Multiemployer plan receives five-year funding extension

Plain-English summary

A multiemployer pension plan requested a five-year extension for amortizing specified unfunded liabilities beginning with its May 1, 2014 plan year. Its actuary certified that without the extension the plan would have an accumulated funding deficiency in the current or one of the next nine plan years. The plan sponsor had adopted a funding-improvement plan, the plan was projected to have enough assets to pay expected benefits and expenses during the extended period, and the required notice had been provided. The IRS approved the extension under section 431(d)(1) for the eligible amortization charge bases identified in the application.

Ruling snapshot

• Question: Does the plan qualify for a five-year extension of its eligible unfunded-liability amortization periods?
• Outcome: Approved, effective for the plan year beginning May 1, 2014
• Key authorities: IRC § 431(b)(2)(B), (b)(4), and (d)(1); ERISA § 304

Full text (IRS public release)

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

201616012

SE:T:EP:RA:A2

Index Number 0431.00-00

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 June 1,
2014, 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
May 1, 2014. This extension applies to the eligible amortization charge bases
identified in your submission, established as of May 1, 2014.

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), and includes a penalties of perjury statement
representing the plan’s actuary certified 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

201616012

(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.

In granting this ruling, it is expected that the Plan's assumptions and methods will
be reviewed and updated as appropriate so that each prescribed assumption
was applied in accordance with applicable law and regulations. And each other
assumption is reasonable (taking into account the experience of the plan and
reasonable expectations) and such other assumptions, in combination, offer the
best estimate of anticipated experience under the plan. In addition, we are not
expressing any opinion as to the accuracy of any material submitted with your
request.

We have sent a copy of this letter to the Manager, EP Classification in Baltimore,
Maryland and to the Manager, EP Compliance Unit in Chicago, Illinois.

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,

David M. Ziegler
Manager, EP Actuarial Group 2

cc: