Five-year extension granted for pension funding amortization periods

Plain-English summary

A multiemployer pension plan requested an automatic extension for amortizing specified unfunded liabilities beginning with its 2023 plan year. The plan submitted an actuarial certification that without relief it would face an accumulated funding deficiency, had adopted a funding improvement plan, was projected to have enough assets to pay expected benefits and expenses, and had given the required notice. The IRS approved a five-year extension for each listed amortization charge base. The ruling expects the plan to use lawful and reasonable actuarial assumptions and obtain any required approvals for assumption or funding-method changes. It does not confirm the accuracy of the materials submitted.

Ruling snapshot

• Question: Did the plan qualify for a five-year extension of the amortization periods for listed unfunded liabilities?
• Outcome: Approved for the plan year beginning January 1, 2023
• Key authorities: IRC §§ 431(d)(1), 431(d)(3)(A), 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

JUL 20 2023

Release Number: 202341012
Release Date: 10/13/2023

Re: Request for automatic extension of amortization periods

Taxpayer =

(EIN:          )

Plan =
(EIN:          ; Plan No:          )

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, 2023, 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, 2023 and applies to the eligible amortization charge bases as identified in
your application submission, as shown below. This approval will extend the
amortization period of each amortization charge base shown below for 5 years.

Amortization Base Table

Description             Date          Initial Base     Outstanding       Requested
                        Established   Amount           Balance as of     Extension (in
                                                       1/1/2023          years)

Benefit Improvements
Assumptions
Assumptions
Benefit Improvements

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Amortization Base Table (continued)

Description             Date          Initial Base     Outstanding       Requested
                        Established   Amount           Balance as of     Extension (in
                                                       1/1/2023          years)

Benefit Improvements
Assumptions
Benefit Improvements
Assumptions
Benefit Improvements
Assumptions
Benefit Improvements
Benefit Improvements
Benefit Improvements
Assumptions
Assumptions
Assumptions
Assumptions
Experience Loss
Benefit Improvements
Assumptions
Experience Loss
Assumptions
Experience Loss
Assumptions
Experience Loss
Experience Loss
Assumptions
Experience Loss
Experience Loss
Assumptions
Experience Loss
Assumptions

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) of the Code.
The Plan has submitted the required information to meet the criteria in
section 431(d)(1)(B) of the Code, including a certification from the plan's actuary that:

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(i)     absent the extension under section 431(a)(1)(A) of the Code, 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 section 431(d)(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, Classification Group 4 in

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.

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

Sincerely yours,

David M. Ziegler, Manager
Employee Plans Actuarial Group 2

cc: