Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has provided guidance for sponsors of multiemployer defined benefit plans relating to elections described in Act secs. 204 and 205 of the Worker, Retiree, and Employer Recovery Act of 2008 (P.L. 110-458), and on the notice required if a plan sponsor makes an election under Act sec. 204. Code Sec. 432, as added by the Pension Protection Act of 2006 (P.L. 109-280) (PPA), established rules for multi-employer defined benefit plans with inadequate funding. The PPA requires certification of the plan's status as endangered, critical or neither and the development of a funding improvement or rehabilitation plan for submission to the Secretary of the Treasury. Plans in endangered or critical status must notify participants, beneficiaries, the Pension Benefit Guaranty Corporation and the Secretary of Labor no later than 30 days past the date of actuary certification. Code Sec. 4971 imposes an excise tax on employers responsible for an accumulated funding deficiency in a plan. Both Code Secs. 432 and 4971 apply to tax years on or after January 1, 2008.

 
P.L. 110-458 provides that the sponsor of a multi-employer plan may elect to temporarily freeze a plan's status in order to maintain the same status as it had in the plan's prior year. Additionally, P.L. 110-458 provides for an elective extension of the funding improvement or rehabilitation plan for plans with a plan year beginning in 2008 or 2009. Thus, a multi-employer plan for which an election has been made must operate in accordance with the Code Sec. 432 elected status, not the status established by the actuary certification.

  The election must be made by the date 30 days after the due date of the annual certification or April 30, 2009, whichever comes later. However, the election must be made before the last day of the plan year and under no circumstances any earlier than April 30, 2009. The election must be submitted to the IRS and include all the prescribed information required by P.L. 110-458. For plans that elect to freeze their status as neither endangered or critical, special notice is required. The time limit on providing notice falls no later than 30 days after the later of either the actuary certification for the election year or the date of election. In such elections, notice must be written in a manner that average employees will understand.

Notice 2009-31, 2009FED ¶46,305

Other References:

 
Code Sec. 432

  CCH Reference - 2009FED ¶20,201.021

 
Code Sec. 4971

  CCH Reference - 2009FED ¶34,324.19

  CCH Reference - 2009FED ¶34,324.20

  Tax Research Consultant

  CCH Reference - TRC RETIRE: 57,202
CCH Reference - TRC RETIRE: 57,212