Determination 1127019: five-year extension for a plan's unfunded liabilities

Plain-English summary

The IRS approved a plan's request for a five-year automatic extension to amortize specified unfunded liabilities. The liabilities are described under IRC § 431(b)(2)(B) and § 431(b)(4), with corresponding provisions under ERISA § 304. The plan met the required conditions, including an actuary's certification that without the extension it would face an accumulated funding deficiency, that the sponsor had adopted a funding-improvement plan, that projected assets would cover expected benefits and expenses during the extended period, and that the required notice had been provided. The approval gives the plan additional time to amortize the eligible liabilities under IRC § 431(d)(1).

Ruling snapshot

• Question: Could the plan receive a five-year extension for amortizing its specified unfunded liabilities?
• Outcome: approved
• Key authorities: IRC §§ 431(b)(2)(B), 431(b)(4), 431(d)(1), and 6110(k)(3); 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 201127019

GOVERNMENT ENTITIES
DIVISION

TAX EXEMPT AND APR 13 2011
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
September 1, 20 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
September 1, 20 This extension applies to the eligible amortization charge
bases, established as of September 1, 20

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,

201127019

(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,

[illegible signature]

David M. Ziegler
Manager, EP Actuarial Group 2