Five-year amortization extension approved for plan liabilities

Plain-English summary

A multiemployer pension plan requested a five-year automatic extension to amortize unfunded liabilities. The IRS approved the extension after finding that the plan submitted the required information, including an actuary's certification that the plan would otherwise face an accumulated funding deficiency and had a funding-improvement plan. The extension applied to the specified amortization charge bases and was effective with the stated plan year, subject to the redacted facts in the ruling. The ruling did not address other plan-amendment or funding issues beyond the requested extension.

Ruling snapshot

• Question: Whether the plan qualified for a five-year extension of the amortization period for unfunded liabilities.
• Outcome: Approved.
• Key authorities: IRC § 431(d)(1); ERISA §§ 304(b)(2) and 304(b)(4).

Full text (IRS public release)

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

201234035

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

March 24, 2009

UIL: 431.00-00

T:EP:RA:A2

Re:

Taxpayer =
Dear
This letter replaces our ruling letter to you dated March 5, 2008.

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, 2008, 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 1,20 . This extension applies to the amortization charge bases as identified in your application submission, established as of January 1, 2008, with a total outstanding balance of $ - .as of that date.

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,

2
201234035

(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

to the ‘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

Sincerely yours,

David M. Ziegler
Manager, EP Actuarial Group 2