201044030

SE:T:EP:RA:A2

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

201044030

(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]
and to the [redacted]

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