Rev. Proc. 79-61

Section 1. Purpose.

The purpose of this Revenue Procedure is to outline the procedure by which a plan administrator or plan sponsor may request and obtain approval for an extension of an amortization period in accordance with section 412(e) of the Internal Revenue Code and section 304(a) of the Employee Retirement Income Security Act of 1974 (ERISA) [Pub. L. 93-406, 1974-3 C.B. 1, 42].

Sec. 2. Background Information.

.01 Statute--Section 412(e) of the Code and section 304(a) of ERISA provide that the period of years required to amortize any unfunded liability of any plan may be extended by the Secretary of Labor for a period of time (not in excess of 10 years).

.02 Reorganization Plan--Reorganization Plan No. 4 of 1978, 1979-1 C.B. 480, which became effective December 31, 1978, transferred the function described in subsection .01 to the Secretary of the Treasury.

Sec. 3. Requests for Approval to Extend an Amortization Period.

.01 Who may submit--Only a plan administrator, plan sponsor, or an authorized representative of either may submit a request for approval to extend the period of years required to amortize any unfunded liability.

.02 Where to Submit--Such requests shall be submitted to the Commissioner of Internal Revenue, Attention: E:A, 1111 Constitution Avenue, N.W., Washington, D.C. 20224.

.03 Procedural Rules--Any such request must be signed by the plan administrator, plan sponsor, or an authorized representative of either in accordance with section 601.201 of the Statement of Procedural Rules. Since a request for approval to extend an amortization period constitutes a request for a ruling, and since a ruling constitutes a written determination within the meaning of section 6110 of the Code, compliance with section 6110 is required with respect to a request for approval.

Section 601.201 of the Statement of Procedural Rules sets forth the requirements for complying with section 6110 of the Code. Section 601.201(e) furnishes specific instructions to taxpayers.

Accordingly, any such request for approval must include both the required declaration, properly signed by the plan administrator or plan sponsor, and a statement of proposed deletions for disclosure purposes.

.04 Information Required -- The applicant must furnish appropriate evidence that the extension of the amortization period is needed to continue the plan or to prevent a substantial curtailment of pension benefit levels or employee compensation, and that a denial of the extension would be adverse to the interests of plan participants in the aggregate. What constitutes appropriate evidence will depend on the facts and circumstances of each case. Generally, such evidence should include the following:

(a) The unfunded liability for which an extension of the amortization period is requested.

(b) The reasons why an extension of the amortization period is needed.

(c) The length of the extension of the amortization period desired (up to a maximum of 10 years).

(d) A numerical illustration showing how the annual pension plan costs will be affected by extending the amortization period. The illustration should be prepared by the enrolled actuary servicing the plan.

(e) The first plan year for which the extension of the amortization period will be reflected in the annual pension plan costs.

(f) General facts concerning the employer. A brief statement concerning the history of the company, its primary business, the ownership of the company, and any recent or contemplated changes (such as acquisitions, mergers, or discontinuances of operations) which might have a bearing on the company's organization or financial condition. The term "employer" includes any related corporation, or other trade or business, described in section 414(b) or (c) of the Code, that also maintains the plan.

(g) The financial condition of the employer. The annual financial statement of the company for each of the last five years should be submitted. This submission should include at least the balance sheet and profit and loss statement for each year. Recent interim financial statements, if available, should also be submitted. If the employer submits reports on Form 10-K to the Securities and Exchange Commission, a copy of the most recent report should be included. Preferably, the financial statement should be a certified financial statement. However, if a certified financial statement has not been prepared, an uncertified statement is acceptable. If neither of these statements is available, copies of the company's Federal income tax returns, including all of the supporting schedules, may be submitted.

(h) Facts concerning each pension plan for which an extension is requested. For each such plan, the following information must be supplied:

(1) The name of the plan and the plan's identification number.

(2) The date the plan was adopted.

(3) The effective date of the plan.

(4) The classes of employee covered.

(5) The number of employees covered.

(6) A copy of the current plan document and a copy of the most recent summary plan description.

(7) A copy of the most recent determination letter issued to the plan.

(8) A brief description of any plan amendments during the last five years which affected plan costs, including the approximate effect of each amendment of such costs.

(9) The most recent actuarial valuation report, plus any available actuarial reports for the preceding four plan years.

(10) A description of how the plan is funded (i.e., trust fund, individual insurance policies, etc.).

(11) A history of the contributions made to the plan for each of the last five plan years with the employee contributions and the employer contributions listed separately.

(12) The approximate contribution required to meet the minimum funding standard as determined by the plan's enrolled actuary.

(13) A copy of the most recently completed Annual Return/Report of Employee Benefit Plan (Form 5500, Form 5500C, or Form 5500K, as applicable) and a copy of the corresponding Actuarial Information schedule (Schedule B of Form 5500).

(14) A list of any waivers of the minimum funding standards, which became applicable at any time during the last 15 plan years, under section 412(d) of the Code and section 303 of ERISA or any extensions of time to amortize any unfunded liability, which became applicable at any time during the last 15 plan years, under section 412(e) of the Code and section 304(a) of ERISA. A description of any special conditions under which a waiver or an extension of time was granted must be submitted. A copy of each ruling letter may be submitted to satisfy this requirement.

(i) Other pension, profit-sharing, or stock bonus plans of the employer. If the employer contributes to other plans, an outline of the essential facts for each such plan should be submitted. The outline should include:

(1) A brief description of the plan, including the name of the plan and its plan year.

(2) The number of employees covered.

(3) The classes of employees covered.

(4) The approximate annual contribution required.

(j) Other information.

(1) A description of the nature of any matters pertaining to the plan which are currently pending or about to be submitted to the Internal Revenue Service, the Department of Labor, or the Pension Benefit Guaranty Corporation.

(2) Details of any existing litigation or court proceeding which involves the plan.

(3) A statement of which the Internal Revenue Service District Office maintains a file concerning the plan.

(k) In certain cases (for example, cases involving plans maintained by more than one employer) some of the material described in subsections (a) through (j) may be inappropriate or burdensome to furnish. In such cases, the applicant should furnish a statement indicating why it is either inappropriate or burdensome to furnish such material.

(1) The applicant may incorporate by reference any of the material described in subsections (a) through (j) which was submitted to the National Office in connection with a previous request for a ruling under section 412 of the Code. Such a reference should include the date of the previous request, the name of the taxpayer on whose behalf the request was submitted, and the name of the person who submitted the request.

Sec. 4. General.

Applicants who have difficulty in furnishing the information specified in this Revenue Procedure may call or write the Actuarial Division, E:A, for guidance. In some instances, preliminary conferences will be afforded in addition to conferences available under Section 601.201 of the Statement of Procedural Rules. In all cases, however, the material described in the last paragraph of section 3.03 shall be furnished.