PLR 201224041: IRS grants a five-year extension to amortize a multiemployer plan's unfunded liabilities

Plain-English summary

The IRS approved a five-year automatic extension for a multiemployer plan to amortize specified unfunded liabilities. The extension applied to eligible amortization charge bases established as of January 1, 2011, and took effect with the plan year beginning on that date. The approval relied on the plan's actuary certifying that the plan would otherwise face an accumulated funding deficiency, had adopted a funding-improvement plan, could pay expected benefits and expenses, and had provided the required notice. The letter does not identify the taxpayer or plan.

Ruling snapshot

• Question: May the plan use a five-year automatic extension to amortize its unfunded liabilities?
• Outcome: Approved
• Key authorities: IRC § 431(d)(1); IRC §§ 431(b)(2)(B) and 431(b)(4); 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

201224041

COMMISSIONER
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

MAR 19 2012

T:EP:RA:A2

Re:

Taxpayer = [illegible]

Dear [illegible]:

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

January 1, 2011, 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

January 1, 2011. This extension applies to the eligible amortization charge bases as identified in your application submission, established as of January 1, 2011.

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,

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201224041

(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 [illegible] to the [illegible] 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 [illegible].

Sincerely yours,
David M. Ziegler
Manager, EP Actuarial Group 2