Multiemployer plan received a five-year funding extension

Plain-English summary

A multiemployer pension plan requested a five-year extension for amortizing specified unfunded liabilities. The plan's actuary certified that without the extension the plan would have an accumulated funding deficiency in the current plan year or one of the next nine years. The application also showed that the sponsor had adopted a funding-improvement plan, the plan was projected to have enough assets to pay 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. The ruling expected the plan to review its actuarial assumptions and methods and use lawful, reasonable assumptions that collectively provided the best estimate of anticipated experience.

Ruling snapshot

• Question: May the plan extend the amortization periods for the eligible unfunded liabilities identified in its application?
• Outcome: approved for five years
• Key authorities: IRC §§ 431(b), 431(d)(1); ERISA § 304(b)

Full text (IRS public release)

Significant Index Number 0431.00-00

201732037

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

MAY 18 2017

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
bases¹ as identified in your application submission, established as of October 1,
          .

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,

¹ Funding standard account charges under Sections 431(b)(2)(B) or 431(b)(4) of the Code.

2

201732037

        (ii) the plan sponsor has adopted a plan to improve the
             plan's funding status,
        (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, to the Manager, EP Compliance Unit in Chicago, Illinois, 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
(ID#          ) at          .

Sincerely yours,

David M. Ziegler
Manager, EP Actuarial Group 2

cc: