PLR 201228048: IRS conditionally waives pension-plan excise taxes while closing a funding-waiver case

Plain-English summary

The IRS closed a company's request for a waiver of the minimum funding standard after the request was withdrawn. It separately granted conditional waivers of the 100 percent excise tax under IRC § 4971(b) for specified pension-plan years. The tax waivers depended on the Pension Benefit Guaranty Corporation approving termination of the plan and covered specified accumulated funding deficiencies and unpaid minimum required contributions that had not been corrected.

Ruling snapshot

• Question: What relief applies after a company withdraws its minimum-funding-waiver request and seeks termination of its pension plan?
• Outcome: Mixed. The funding-waiver case was withdrawn and closed, while the § 4971(b) tax was conditionally waived.
• Key authorities: IRC § 4971(b); ERISA § 3002(b)

Full text (IRS public release)

Significant Index No. 4971.02-00

201228048

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

MAY 26 2009

T: EP: RA: T: A2

Re:

Company = [illegible]

Dear [illegible]:

This letter constitutes notice that pursuant to your authorized representative's request of April 29 and April 30, 2009:

(1) your request for a waiver of the minimum funding standard for the Plan for the plan year ending June 30, [illegible], has been withdrawn, and the case has been closed by this office; and

(2) waivers of the 100 percent tax under section 4971(b) of the Internal Revenue Code (“Code”) have been granted for the Plan for the plan years ending June 30, [illegible], through [illegible], on the condition that the Plan is terminated by the Pension Benefit Guaranty Corporation (“PBGC”). If the termination of the Plan is not approved, the Company may request that its request for a waiver of the minimum funding standard for the Plan for the plan year ending June 30, [illegible], be re-opened for consideration.

The conditional waivers of the 100 percent tax have been granted in accordance with section 3002(b) of the Employee Retirement Income Security Act (“ERISA”). The amounts for which the conditional waivers have been granted are equal to 100 percent of the accumulated funding deficiencies in the funding standard account as of June 30, [illegible], through [illegible], and the aggregate unpaid minimum required contributions as of June 30, [illegible], and [illegible], the end of the plan years for which the waivers have been granted, to the extent such funding deficiencies or aggregate unpaid minimum required contributions have not been corrected.

201228048

2

The financial condition of the Company has deteriorated significantly and it cannot continue to afford to make any contributions to the Plan. In telephone conversations with the Company's authorized representative, the Service was informed that the Company would be pursuing a distress termination of the Plan with the PBGC.

This ruling is directed only to the taxpayer that requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited by others as precedent.

We have sent a copy of this letter to the [illegible],
[illegible], and to your
authorized representative pursuant to a power of attorney on file in this office.

If you require further assistance in this matter, please contact [illegible].

Sincerely yours,

Andrew E. Zuckerman, Director
Employee Plans Rulings & Agreements