Pension plan received waiver of 100-percent funding excise tax

Plain-English summary

A company requested waiver of the 100-percent excise tax on a pension plan's uncorrected minimum required contribution. It furnished evidence that imposing the tax would cause substantial business hardship and harm plan participants in the aggregate, and it withdrew a separate request for waiver of the minimum funding standard. The IRS granted the waiver for an amount equal to 100 percent of the plan's unpaid minimum required contribution at the end of the relevant plan year, to the extent it remained uncorrected.

Ruling snapshot

• Question: Could the company obtain a waiver of the section 4971(b) 100-percent excise tax for the plan year?
• Outcome: Approved for the specified unpaid minimum required contribution.
• Key authorities: IRC §§ 412(c) and 4971(b); Rev. Proc. 81-44; ERISA § 3002(b)

Full text (IRS public release)

Internal Revenue Service                                 Department of the Treasury
                                                         Washington, DC 20224

Number: 201928002                                        Third Party Communication: None
Release Date: 7/12/2019                                  Date of Communication: Not Applicable
Index Number: 4971.02-00, 4971.06-02
                                                         Person To Contact:
--------------------------------------------             -----------------, ID No. ----------------
------------------------------                           Telephone Number:
--------------------------                               --------------------
-----------------------------                            Refer Reply To:
                                                            CC:EEE:EB:QP1
In Re: ---------------------------------------------------- PLR-114140-18
--------------------------------                            Date:
                                                            April 10, 2019




Plan        = -----------------------------------------------------------------------------
Plan Year A = ------
Company     = --------------------------------------------


Dear ----------------:

This letter constitutes notice that, pursuant to the March 8, 2019 request by Company, a
waiver of the 100 percent tax under section 4971(b) of the Internal Revenue Code
(“Code”) has been granted for Plan Year A.

In accordance with section 3.04 of Rev. Proc. 81-44, 1981-2 C.B. 618, Company
furnished evidence that imposition of the 100 percent excise tax would be a substantial
business hardship and would be adverse to the interest of plan participants in the
aggregate. Company submitted a request for a waiver of the minimum funding standard
under section 412(c) with respect to Plan Year A, and it has been withdrawn.

The waiver of the 100 percent tax has been granted in accordance with section 3002(b)
of the Employee Retirement Income Security Act of 1974 (“ERISA”). The amount for
which the waiver has been granted is equal to 100 percent of the Plan's unpaid
minimum required contribution as of December 31 of Plan Year A, the end of the plan
year for which the excise tax waiver has been granted, to the extent such unpaid
minimum required contribution has not been corrected.

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in
this letter.

PLR-114140-18                                 2

This ruling is directed only to the taxpayer that requested it. Section 6110(k)(3) of the
Code provides that it may not be used or cited by others as precedent.

The ruling contained in this letter is based upon information and representations
submitted by Company and accompanied by a penalty of perjury statement executed by
an appropriate party. While this office has not verified any of the material submitted in
support of the request for ruling, it is subject to verification on examination.

                                       Sincerely,




                                       Janet A. Laufer
                                       Senior Technician Reviewer
                                       Employee Benefits, Exempt Organizations, and
                                       Employment Taxes
                                       Office of Associate Chief Counsel