PLR 201347030: IRS approves a five-year extension for a plan's unfunded liabilities

Plain-English summary

The IRS approved a pension plan's request for a five-year automatic extension to amortize certain unfunded liabilities. The approval covers liabilities described under sections 431(b)(2)(B) and 431(b)(4) of the Internal Revenue Code and corresponding provisions of ERISA. The plan provided the information and actuarial certification required for an extension, including projected funding deficiencies without the extension, a funding-improvement plan, sufficient projected assets, and required notice. The ruling allows the plan additional time to amortize its eligible liabilities under section 431(d)(1).

Ruling snapshot

• Question: Could the plan receive a five-year extension for amortizing its unfunded liabilities?
• Outcome: Approved
• Key authorities: IRC §§ 431(b)(2)(B), 431(b)(4), 431(d)(1), and 6110(k)(3); ERISA §§ 304(b)(2)(B) and 304(b)(4)

Full text (IRS public release)

Significant Index Number 0431.00-00
201347030
DEPARTMENT OF THE TREASURY 0

INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

GOVERNMENT ENTITIES AUG 29 2013
TEP 2A AL
Re:
(Plan No. __) (“Plan”)
EIN:
Taxpayer =

Dear

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

, 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

. This extension applies to the eligible amortization charge bases,

established as of

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,

3 201347030

(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 Manager, EP Classification in ‘ " and to the Manager, EP Compliance Unit in

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

(ID# . ) at
Sincerely yours,
De a
David M. Ziegler
Manager, EP Actuarial Group 2
cc: