PLR 1136032: IRS approves a five-year pension-plan amortization extension

Plain-English summary

The IRS approved a plan's request for a five-year automatic extension to amortize unfunded liabilities as of June 1, 2010. The extension applied to eligible amortization charge bases established as of that date and was effective with the plan year beginning June 1, 2010. The approval relied on the plan's submission of required information, including an actuary's certification concerning projected funding deficiencies, a funding-improvement plan, projected assets, and required notice. The letter stated that it was directed only to the requesting taxpayer and could not be used or cited by others as precedent.

Ruling snapshot

• Question: Whether the plan qualified for a five-year automatic extension to amortize specified unfunded liabilities.
• Outcome: Approved.
• Key authorities: IRC §§ 304(b), 431(b), 431(d)(1), and 6110(k)(3); ERISA §§ 304(b)(2) 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

TAX EXEMPT AND JUN 16 2011 201136032
GOVERNMENT ENTITIES
DIVISION

TEP: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
June 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
June 1, 2010. This extension applies to the eligible amortization charge bases,
established as of June 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,

201136032

(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,

David M. Ziegler
Manager, EP Actuarial Group 2