SECTION 2. BACKGROUND

INFORMATION

.01 Section 431(d) .—Section 431(d) was added to the Code as part of a significant revision of the funding rules for pension plans qualified under § 401(a) made by the Pension Protection Act of 2006 (PPA). Parallel provisions to § 431(d) can be found at § 304(d) of the Employee Retirement Income Security Act of 1974 (ERISA). The Secretary of the Treasury has interpretive and enforcement jurisdiction over both provisions.

Section 431(d)(1) provides that if the plan sponsor of a multiemployer plan submits to the Secretary of the Treasury an application for an extension of the amortization period for any unfunded liability described in § 431(b)(2)(B) or 431(b)(4) (referred to in this revenue procedure as a “charge base”), and includes the certification by the plan’s actuary described in § 431(d)(1)(B), the Secretary shall extend the amortization period for the period (not in excess of five years) requested in the application. An extension under § 431(d)(1) is referred to as an automatic extension. In addition, § 431(d)(2)(A) provides that the plan sponsor of a multiemployer plan may submit an application for an extension of the amortization period for any such charge base, and the Secretary may extend the amortization period for a period of time not in excess of 10 years less the number of years of any automatic extension with respect to such charge base, if the Secretary makes the determination

described in § 431(d)(2)(B). An extension under § 431(d)(2) is referred to as an alternative extension. Section 431(d)(3) requires that an applicant provide notice of the extension application to each affected party described in § 4001(a)(21) of ERISA.

.02 Rev. Proc. 2008–67 .—Rev. Proc. 2008–67, 2008–2 C.B. 1211, provided the procedure for submitting an application for a ruling on an amortization extension with respect to plan years starting after December 31, 2007. This revenue procedure differs from Rev. Proc. 2008–67 in a number of ways. The major differences include: modifications to the list of affected parties to whom notification must be made (adding the Pension Benefit Guaranty Corporation (PBGC) and removing contributing employers); extension of the period for submission of an application; and modification of the treatment of automatic extension applications for purposes of certifying a plan’s status under § 432(b)(3) of the Code. This revenue procedure also clarifies certain other aspects of Rev. Proc. 2008–67. In addition, the model notice in this revenue procedure now includes a plain language explanation section and a Comment and IRS Acknowledgement Sheet.

.03 Section 431(b)(8) .—Section 211(a)(2) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010), Pub. L. No. 111–192, added § 431(b)(8) to the Code. Section 431(b)(8)(A) provides a special amortization rule for certain net investment losses in the case of a multiemployer plan that meets a solvency test. The special rule applies to the portion of the plan’s experience loss or gain for a plan year attributable to net investment losses (if any) incurred in either or both of the first two plan years ending after August 31, 2008 (an eligible loss year). This portion of the experience loss or gain may be treated as an item separate from other experience losses, to be amortized in equal annual installments (until fully amortized) over the period beginning with the plan year in which such portion is first recognized in the actuarial value of assets and ending with the last plan year in the 30-plan-year period beginning with the eligible loss year. Under § 431(b)(8)(A)(ii)(I), the amortization period under the special amortization rule

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the applicant’s Board and must be in substantially the form set forth in the Model Notice found in Appendix A to this revenue procedure. The Service does not require the applicant to furnish any information to affected parties in addition to that required by the Model Notice in Appendix A as part of the extension application process, but additional information may be provided by the applicant pursuant to the collective bargaining process or otherwise.

The notice must be hand-delivered or mailed to the last known address of each employee organization, participant, beneficiary, and alternate payee. Alternatively, the notice may be delivered electronically in accordance with the requirements of § 1.401(a)–21 of the Income Tax Regulations. Merely posting the notice on a bulletin board is not sufficient to satisfy this notice requirement. If the applicant makes a reasonable effort to carry out the provisions of this paragraph, then failure of an employee organization, participant, beneficiary, or alternate payee to receive the notice will not cause the applicant to fail the notice requirement.

Notice to the PBGC may be submitted electronically to MultiemployerPro- gram@pbgc.gov or may be sent to the following address:

Pension Benefit Guaranty Corporation Attn: Multiemployer Program Division 1200 K Street, N.W. Washington, D.C. 20005–4026

.06 Providing Informa- tion .—Employers who have difficulty in furnishing the information specified in this revenue procedure may call the Employee Plans Customer Assistance Service at 1–877–829–5500 (a toll-free number), or write for guidance to the following address:

Internal Revenue Service Commissioner, TE/GE Attention: SE:T:EP:RA:T:A2 1111 Constitution Avenue, N.W. Washington, D.C. 20224

In appropriate instances, pre-submission conferences may be afforded in addition to conferences available under Rev. Proc. 2010–8.

.07 Coordination of Extension Appli- cations .—The total length of an amortization period extension permitted under

cannot be further extended under § 431(d). In addition, under § 431(b)(8)(A)(ii)(II), if an extension of an amortization period was granted under § 431(d) for any plan year before a decision to apply the special amortization rule for the plan year, that extension cannot result in the amortization period under the special amortization rule exceeding 30 years.