Multiemployer plan receives five-year funding extension

Plain-English summary

A multiemployer plan requested an automatic five-year extension for amortizing certain unfunded liabilities. Its original application included bases related to funding-method changes, plan mergers, and combined bases that were not eligible under section 431(d), so the representative revised the request to exclude them. The plan's actuary certified that without relief the plan would face an accumulated funding deficiency, that the sponsor adopted a funding-improvement plan, and that the plan could timely pay expected benefits and expenses during the extended period. The IRS found that the revised application met section 431(d)(1)'s criteria. It approved the five-year extension for the listed eligible amortization bases.

Ruling snapshot

• Question: Does the multiemployer plan qualify for a five-year extension of the amortization periods for its eligible unfunded liabilities?
• Outcome: approved for the revised list of eligible amortization bases
• Key authorities: IRC §§ 412(c)(7) and 431(d); ERISA §§ 302(c)(7) and 304(b); Rev. Proc. 2010-52

Full text (IRS public release)

Significant Index Number 0431.00-00
DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE 201751024

WASHINGTON, D.C. 20224

TAX EXEMPT AND

GOVERNMENT ENTITIES SEP 26 2017

DIVISION

SE:T:EP:RA:A2

Re: . (Plan No. )
(“Plan”)
EIN: -

Plan Sponsor =

Dear

This letter constitutes notice that approval has been granted for your request for an
automatic 5-year extension for amortizing the unfunded liabilities as of January 1, 20__,
for the above-named Plan, as modified below. This approval applies to such unfunded
liabilities 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__, and applies to the eligible amortization charge
bases as identified in your representative’s letter of August 9, 2017.

Please note that your original application included amortization bases established with
respect to changes in funding methods and plan mergers, and combined amortization
bases. These amortization bases are not described in sections 431(b)(2)(B) and
431(b)(4) of the Code or sections 304(b)(2)(B) and 304(b)(4) of ERISA, or may contain
bases that are not described in these sections, and are therefore not eligible for an
extension of the amortization period under section 431(d) of the Code. Your
representative agreed to change the request to exclude these bases and, in a letter
dated August 9, 2017, provided an updated listing of amortization bases to which the
extended amortization period would apply. A copy of the updated list of amortization
bases to be extended under this ruling, with a total outstanding balance of

$ as of January 1, 20__, is shown in the following table:


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Type of Base | Date Established | Amortization Amount (Before Extension) | Period Remaining as of 1/1/20__ (Before Extension) | Outstanding Balance as of 1/1/20__
Initial Unfunded
Plan Amendment
Plan Amendment
Plan Amendment
Plan Amendment
Plan Amendment
Plan Amendment
Plan Amendment
Plan Amendment
Plan Amendment
Plan Amendment
Benefit Level
Plan Amendment
Plan Amendment
Plan Amendment
Plan Amendment
Plan Amendment
Plan Amendment
Plan Amendment
Experience Loss
Plan Amendment
Change in Assumptions
Change in Assumptions
Experience Loss
Plan Amendment
Plan Amendment
Experience Loss
Plan Amendment
Experience Loss
Plan Amendment
Experience Loss
Experience Loss
Plan Amendment
Experience Loss
Plan Amendment
Change in Assumptions
Plan Amendment
CPFB Experience Loss
Change in Assumptions
Plan Amendment
CPFB Experience Loss
Plan Amendment
Plan Amendment
Change in Assumptions
Change in Assumptions
Experience Loss
Experience Loss
Total

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The extension of the amortization periods of the unfunded liabilities of the Plan has
been 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,

(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 accordance
with section 3.05 of Rev. Proc. 2010-52.

In granting this ruling, it is expected that:

(i) the Plan's assumptions and methods will be reviewed and updated as
appropriate so that each prescribed assumption is applied in accordance with
applicable law and regulations,

(ii) 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,
and

(iii) the Plan Sponsor obtained the appropriate approvals for any changes in
assumptions or funding methods (whether through an individual private letter
ruling or by qualifying for automatic approvals available in the Code, Treasury
regulations or other generally applicable guidance.)

Furthermore, we are not expressing any opinion as to the accuracy of any material
submitted with your request.

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 the amortization extension remains in place. Please note that any
amendment that increases liabilities for a profit sharing plan or any other retirement
plans (whether qualified or unqualified) maintained by the Trustees of the Plan and
covering participants of the Plan to which this ruling applies, would be considered an
amendment for purposes of section 412(c)(7) of the Code and section 302(c)(7) of
ERISA.


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We have sent a copy of this letter to the Manager, EP Classification in Baltimore,
Maryland, the Manager, EP Compliance Unit in Chicago, Illinois, and to your authorized
representatives 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
Employee Plans Actuarial Group 2

cc: