Other 201343031: IRS grants a conditional pension minimum funding waiver

Plain-English summary

The IRS granted a conditional waiver of the required minimum funding contribution for a pension plan for the year ending December 31, 2012. The company had experienced temporary business hardship tied to the economic recession and reduced advertising revenue, while representing that it had made prior contributions and expected sufficient future income and cash flow. The waiver requires timely future contributions, payments toward the waived deficiency, verification of payment, and restrictions on increasing plan benefits or liabilities while the deficiency remains unamortized. If any condition is not satisfied, the waiver is retroactively null and void.

Ruling snapshot

• Question: Should the company receive a waiver of the minimum funding standard for the pension plan's 2012 plan year?
• Outcome: Approved, subject to the listed conditions
• Key authorities: IRC §§ 412(c), 412(c)(7), and 430(j)(3); ERISA §§ 302 and 302(c)(7)

Full text (IRS public release)

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND JUL 2 9 2013
GOVERNMENT ENTITIES
DIVISION
UNIFORM ISSUE LIST: 412.06-00 ,
TER, e4A T3

Re: Request for Waiver of Minimum Funding Standard for The “see* Pension Plan (the “Plan”)

Company =
EIN =

Dear ,

This letter constitutes notice that your request for a waiver of the required minimum funding contribution for the Plan for the plan year ending December 31, 2012 has been granted subject to the conditions listed below. This waiver is for the unpaid required minimum contribution for the above listed plan year; all waiver amortization payments representing the waiver must be paid as stated under section 412(c)(1)(C) of the Internal Revenue Code (the “Code’).

1. Starting with the quarterly contribution due October 15, 2013, the
   Company makes the required quarterly contributions to the Plan in a timely fashion while the Plan is subject to the minimum funding standard. For this purpose, the total amount of each quarterly contribution will be determined in accordance with section 430(j)(3)(D) and section 430(j)(3)(E) of the Code and can be comprised of several installments made prior to the respective due date of the quarterly contribution.

2. The Company makes contributions to the Plan in amounts sufficient to
   meet the minimum funding requirements for the Plan for the plan year ending December 31, 2012 on or before September 15th of the year following each respective plan year.

3. Under section 412 (c)(7) of the Code, the Company is restricted from
   amending the Plan to increase benefits and/or Plan liabilities while any

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of the waived funding deficiency remains unamortized, with only certain exceptions as defined in section 412(c)(7)(B).

4. The Company provides verification of payment of all contributions
   described above in a timely manner to the Internal Revenue Service at:

You agreed to these conditions in a letter dated July 1, 2013. If any of these conditions is not satisfied the waiver will be retroactively null and void.

This conditional waiver has been granted in accordance with section 412(c) of the Code and section 302 of the Employee Retirement Income Security Act of 1974 (“ERISA”).

The Company is a '" company with a significant newspaper presence in the region in which it serves. The temporary substantial business hardship was

. precipitated by the overall economic recession which severely impacted the retail market and had a particularly detrimental effect on the Company's advertising revenue. In response to its business hardship the Company aggressively cut costs and significantly reduced operating expenses, leaving it well positioned to rebound as the regional economy improves. Also, non-core assets were put up for sale to generate cash and with increased focus on the digital market, revenues from that sector continue to grow.

The Company has made timely contributions to the Plan in prior years and forecasts sufficient income and cash flow to make the minimum required contributions over the waiver amortization period.

Your attention is called to section 412(c)(7) of the Code and section 302(c)(7) of ERISA which describe the consequences that would result in the event the Plan is amended to increase benefits, change the rate in the accrual of benefits or to change the rate of vesting, while any portion of the waived funding deficiency remains unamortized. Please note that any amendment to a profit sharing plan or any other retirement plan (covering employees covered by this Plan) maintained by the Company, to increase benefits, or any action by the Company or its authorized agents or designees (such as a Board of Directors or Board of Trustees) that has the effect of increasing the liabilities of those plans, would be considered an amendment for purposes of section 412(c)(7) of the Code and section 302(c)(7) of ERISA. Similarly, the establishment of a new profit sharing plan or any other retirement plan by the Company (covering employees covered

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by this Plan) would be considered an amendment for purposes of section 412(c)(7) of the Code and section 302(c)(7) of ERISA.

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.

When filing Form 5500 for the plan year ending December 31, 2012, the date of this letter should be entered on Schedule SB (Actuarial Information). For this reason, we suggest that you furnish a copy of this letter to the enrolled actuary who is responsible for the completion of Schedules SB.

We have sent a copy of this letter to the Manager, EP Classification in ‘and to the Manager, EP Compliance Unit in

If you wish to inquire about this ruling please contact *. Please address all correspondence to SE:T:EP:RA:T3.

Sincerely,

William B. Hulteng, Manager
Employee Plans Technical