n-05-60.pdf

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Part III. Administrative, Procedural, and Miscellaneous

Notice 2005-60

I. PURPOSE

The Internal Revenue Service, the Department of Labor's Employee Benefits
Security Administration ("EBSA") and the Pension Benefit Guaranty Corporation
("PBGC") are providing relief in connection with certain employee benefit plans because
of damage caused by Hurricane Katrina (“Katrina”). The relief provided by this notice is
in addition to the relief already provided by the Service and the PBGC to victims of
Katrina.

II. BACKGROUND

Section 412(a) of the Code and § 302(a) of the Employee Retirement Income
Security Act of 1974, Pub. L. No. 93-406 ("ERISA") provide that, in order for a plan to
meet the minimum funding standards of the Code and ERISA, the plan must not have
an accumulated funding deficiency as of the end of each plan year. Section 412(c)(10)
of the Code and § 302(c)(10) of ERISA provide that, for purposes of satisfying the
minimum funding requirements of the Code and ERISA, any contributions for a plan
year made by an employer by the end of the 8½-month period following the end of such
plan year are deemed to have been made on the last day of the year.

Section 412(d) of the Code and § 303 of ERISA provide for waivers of the
minimum funding requirements in the event of temporary substantial business hardship.
In order for a plan other than a multiemployer plan to receive such a waiver, § 412(d)(4)
of the Code and § 303(d)(1) of ERISA provide that an application for such a waiver must
be submitted no later than the 15
th
day of the 3rd month beginning after the close of the
plan year for which the waiver is sought. Thus, for example, in order for a plan to
receive a waiver of the minimum funding requirements for the plan year ending on June
30, 2005, the sponsor of the plan must have submitted an application by September 15,
2005.

Section 412(m)(1) of the Code and § 302(e)(1) of ERISA require that, with
respect to certain plans with a funded current liability percentage of less than 100
percent, a higher rate of interest be charged on any unpaid required quarterly
installments. Section 412(m)(5) of the Code and § 302(e)(5) of ERISA increase the
required quarterly installments to the amount needed to prevent a liquidity shortfall (as
defined in those sections). For a plan with a calendar-year plan year, the due dates for
the required installments for the 2005 calendar year are April 15, 2005, July 15, 2005,
October 15, 2005, and January 15, 2006.

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Section 412(n)(1) of the Code and § 302(f)(1) of ERISA provide that, with respect
to certain plans with a funded current liability percentage of less than 100 percent, if the
required installments or any other payment required under those sections are not made
to the plan before the due date for such installment or other payment, and if the
aggregate unpaid balance of such installments or other payments exceeds $1,000,000,
then there shall be a lien in favor of the plan. The lien may be perfected by the PBGC.

Section 7508A(b) of the Code provides that, in the case of a pension or other
employee benefit plan, or any sponsor, administrator, participant, beneficiary, or other
person with respect to such plan, affected by a Presidentially declared disaster or a
terroristic or military action, the Secretary of the Treasury may prescribe a period of up
to 1 year which may be disregarded in determining the date by which any action is
required or permitted to be completed. No plan shall be treated as failing to be
operated in accordance with its terms solely because the plan disregards any period by
reason of such relief. Parallel provisions are in Titles I and IV of ERISA.

Under the PBGC's premium regulations, contributions may be taken into account
for determining a plan's unfunded vested benefits for a premium payment year or a
plan's entitlement to the full funding limit exemption from the variable-rate premium for a
premium payment year if the contributions (1) are for a plan year before the premium
payment year and (2) are made on or before the earlier of (a) the due date for payment
of the variable-rate premium or (b) the date the variable-rate premium is paid (29 CFR
§§ 4006.4(b)(2)(iv) and 4006.5(a)(5)). In addition, there are Title IV reporting and
disclosure requirements arising from certain late contributions (e.g., 29 CFR § 4043.25,
29 CFR § 4011.10(b)(6)).

III. RELIEF

For any plan that is affected by Katrina (an "Affected Plan"), if the date described
in § 412(c)(10) or 412(m) of the Code and § 302(c)(10) or 302(e) of ERISA for making
contributions falls within the period beginning on August 29, 2005, and ending on
October 30, 2005, then the date such contributions must be made is postponed to
October 31, 2005. If the date described in § 412(d)(4) of the Code and § 303(d)(1) of
ERISA for applying for a waiver for an Affected Plan falls within the period beginning on
August 29, 2005, and ending on October 30, 2005, then the date such waiver must be
applied for is postponed to October 31, 2005.

For purposes of the notice, a plan is an Affected Plan only if any of the following
were located at the time of Katrina in any of the parishes or counties declared by the
President to be eligible for individual assistance under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288: the principal place of
business of the employer that maintains the plan (in the case of a single-employer plan,
determined disregarding the rules of § 414(b) and (c) of the Code); the principal place of
business of employers that employ more than 50 percent of the active participants
covered by the plan (in the case of a plan covering employees of more than one

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employer, determined disregarding the rules of § 414(b) and (c)); the office of the plan
or the plan administrator; the office of the primary recordkeeper serving the plan; or the
office of the enrolled actuary or other advisor that had been retained by the plan or the
employer at the time of Katrina to determine the funding requirements for which the due
date falls between the period beginning on August 29, 2005, and ending on October 30,
2005. For purposes of the preceding sentence, the term "office" includes only the
worksite of those individuals, and the location of any records, necessary to determine
the plan's funding requirements for the relevant period.

The following rule applies under Title IV of ERISA for purposes of determining a
plan's unfunded vested benefits for a premium payment year or entitlement to the full
funding limit exemption from the variable-rate premium for a premium payment year.
For any plan for which this notice extends a date described in § 412(c)(10) of the Code
and § 302(c)(10) of ERISA, contributions for any plan year before the premium payment
year may be taken into account if they are made on or before the earlier of (1) the
extended § 412(c)(10)/§ 302(c)(10) date under this notice or (2) the date of the plan's
variable-rate premium filing (or, if applicable, amended variable-rate premium filing) for
the premium payment year. In addition, for any plan for which this notice extends a
date described in § 412(c)(10) of the Code and § 302(c)(10) of ERISA, contributions are
treated as timely for purposes of any Title IV reporting and disclosure requirement if
they are made on or before the extended § 412(c)(10)/§ 302(c)(10) date under this
notice.

DRAFTING INFORMATION

The principal authors of this notice are Donna Prestia and Roger Kuehnle of the
Employee Plans, Tax Exempt and Government Entities Division. For further information
regarding this notice, please contact the Employee Plans’ taxpayer assistance
telephone service at 1-877-829-5500, between the hours of 8:30 a.m. and 6:30 p.m.
Eastern Time, Monday through Friday (a toll-free number). Ms. Prestia may be reached
at (202) 283-9543 (not a toll-free number).