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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
The IRS has issued a revenue procedure permitting multiemployer plan sponsors to request an extension of the amortization period for unfunded liability for up to 10 years, if certain conditions are met. A plan sponsor may request an “automatic” extension not in excess of five years and an “alternative” extension not in excess of 10 years in the same application. The Secretary of the Treasury will automatically grant the portion of an application requesting an extension of five years or less. The grant of the portion of an application that includes a request for an extension of over five but not exceeding ten years is discretionary on the part of the Secretary.
The request for an extension of an amortization period must be submitted to IRS in the form of a letter ruling, along with appropriate authorization, certification by the plan’s actuary, and a user fee. Notice must be provided to each employee organization representing employees covered by the plan, to each contributing employer, and to each participant, beneficiary, and alternate payee of the plan within 14 days prior to the date of submission of the request. Appendix A of the revenue procedure contains a Model Notice that will allow sponsors to comply with the notice requirement.
All extension requests must be submitted by the last day of the first plan year for which the extension is intended to take effect. The IRS will consider applications received after this date only upon a showing of good cause. The plan actuary must provide the IRS with annual certification of a plan’s funding status under Code Sec. 432(b)(3) not later than the 90th day of each plan year, even if an application for an extension has been made. The actuary’s certification may not take into account any extension application before the application receives a favorable ruling.
Prior to amendment by the Pension Protection Act (PPA; P.L. 109-280), Code Sec. 412 (e) and ERISA §304(a) allowed any plan sponsor to request an extension to amortize unfunded liability for up to ten years. Those provisions were replaced, effective for plan years beginning after December 31, 2007, pursuant to new Code Sec. 431(d) and ERISA §304(d) . For plan years beginning in 2008, there is no Code provision that permits single-employer plans to receive an extension of the amortization period for unfunded liability. Code Sec. 431(d)(1)(C) provides a sunset provision requiring extension applications to be submitted on or before December 31, 2014.
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