PLR 1123049: IRS approves a five-year pension-plan amortization extension

Plain-English summary

The IRS approved a request for a five-year extension of the period for amortizing a pension plan's unfunded liabilities. The extension applies to the eligible amortization charge bases identified in the taxpayer's application and is effective for the plan year beginning July 1, 2010. The IRS found that the plan submitted the required information, including the actuary's certification about funding deficiencies, a funding improvement plan, projected assets, and notice to participants. The ruling concerns the requested extension under IRC § 431(d)(1).

Ruling snapshot

• Question: Should the plan receive a five-year extension for amortizing specified unfunded liabilities?
• Outcome: Approved.
• Key authorities: IRC §§ 431, 6110.

Full text (IRS public release)

Significant Index Number 0431.00-00
| 201123049

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

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 as
identified in your application submission, 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,

201123049

(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

to the 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,

David M. Ziegler
Manager, EP Actuarial Group 2