The Internal Revenue Service (IRS) has answered many highly technical questions about how to apply the new single-employer pension plan funding relief rules.
The IRS gives the answers in IRS Notice 2011-3, a batch of guidance developed to help employers use the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA).
Congress enacted PRA to keep employers hit hard by the Great Recession from dropping pension plans, by temporarily easing the effects of new rules plan sponsors were supposed to be using to calculate plan funding levels and contribution requirements.
The new guidance covers topics such as installment acceleration amounts, the interaction of the relief rules with mergers and acquisitions, elections to use an alternative amortization schedule, and transition rules.
In the transition section, for example, officials answer questions such as, “What are the consequences if a plan sponsor made an election to use an alternative amortization schedule prior to Jan. 1, 2011, but the election did not include all of the information required in … this notice?”