IRS approval 1206020: Five-year extension for amortizing unfunded liabilities

Plain-English summary

The IRS approved a five-year automatic extension for amortizing specified unfunded liabilities of a pension plan. The extension applies to eligible outstanding amortization charge bases for the plan year beginning January 1, 2011. The approval relied on the plan's required information and an actuary's certification that the plan would otherwise face an accumulated funding deficiency, had adopted a funding improvement plan, was projected to have sufficient assets for expected benefits and expenses, and had provided the required notice. The ruling is directed only to the requesting taxpayer and is not precedent.

Ruling snapshot

• Question: Did the plan satisfy the requirements for a five-year extension of its amortization periods?
• Outcome: Approved
• Key authorities: IRC § 431(d); 26 U.S.C. § 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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

NOV 16 2011

T:EP:RA:A2

Re:

Trustees =
Dear [illegible]:

This letter is in reference to your request dated September 24, 2011, as supplemented
by the additional information provided by the Plan’s authorized representative on
November 14, 2011. Approval has been granted for your request for a 5-year
automatic extension for amortizing the unfunded liabilities 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). The extension of the amortization periods of the unfunded liabilities of the
Plan has been granted in accordance with section 431(d)(1) of the Code. This
extension is effective for the plan year beginning January 1, 2011, and applies to the
eligible outstanding amortization charge bases as of that date.

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, including a certification
from the plan's actuary that:

(i) absent the extension under subparagraph 431(d)(1)(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,

(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 431(d)(3)(A) has been
provided.


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We have sent a copy of this letter to the [illegible]
and to the [illegible]. A copy of this
letter should be sent to the enrolled actuary for the Plan.

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 have any questions regarding this matter, please contact [illegible]

Sincerely,

David M. Ziegler, Manager
Employee Plans Actuarial Group 2