IRS grants a multiemployer pension plan a 5-year extension to amortize its unfunded liabilities under section 431(d)

Plain-English summary

Multiemployer pension plans must fund their promised benefits under minimum funding rules, paying down "unfunded liabilities" over set amortization periods. Section 431(d) lets a plan apply for an automatic extension of those periods, up to five years, if it meets specific conditions. Here the IRS granted such an extension for a multiemployer plan, stretching the amortization period of each listed charge base by five years. The approval rested on the plan actuary's certifications: that without the extension the plan would hit a funding deficiency in the current or one of the next nine plan years; that the plan sponsor adopted a plan to improve funding; that the plan is projected to have enough assets to pay expected benefits over the extended period; and that required participant notice was given. The IRS conditioned the approval on the plan keeping its actuarial assumptions and methods reasonable and up to date, and warned that amending the plan to increase benefits, change benefit accruals, or change vesting while the extension is in place triggers the consequences under section 412(c)(7) of the Code and section 302(c)(7) of ERISA. The IRS expressed no opinion on the accuracy of the submitted materials.

Ruling snapshot

• Question: Will the IRS grant a multiemployer plan's request for an automatic 5-year extension of its amortization periods under section 431(d)?
• Outcome: Approved (5-year extension granted, subject to conditions)
• Key authorities: IRC § 431(d)(1), (b); ERISA § 304(b); IRC § 412(c)(7); ERISA § 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

Number: 202224017
Release Date: 6/17/2022

Re: Request for automatic extension of amortization periods

Taxpayer =

Plan =

Dear

This letter constitutes notice that approval has been granted for your request for an
automatic extension for amortizing the unfunded liabilities as of         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
        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

[Columns: Date Established | Description | Outstanding Balance | Remaining Years
Prior to Extension. The date and dollar-value cells are redacted or illegible in the
scan; the legible description entries follow.]

Plan amendment
Plan amendment
Plan amendment
Change in Assumptions
Plan amendment
Change in assumptions
Plan amendment
Actuarial loss
Plan amendment

Amortization Base Table (continued)

[Columns: Date Established | Description | Outstanding Balance | Remaining Years
Prior to Extension.]

Actuarial loss
Plan amendment
Plan amendment
Plan amendment
Actuarial loss
Plan amendment
Actuarial loss
Plan amendment
Plan amendment
Actuarial loss
Change in assumptions
Actuarial loss
Change in assumptions
Actuarial loss
Change in assumptions
Plan amendment
Actuarial loss
Change in assumptions
Actuarial loss
Change in assumptions
Plan amendment
Actuarial loss
Actuarial loss

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:

(i) absent the extension under section 431(d)(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, EP Classification in Columbus,
Ohio, to the Manager, EP Compliance Unit in Chicago, Illinois, and to your authorized

representatives pursuant to a Power of Attorney and Declaration of Representative
(Form 2848) on file in this office.

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.

If you require further assistance concerning this matter, please contact
[illegible]

Sincerely yours,

David M. Ziegler, Manager
Employee Plans Actuarial Group 2

cc: