n-06-105.pdf

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing.

This collection currently includes the publisher’s available advance-release directory. Historical bulletin renditions are discovered separately; an advance-release record alone does not certify the collection archive complete.

# Part III .--- Administrative, Procedural and Miscellaneous

# Extension of Election of Alternative Deficit Reduction Contribution

Notice 2006-105

This notice sets forth the procedures for electing an alternative deficit reduction
contribution under § 412(l)(12) of the Internal Revenue Code (the Code) (which was
added by section 102 of the Pension Funding Equity Act of 2004 (PFEA), Pub. L. No.
108-218), as modified by section 402(i) of the Pension Protection Act of 2006 (PPA),
Pub. L. No. 109-280. Except as outlined below, all references to the Code and the
Employee Retirement Income Security Act of 1974 (ERISA) are to the Code and ERISA
as in effect on August 16, 2006.

## I. Background

Section 412(l)(12) of the Code permits certain employers who are required to
make additional contributions under § 412(l) to elect a reduced amount of those
contributions ("alternative deficit reduction contributions") for plan years beginning after
December 27, 2003, and before December 28, 2005. Section 412(1)(12) is generally
limited to a plan maintained by either (1) a commercial passenger airline or (2) an
employer primarily engaged in the production or manufacture of a steel mill product or
the processing of iron ore pellets.1 Section 302(d)(12) of ERISA permits an identical
election and provides identical requirements with respect to the minimum funding
standard of section 302.

Announcement 2004-38, 2004-1 C.B. 878, provides procedures for electing an
alternative deficit reduction contribution including a model election form. Announcement
2004-43, 2004-1 C.B. 955, provides guidance on the types of notices that must be given
by an employer to plan participants and their beneficiaries and to the Pension Benefit
Guaranty Corporation (the PBGC) if that employer elects to make an alternative deficit
reduction contribution described in Announcement 2004-38. In addition, Announcement
2004-43, as corrected by Announcement 2004-51, 2004-1 C.B. 1041, sets forth timing
requirements for the election. Notice 2004-59, 2004-2 C.B. 447, provides guidance on
the restrictions that are placed on plan amendments following an employer's election of
an alternative deficit reduction contribution under § 412(l)(12) of the Code and section
302(d)(12) of ERISA.

Section 402(i) of PPA extended the alternative deficit reduction election for
certain employers. The extension under the PPA is limited to an eligible employer that is
a commercial passenger airline, can be made for any plan year beginning after
December 27, 2003, and before December 28, 2007, and applies without regard to the
two plan year limit contained in § 412(l)(12)(D)(ii) of the Code.

1
An eligible employer under PFEA (but not PPA) also included an organization described in §
501(c)(5) of the Code that established a plan on June 30, 1955, to which § 412 now applies.

<!-- PageBreak -->

Other than as necessary to reflect the statutory narrowing of the class of eligible
employers, the elimination of the two-year rule and the extension of time described in the
preceding paragraph, all of the guidance described above with respect to the election
under PFEA remains applicable to the election under section 402(i) of the PPA with the
following exceptions. Notwithstanding the requirement under Announcement 2004-43
that any alternative deficit reduction contribution election be made by the end of the first
quarter of the plan year, if, on or before December 21, 2006, an employer makes an
alternative deficit reduction contribution election for the first plan year beginning on or
after December 28, 2005, that election will be deemed timely. In addition, if an employer
issues a PBGC notice for a plan for such a plan year on or before December 21, 2006,
the PBGC will treat the PBGC notice as timely issued. The content of the PBGC notice
should reflect a reasonable effort to make any appropriate modifications to the
projections in order to take into account the enactment of the PPA.

Section III of this notice sets forth the information that must be contained in the
election and the address to which the election must be sent. If an employer elects an
alternative deficit reduction contribution for any plan year, the employer must provide
written notice of the election to the plan's participants and beneficiaries and (except to
the extent that an earlier notice is required by the preceding paragraph) to the PBGC
within 30 days of filing the election.

## II. Effect on Other Documents

Announcement 2004-38 is modified, Announcement 2004-43 is amplified and
modified, and Notice 2004-59 is amplified.

## III. Election of Alternative Deficit Reduction Contribution for Commercial Passenger Airlines

A. As an officer of the employer maintaining the plan, I hereby elect an alternative deficit
reduction contribution under § 412(l)(12) of the Code and section 302(d)(12) of ERISA
and include the following information:

1\. The name and EIN of the employer:

2\. The name and plan number of the plan:

3\. The plan year to which the election relates:

4\. Specify the plan year beginning in 2000 for which the additional contributions
under § 412(l) did not apply:

5\. If any of the information in items 1 or 2 was different for the 2000 plan year
than in the plan year for which the election is being made, enter the plan
name, plan number, and name and EIN of the employer for the 2000 plan
year:

<!-- PageBreak -->

6\. Signature of employer

Date

The election must be signed by an officer of the employer maintaining the
plan. An authorized representative of the employer, plan administrator, or
enrolled actuary may not sign this election on behalf of the employer.

B. This election must be filed at the following address:

Internal Revenue Service
Commissioner, Tax Exempt and Government Entities Division
Attention: SE:T:EP:RA:T

Alternative DRC Election

P.O. Box 27063

McPherson Station

Washington, D.C. 20038

## Drafting Information

The principal author of this notice is Michael Rubin 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 (877) 829-
5500 (a toll-free number) between the hours of 8:30 am and 4:30 pm Eastern Time,
Monday through Friday . Mr. Rubin may be reached at (202) 283-9888 (not a toll-free
number).