PLR 9933052: Pension funding waiver modified to require contributions and real estate security

Plain-English summary

The IRS modified an earlier conditional waiver of a pension plan's minimum funding standard for the plan year ending August 31, 1996. It removed a credit balance condition and required the company to make contributions sufficient to meet the funding standard for plan years ending in 1997 through 2001. Within 90 days, the company also had to enter into an agreement with the Pension Benefit Guaranty Corporation giving the plan a first priority security interest in company real estate, then send the IRS a copy within seven days of signing. The letter states that the company had already made the contributions needed for the 1998 plan year.

Ruling snapshot

• Question: How would the previously granted minimum funding waiver be modified?
• Outcome: Approved modification, replacing the credit balance condition with contribution and security requirements.
• Key authorities: IRC § 412.

Full text (IRS public release)

199933052

Internal Revenue Service Department of the Treasury

Significant Index No. 0412.06-00
Washington, DC 20224

Person to Contact:
Telephone Number:

Refer Reply to:

OP:E:EP:A:2
Date:

MAY 28 1999

In re:

This letter constitutes notice that pursuant to your request of November 13, 1998, the conditional waiver of the minimum funding standard for the above-named plan for the plan year ending August 31, 1996, which was granted in our ruling letter dated October 25, 1996, has been modified to remove the credit balance condition and to add the following conditions:

(1) The company will make contributions necessary to satisfy the minimum funding standard under the plan for the plan years ending August 31, 1997 through August 31, 2001.

(2) Within 90 days of the date of this letter, the company will enter into a security agreement with the Pension Benefit Guaranty Corporation (PBGC) that gives the plan a first priority security interest in the company’s real estate in an amount satisfactory to the PBGC. Within 7 days of the signing of such agreement, a copy of the signed agreement shall be provided to this office at the following address:

Internal Revenue Service
1111 Constitution Avenue, N.W.
Attn: John Heil
OP:E:EP:A:2
Room 2557
Washington, DC 20224

According to the information provided with the request, contributions necessary to satisfy

the minimum funding standard for the plan year ending August 31, 1998 have been made to the plan.

A copy of this letter is being sent to the Key District Office in as well as to your authorized representative pursuant to a power of attorney (Form 2848)

(2) 199933052

on file. If you have any questions concerning this ruling; please contact the individual referenced above.

Sincerely yours,

Martin L. Pippins

Martin L. Pippins
Chief, Actuarial Branch 2 (Acting)