IRS determination 201046019: conditional waiver of the section 4971 tax after withdrawal of a funding-standard request

Plain-English summary

The IRS closed a company's request for a waiver of the minimum funding standard after the company withdrew that request. It separately granted a conditional waiver of the 100 percent tax under section 4971(b) for a plan year ending June 30, 2008. The condition was that the pension plan be terminated by the Pension Benefit Guaranty Corporation. If the termination was not approved, the company could ask the IRS to reopen the withdrawn minimum-funding request. The letter states that the company intended to pursue a distress termination with the PBGC.

Ruling snapshot

• Question: What relief applies after the company's minimum-funding request was withdrawn and the plan's funding deficiency remained?
• Outcome: Mixed, the request was closed, but a conditional tax waiver was granted
• Key authorities: IRC § 4971(b); ERISA § 3002(b)

Full text (IRS public release)

Significant Index No. 4971.02-00

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

AUG 25 2010 201046019

GOVERNMENT ENTITIES
DIVISION

Re:

Company =
Dear ,

This letter constitutes notice that pursuant to your authorized representative’s request of August 20, 2010,

(1) your request for a waiver of the minimum funding standard for the Plan for the

plan year ending June , 20 , has been withdrawn, and the case has been closed by this office; and

(2) a waiver of the 100 percent tax under section 4971(b) of the Internal Revenue Code (“Code”) has been granted for the Plan for the plan year ending June 30, 2008, on the condition that the Plan is terminated by the Pension Benefit Guaranty Corporation (“PBGC”). If the termination of the Plan is not approved, the Company may request that its request for a waiver of the minimum funding standard for the Plan for the plan year ending June , 20 , be re-opened for consideration.

The conditional waiver of the 100 percent tax has been granted in accordance with section 3002(b) of the Employee Retirement Income Security Act. The amount for which the conditional waiver has been granted is equal to 100 percent of the accumulated funding deficiency in the funding standard account as of June , 20 , the end of the plan year for which the waiver has been granted, to the extent such funding deficiency has not been corrected.

201046019

In telephone conversations with the Company, the Internal Revenue Service was informed that the Company would be pursuing a distress termination of the Plan with the PBGC.

This ruling is directed only to the taxpayer that requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited by others as precedent.

We have sent a copy of this letter to the
to the
and to your
authorized representative pursuant to a power of attorney on file in this office.

If you require further assistance in this matter, please contact
, Sincerely yours,

[illegible signature]

David M. Ziegler, Manager
Employee Plans Actuarial Group 2