RS Guidance on Defined Benefit Plan Special Funding Rules (Notice 2010-55; Notice 2010-56)

The IRS has provided guidance on the availability of special funding rules for single-employer defined benefit plans under Code Sec. 430(c)(2)(D) and multiemployer defined benefit plans under Code Sec. 431(b)(8) for plan years for which Form 5500 and Schedule SB and MB, respectively, have been filed.

Under the Preservation of Access to Care for Medicare Beneficiaries and Pensions Relief Act of 2010 (PRA 2010) (P.L. 111-192), new Code Sec. 430(c)(2)(D) permits plan sponsors of single-employer benefit plans to elect, for certain plan years, to amortize the shortfall amortization base established for the plan year under one of two alternative schedules. The same schedule must be used for both plan years if the sponsor elects to use alternative amortization schedules for two plan years. The election may be made with respect to one or two plan years that begin in 2008, 2009, 2010, and 2011. Electing sponsors are required to give notice of the election to plan participants and beneficiaries as well as the Pension Benefit Guaranty Corporation. Future guidance is anticipated and may include guidance on (1) the calculation of the alternative amortization schedules; (2) rules relating to installment acceleration amounts; (3) the procedures for making the election; and (4) notice requirements.

PRA 2010 also provides special funding rules for multiemployer defined benefit plans under Code Sec. 431(b)(8). New Code Sec. 431(b)(8)(A) provides a special amortization rule for investment losses. The notice also states that the IRS anticipates providing future guidance on: (1) determination of the portion of the experience loss or gain attributable to net investment losses; (2) the notification requirement; and (3) the effect of application of the special rules on the certification of a multiemployer plan’s status.


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