Private Letter Ruling
201801015
Released January 5, 2018
Approved
Transcribed from scan
Multiemployer plan receives a five-year funding extension
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This page covers one taxpayer's ruling from 2018, which can't be cited as precedent. Ezel answers your situation under the current Code and IRS guidance, with citations.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
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Plain-English summary
A multiemployer pension plan asked to extend the periods for amortizing specified unfunded liabilities. The plan's actuary certified that without relief the plan would face an accumulated funding deficiency, the sponsor had adopted a plan to improve its funding status, and the plan was projected to have enough assets to pay expected benefits and expenses during the extended period. The IRS approved a five-year extension under section 431(d)(1) for the eligible amortization charge bases listed in the ruling. The approval assumes that the plan will use lawful and reasonable actuarial assumptions and obtain any required approvals for changes in assumptions or funding methods. The IRS also warned that benefit, accrual, vesting, or related liability increases while the extension remains in place can have consequences under section 412(c)(7).
Ruling snapshot
- Question: May the multiemployer plan extend the amortization periods for specified unfunded liabilities?
- Outcome: approved
- Key authorities: IRC §§ 412(c)(7), 431(b), and 431(d)(1); ERISA §§ 302(c)(7) and 304(b); Rev. Proc. 2010-52
Full text (IRS public release)
Significant Index No. 0431.00-00
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION
OCT 12 2017
201801015
Re: (Plan No. ) (“Plan”)
EIN: -
Plan Sponsor =
Dear :
This letter constitutes notice that approval has been granted for your request for an
automatic extension for amortizing the unfunded liabilities as of January 1, 20 , for
the above-named Plan. 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 application submission that are established as of January 1, 20 , as
shown in the table on page 2. This approval will extend the amortization periods for 5
years.
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,
(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.
201801015
2
Description of Charge Base | Date Established | Initial Amount | Initial Period | Outstanding Balance as of 1/1/2016 | Amortization Period before Extension | Amortization Charge before Extension
1 | 4/1/19 | | 40 | | 2 |
2 | 4/1/19 | | 40 | | 4 |
3 | 4/1/19 | | 30 | | 1 |
4 | 4/1/19 | | 30 | | 2 |
5 | 4/1/19 | | 30 | | 2 |
6 | 4/1/19 | | 30 | | 2 |
7 | 4/1/19 | | 30 | | 3 |
8 | 4/1/19 | | 30 | | 3 |
9 | 4/1/19 | | 30 | | 3 |
10 | 4/1/19 | | 30 | | 4 |
11 | 4/1/19 | | 30 | | 4 |
12 | 4/1/19 | | 30 | | 5 |
13 | 4/1/19 | | 30 | | 6 |
14 | 4/1/19 | | 30 | | 6 |
15 | 4/1/19 | | 30 | | 7 |
16 | 4/1/19 | | 30 | | 9 |
17 | 4/1/19 | | 30 | | 9 |
18 | 4/1/19 | | 30 | | 11 |
19 | 4/1/19 | | 30 | | 12 |
20 | 4/1/19 | | 30 | | 12 |
21 | 4/1/19 | | 30 | | 12 |
22 | 4/1/19 | | 30 | | 13 |
23 | 4/1/19 | | 30 | | 13 |
24 | 4/1/20 | | 30 | | 15 |
25 | 4/1/20 | | 30 | | 15 |
26¹ | 4/1/20 | | 30 | | 15 |
27 | 1/1/20 | | 15 | | 2 |
28 | 1/1/20 | | 15 | | 3 |
29 | 1/1/20 | | 30 | | 19 |
30 | 1/1/20 | | 15 | | 4 |
31 | 1/1/20 | | 15 | | 5 |
32 | 1/1/20 | | 15 | | 6 |
33 | 1/1/20 | | 30 | | 21 |
34 | 1/1/20 | | 15 | | 7 |
35 | 1/1/20 | | 15 | | 10 |
36 | 1/1/20 | | 15 | | 11 |
37 | 1/1/20 | | 15 | | 13 |
38 | 1/1/20 | | 15 | | 14 |
39 | 1/1/20 | | 15 | | 15 |
40 | 1/1/20 | | 15 | | 15 |
¹ Based on information provided by the Plan’s authorized representative, bases #24, #25, and #26 consist entirely
of bases that are eligible for extension under section 431(d)(1) of the Code.
201801015
3
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.
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 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 concerning this matter, please contact
(ID# ) at ( ) - .
Sincerely yours,
David M. Ziegler, Manager
Employee Plans Actuarial Group 2
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