The Pension Protection Act Blog

Today (April 30th) was the deadline for multiemployer plans to make certain elections described in sections 204 and 205 of the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA). Recognizing that some multiemployer plans need additional time, the IRS issued Notice 2009-42 today, which extends the deadline from April 30, 2009 to June 30, 2009. To avoid confusion in applying this extension, Notice 2009-42 is clear that “June 30, 2009″ is to be substituted for “April 30, 2009″ in Section IV.1 of Notice 2009-31.

Section 204 of WRERA, among other items, generally provides that a multiemployer plan sponsor can elect to temporarily freeze the plan’s section 432 status so that it is the same as the plan’s section 432 status for the plan year immediately prior to the election year. For a multiemployer plan that was in endangered or critical status for the prior year, and for which an election is made under section 204, the plan sponsor is not required to update its funding improvement plan, rehabilitation plan, or schedules as otherwise required under Code sections 432(c)(6) or 432(e)(3)(B) until the plan year following the election year.

Section 205 of WRERA provides for an elective extension of the funding improvement period or rehabilitation period for multiemployer plans in endangered or critical status for a plan year beginning in 2008 or 2009.

Additionally, for multiemployer plans involved in arbitration by June 30, 2009 over making an election under section 204 or 2005 of WRERA, Notice 2009-42 provides this solution:

“”In addition, if (1) as of the otherwise applicable deadline (i.e., the deadline for a plan as modified by this notice) for making an election under section 204 or 205, a plan sponsor has been uanble to reach agreement as to whether to make the election, so that the decision must be resolved through an arbitration process; (2) the plan sponsor makes an election by the otherwise appplicable deadline that is contingent on the resolution of the arbitration; and (3) the resolution is to not make an election, then the IRS will automatically approve a request to revoke the election.”

With several large multiemployer plans filing lawsuits over their losses due to Madoff, and Chrysler filing Chapter 11 Bankruptcy today, this may just be the tip of the guidance iceburg for endangered multiemployer plans.

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