Multiemployer plan received five-year amortization extensions

Number

201818021

Outcome

Approved

Document type

Private Letter Ruling

IRS subject

Minimum Funding Standards for Multiemployer Plans

Topics

Retirement plans, IRAs, and annuities

Code sections

§ 412, § 431, § 6110

Ruling dated

February 6, 2018

Publicly released

May 4, 2018

Source

View Official PDF

Apply this to your situation

This page covers one taxpayer's ruling, issued in 2018, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, 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.

About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.

Transcribed from a scanned original: the IRS released this determination as an image-only PDF. The full text below is a machine transcription, proofread against the scan. Check the original PDF before quoting exact language.

View official IRS release (PDF)

Plain-English summary

A multiemployer pension plan requested automatic extensions for amortizing 71 listed unfunded-liability charge bases. The plan's actuary certified that, without relief, 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, projected sufficient assets for expected benefits and expenses during the extended period, and provided the required notice. The IRS approved five-year extensions under Section 431(d)(1). It cautioned that benefit, accrual, or vesting increases while the extension remains in place can trigger consequences under Section 412(c)(7) and the parallel ERISA provision.

Ruling snapshot

Question: Did the plan qualify for automatic five-year extensions of its listed unfunded-liability amortization periods?
Outcome: Approved.
Key authorities: IRC §§ 431(b), 431(d)(1), and 412(c)(7); ERISA §§ 304(b) 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
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

FEB 06 2018

T:EP:RA:AZ

Re: [redacted]
(Plan No. [redacted]) (“Plan”)
EIN: [redacted]

Plan Sponsor = [redacted]

Dear [redacted]:

This letter constitutes notice that approval has been granted for your request for an automatic extension for amortizing the unfunded liabilities as of May 1, 20[redacted], 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 May 1, 20[redacted], and applies to the eligible amortization charge bases as identified in your application submission that are established as of May 1, 20[redacted], as shown in the table starting 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.

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.

Summary of Outstanding Charge Bases Subject to the Amortization Extension

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# [redacted]) at ([redacted]) [redacted].

Sincerely yours,

David M. Ziegler, Manager
Employee Plans Actuarial Group 2

cc: Manager, EP Classification
Baltimore, Maryland
Manager, EP Compliance Unit
Chicago, Illinois

What does the Code say today, for your facts?

This determination bound one taxpayer and cannot be cited. Ezel checks the current Internal Revenue Code and IRS guidance against your situation, with citations.

Opens in Ezel Pro.

Checks the law as it stands today, not only this page
Cites every source it relies on, so you can verify it
Chat, drafting and research in one workspace