IRS revokes plan's five-year funding amortization extension

Plain-English summary

A pension plan's representatives asked the IRS to revoke a 2009 ruling that had granted a five-year automatic extension for amortizing unfunded liabilities as of July 1, 2008. The IRS found that mistakes in the original submission caused the ruling to use the wrong employer identification and plan numbers. It granted the revocation, eliminating the extension from the plan's funding standard account. The plan must recompute affected years without the five-year amortization and amend the related Schedules MB, although a reconciliation attached to a specified later Schedule MB was sufficient because the revocation had not produced an accumulated funding deficiency. A separate request to change the plan's funding method remained under review.

Ruling snapshot

• Question: Should the prior five-year extension for amortizing the plan's unfunded liabilities be revoked?
• Outcome: Revocation. The extension ceased to exist and affected funding schedules must be corrected.
• Key authorities: IRC § 431(b)(2)(B), (b)(4); ERISA § 304(b)(2)(B), (b)(4)

Full text (IRS public release)

Significant Index Number 0431.00-00

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

MAR 02 2017

Re:                                                   (“Plan”)
        EIN:             ; (Plan No.       )
        Sponsor =

Dear                         :

This letter constitutes notice that the ruling letter dated June 22, 2009, approving a
5-year automatic extension for amortizing the unfunded liabilities as 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(ERISA) of the Plan as of July 1, 2008, has been revoked. This revocation request was
made by your authorized representatives subsequent to discussions concerning your
request for a change in funding method for the Plan effective for the plan year
beginning July 1,       , and has been granted upon review of the material facts by this
Office.

We note that the ruling letter dated June 22, 2009, was issued with EIN
and Plan No.       . Upon review of the original submission requesting the 5-year
automatic extension and after discussions with your authorized representatives, we
have determined that this and other errors were a result of mistakes in the submission,
and the ruling letter should have been issued with EIN                 and Plan No.       .

As a consequence of this revocation, the 5-year automatic extension for amortizing the
unfunded liabilities of the Plan as of July 1, 2008, as reflected in the funding standard
account of the Plan and in the Schedules MB of Form 5500 filed for the Plan for each
plan year since the plan year beginning July 1,       , ceases to exist. Accordingly, the
funding standard account for the plan year beginning July 1,       , and each
subsequent plan year, must be re-determined without taking the 5-year amortization
into account. All Schedules MB filed for plan years beginning on or after July 1,
must be amended to reflect the revocation. However, since it has been represented
that this revocation has not resulted in an accumulated funding deficiency in any year, it
is sufficient to attach a reconciliation of the funding standard account to the Schedule
MB of Form 5500 filed for the plan year ending June 30,       .

2 201721024

We have sent a copy of this letter to each of your authorized representatives, to the
Manager, EP Classification in Baltimore, Maryland, and to the Manager, EP
Compliance Unit in Chicago. Your request for a change in funding method for the Plan
effective for the plan year beginning July 1,       , is still under review and will be
handled separately. If you have any questions, please contact please contact
(ID#          ) at (          )          .

Sincerely yours,

David M. Ziegler, Manager
Employee Plans Actuarial Group 2

Cc: