Multiemployer plan receives a five-year funding extension

Plain-English summary

A multiemployer pension plan requested a five-year extension for amortizing specified unfunded liabilities. The plan's actuary certified that without the extension the plan would have an accumulated funding deficiency in the current year or one of the next nine years. The application also stated that the sponsor had adopted a plan to improve funding, the plan was projected to have enough assets to pay benefits and expenses during the extended period, and the required notice had been given. The IRS approved the extension under section 431(d)(1) for the eligible amortization charge bases identified in the application. The approval expects the plan to review its actuarial assumptions and methods and use reasonable assumptions reflecting the best estimate of anticipated experience.

Ruling snapshot

• Question: May the multiemployer plan extend the amortization periods for the eligible unfunded liabilities in its application?
• Outcome: approved
• Key authorities: IRC §§ 431(b) and 431(d); ERISA § 304(b)

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

OCT 05 2017

201752216

Re:
                ; EIN:     -          , Plan No.      (the Plan)

Taxpayer =

Dear                  and             :

This letter constitutes notice that approval has been granted for your request for a 5-
year automatic extension for amortizing the unfunded liabilities 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). The extension of the amortization periods of the unfunded liabilities of the
Plan has been granted in accordance with section 431(d)(1) of the Code. This
extension is effective for the plan year beginning January 1,          . This extension
applies to the eligible amortization charge bases as identified in your application
submission, established as of January 1,          .

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 431(d)(1)(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,

2

201752216

    (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 431(d)(3)(A) has been
          provided.

In granting this approval, it is expected that the Plan’s assumptions and methods will be
reviewed and updated as appropriate so that each prescribed assumption was applied
in accordance with applicable law and regulations and that each assumption is
reasonable and offers the best estimate of anticipated experience under the Plan
(taking into account the experience of the Plan and reasonable expectations going
forward). In addition, we are not expressing any opinion as to the accuracy of any
material submitted with your request.

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.

We have sent a copy of this letter to the Manager, EP Classification in Baltimore,
Maryland and to the Manager, EP Compliance Unit in Chicago, Illinois and to your
authorized representative pursuant to a power of attorney (Form 2848) on file with this
office. If you have any questions regarding this matter, please contact
(ID#          ) at (     )      -     .

Sincerely,

David M. Ziegler, Manager
Employee Plans Actuarial Group 2

cc: