Multiemployer plan received an amortization extension

Plain-English summary

A multiemployer pension plan requested an automatic extension of the periods for amortizing specified unfunded liabilities. The plan's actuary certified that without relief the plan would incur an accumulated funding deficiency within the relevant period, the sponsor had adopted a funding-improvement plan, the plan was projected to have enough assets to pay benefits and expenses over the extended period, and the required notice had been provided. The IRS approved the request under Section 431(d)(1), although the released copy redacts the extension length and the dates, amounts, periods, balances, and payments in the amortization-base table. The letter expects the plan to maintain appropriate actuarial assumptions and obtain required approvals for any changes. It also warns that benefit, accrual, or vesting changes while the extension remains in place can have consequences under Section 412(c)(7).

Ruling snapshot

• Question: Did the plan qualify for an automatic extension of its unfunded-liability amortization periods under Section 431(d)(1)?
• Outcome: Approved; the public copy redacts the extension length.
• Key authorities: IRC §§ 431(d)(1) and 412(c)(7); ERISA §§ 304 and 302(c)(7); Rev. Proc. 2010-52.

Full text (IRS public release)

Significant Index No. 0431.00-00
DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE 2 0 1 8 1 5 0 1 7

WASHINGTON, D.C. 20224

TAX EXEMPT AND

GOVERNMENT ENTITIES JAN 18 2018

DIVISION

SE:T:EP:RA:AZ

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, 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, , and applies to the eligible amortization charge bases as identified in your application submission that are established as of January 1, as shown in the table on page 2. This approval will extend the amortization periods for 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

succeeding plan years,
(ii) the Plan Sponsor has adopted a plan to improve the Plan's funding status,

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2

Date Established | Type | Original Amount | Original Period | Remaining Period as of 01/01/ | Outstanding Balance as of 01/01/ | Payment

[OCR note: the dates, amounts, periods, balances, and payments in the table are redacted. The surviving Type entries are transcribed below in order.]

Benefits
Benefits
Benefits
Benefits
Benefits
Benefits
Benefits
Assumptions
Benefits
Benefits
Assumptions
Benefits
Assumptions
Benefits
Assumptions
Benefits
Assumptions
Benefits
Assumptions
Benefits
Assumptions
Benefits
Amendment
Assumption
Assumptions
Amendment
Assumptions
Assumptions
Experience
Assumptions
Experience
Assumptions
Experience
Assumption
Experience
Assumptions
Experience
Amendment
Assumptions
Experience
Assumptions
Assumptions
Experience
Assumptions
Experience
Experience

201815017

3

(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.

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.

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4

If you require further assistance concerning this matter, please contact (ID# ) at ( ) - .

Sincerely yours,

David M. Ziegler, Manager
Employee Plans Actuarial Group 2

cc: