WRERA notice

State or Territory

QZAB Allocations (in dollars)

Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming

6,760,000
9,457,000
3,152,000
25,535,000
12,224,000
90,020,000
44,099,000
2,592,000
51,280,000
19,510,000
16,603,000
48,793,000
4,273,000
22,487,000
3,538,000
33,416,000
132,788,000
8,792,000
2,137,000
26,025,000
25,395,000
10,438,000
20,596,000
1,541,000

American Samoa
Guam
Northern Mariana Islands
Puerto Rico
Virgin Islands

1,368,000
1,397,000
1,362,000
61,753,000
1,269,000

Total Allocation

SECTION 6. EFFECTIVE DATE OF
NATIONAL ZONE ACADEMY BOND
LIMITATIONS
The national limitation allocated in section 4 is effective for QZABs issued after
October 3, 2008, and the national limitation allocated in section 5 is effective for
QZABs issued on or after January 1, 2009.
SECTION 7. DRAFTING
INFORMATION
The principal authors of this notice are
Timothy Jones and Sandra H. Westin of the
Office of Associate Chief Counsel (Financial Institutions and Products). For further
information regarding this notice, contact
Sandra H. Westin or Timothy L. Jones at
(202) 622–3980 (not a toll-free call).

1,400,000,000

Election and Notice
Procedures for Multiemployer
Plans Under Sections 204 and
205 of WRERA
Notice 2009–31
I. PURPOSE
This notice provides guidance for sponsors of multiemployer defined benefit
plans relating to the elections described
in sections 204 and 205 of the Worker,
Retiree, and Employer Recovery Act of
2008, P.L. 110–458 (WRERA), and on the
notice required to be provided if a plan
sponsor makes an election under section
204.
II. BACKGROUND
1. PPA provisions
Section 432 of the Internal Revenue Code (Code), which was added

April 20, 2009

856

by the Pension Protection Act of 2006,
P.L. 109–280 (PPA), provides rules for
multiemployer defined benefit plans
that are significantly underfunded. In
particular, section 432(b)(3) provides
that the plan actuary for any such
multiemployer plan must, by the 90th day
of each plan year, certify to the Secretary
of the Treasury and to the plan sponsor
as to the plan’s “section 432 status” (i.e.,
whether the plan is in endangered status,
critical status, or neither status) for the
plan year. If a plan is certified to be in
endangered status (including seriously
endangered status), the plan sponsor
must adopt a funding improvement plan
that is reasonably expected to enable the
multiemployer plan to achieve certain
funding improvements by the end of its
10-year funding improvement period (with
a possible substitution of a 15-year funding
improvement period for a plan in seriously
endangered status). Similarly, the sponsor
of a plan that has been certified to be in
critical status must adopt a rehabilitation

2009–16 I.R.B.

plan that generally is reasonably expected
to enable the multiemployer plan to
emerge from critical status by the end
of its 10-year rehabilitation period (with
alternative approaches available if the
plan sponsor determines, as described
in section 432(e)(3)(A)(ii), that the plan
cannot reasonably be expected to emerge
from critical status by the end of the
rehabilitation period using all reasonable
measures). A funding improvement plan
or rehabilitation plan must be updated
each year after the initial endangered year
(referred to in section 432(c)(2) as the
initial determination year) or initial critical
year.
Section 432(b)(3)(D) provides that the
sponsor of a multiemployer plan in endangered or critical status must provide notice
of the plan’s certified status to participants
and beneficiaries, the bargaining parties,
the Pension Benefit Guaranty Corporation,
and the Secretary of Labor, not later than
30 days after the date of the certification. If
the plan is in critical status, the notice must
explain that adjustable benefits, as defined
in section 432(e)(8), may be reduced.
Section 4971(a) and (b) imposes an
excise tax on an employer responsible for
contributing to or under a plan if the plan
has an accumulated funding deficiency.
PPA added section 4971(g) to the Code,
providing new excise tax rules for plans in
endangered or critical status. In particular,
section 4971(g) imposes new excise taxes
with respect to plans in critical or endangered status, and section 4971(g)(1)(A)
provides that no excise tax is imposed
under section 4971(a) or (b) for a taxable
year with respect to a plan in critical status
for the plan year that ends with or within
the taxable year.
Section 432 applies to plan years beginning on or after January 1, 2008. Section
4971(g) applies to tax years that include
the last day of any plan year beginning on
or after January 1, 2008.
2. Section 204 of WRERA
Section 204(a) of WRERA provides
that a multiemployer plan sponsor may
elect, notwithstanding the actuarial certification of the plan’s section 432 status
under section 432(b)(3) of the Code for the
plan year for which the election is made
(“election year”), to temporarily freeze
the plan’s section 432 status so that it is

2009–16 I.R.B.

the same as the plan’s section 432 status
for the plan year immediately prior to the
election year (“prior year”). Specifically,
section 204(a)(1) of WRERA provides
that a multiemployer plan sponsor may
elect that the plan’s section 432 status
for the first plan year beginning on or
after October 1, 2008 and not later than
September 30, 2009 be the same as the
plan’s section 432 status for the prior year.
If section 432 of the Code did not apply
to the plan for the prior year (because the
prior year began before January 1, 2008),
the actuary must, in order to apply the
election, make a certification of the plan’s
section 432 status for the prior year in the
same manner as if section 432 had applied
for the prior year.
Section 204(a)(2) of WRERA provides
that the sponsor of a multiemployer plan
that was in endangered or critical status
for the prior year, and for which an election is made under section 204, is not required to update its funding improvement
plan, rehabilitation plan, or schedules as
otherwise required under section 432(c)(6)
or 432(e)(3)(B) of the Code until the plan
year following the election year.
Section 204(b) of WRERA provides a
special rule for multiemployer plans that
would, but for the election to freeze the
plan’s section 432 status, be in critical status for the election year. In particular, if
the plan has, without regard to the election, been certified by the plan actuary to
be in critical status for the election year,
then the plan is treated as being in critical
status for that year for purposes of applying the excise tax exception under section
4971(g)(1)(A) of the Code.
Section 204(c)(1) of WRERA provides
that an election under section 204 must be
made at the time and in the manner that the
Secretary of the Treasury or the Secretary’s
delegate may prescribe and, once made,
may be revoked only with the consent of
the Secretary. If the election is made before the date the annual certification of the
plan’s section 432 status is submitted to
the Secretary, then the election must be included with the certification that is submitted to the Secretary. If the election is made
after the date the certification is submitted,
then the election must be submitted to the
Secretary not later than 30 days after the
date of the election.
Section 204(c)(2) of WRERA provides
special notice rules that apply when an

857

election under section 204 is made to
freeze a plan’s section 432 status and that
modify the otherwise applicable notice
requirements under section 432(b)(3)(D)
of the Code. If a plan is in neither endangered nor critical status as a result of the
election, the plan sponsor must provide the
notice described in section 204(c)(2)(A)
of WRERA. This notice applies in lieu of
the notice that is otherwise required under
section 432(b)(3)(D) of the Code in the
case of a plan that has been certified to be
in endangered or critical status. The notice
described in section 204(c)(2)(A)(ii) of
WRERA must be provided to the participants and beneficiaries, the bargaining
parties, the Pension Benefit Guaranty Corporation, and the Secretary of Labor and
must contain such information about the
election as the Secretary of the Treasury
(in consultation with the Secretary of Labor) may require. Pursuant to section
204(c)(2)(A)(ii)(I) of WRERA, if the election is made before the date the annual certification of the plan’s section 432 status is
submitted to the Secretary of the Treasury,
then notice must be provided not later than
30 days after the date of the certification.
Under section 204(c)(2)(A)(ii)(II), if the
election is made after the date the annual
certification is submitted to the Secretary,
then notice must be provided not later than
30 days after the date of the election.
Under section 204(c)(2)(B) of
WRERA, if the plan is certified to be in
critical status for the election year but
is in endangered status by reason of an
election made under section 204, the notice
that must be provided is the notice that
would have been provided under section
432(b)(3)(D) of the Code if the plan had
been certified to be in endangered status
for the election year.
3. Section 205 of WRERA
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.
If the sponsor of a multiemployer plan
that is in endangered or critical status for a
plan year beginning in 2008 or 2009 (determined after application of section 204
of WRERA) makes an election under section 205 of WRERA, then, for purposes of

April 20, 2009

section 432 of the Code, the plan’s 10-year
funding improvement period or rehabilitation period, whichever is applicable, is extended to 13 years. Similarly, if the sponsor of a multiemployer plan that is in seriously endangered status for a plan year
beginning in 2008 or 2009 (determined after application of section 204 of WRERA)
and that is eligible for a 15-year funding
improvement period makes an election under section 205 of WRERA, then, for purposes of section 432 of the Code, the plan’s
funding improvement period is extended
to 18 years. An election under section
205 of WRERA must be made at the time,
and in the manner and form, as the Secretary of the Treasury or the Secretary’s delegate may prescribe (in consultation with
the Secretary of Labor).
III. EFFECT OF ELECTION
A multiemployer plan for which an
election under section 204 of WRERA has
been made must be operated in accordance
with its section 432 status, as determined
pursuant to the election, rather than the
section 432 status to which the actuary
certified for the election year. Thus, for
example, the sponsor of a multiemployer
plan that would have been in critical status
for the election year, but for an election
under section 204 to freeze the plan’s section 432 status as endangered, could not
assess employer surcharges under section
432(e)(7) of the Code, reduce adjustable
benefits under section 432(e)(8), or restrict lump sum distributions under section
432(f)(2). Such a multiemployer plan
would continue to be operated in accordance with its funding improvement plan
(rather than a rehabilitation plan), but the
funding improvement plan would not be
required to be updated for the election
year. If the plan’s sponsor had not adopted
a funding improvement plan based on
its endangered status for the prior year
(because section 432 did not apply to the
plan for the prior year), then the sponsor
would need to adopt a funding improvement plan in the election year (the first
year for which section 432 applies to the
multiemployer plan). However, pursuant
to section 204(b) of WRERA, the excise
tax exception under section 4971(g)(1)(A)
of the Code for a plan in critical status
would be available with respect to any accumulated funding deficiency of the plan

April 20, 2009

for the election year, even though the plan,
by reason of the election under section
204 of WRERA, is not treated as being in
critical status.
A plan sponsor that wishes to take advantage of the rule under section 204(a)(2),
under which no updates to a funding improvement plan or rehabilitation plan are
required until the year following the election year, must make the election under
section 204 even if the plan’s section 432
status for the election year would be the
same regardless of whether the election is
made.
A plan sponsor should take into account
the interaction between sections 204 and
205 of WRERA in choosing whether to
elect the relief provided under either section. For example, a plan sponsor may
elect under section 204 for the plan year
beginning in 2009 to freeze the plan’s section 432 status as neither endangered nor
critical (rather than operate in accordance
with an actuarial certification of endangered status or critical status for that year).
If, however, the plan is subsequently certified as being in endangered or critical status for the plan year beginning in 2010,
then the section 205 election to extend the
funding improvement period or rehabilitation period to 13 years (or 18 years, if applicable) would no longer be available because the initial endangered year or initial
critical year for the plan (the year when
the plan first enters endangered or critical
status) would not be until 2010 (a year as
of which no election under section 205 is
available). On the other hand, if the plan
sponsor does not make an election under
section 204 for a year so that it operates in
accordance with the plan’s endangered or
critical status as certified for the year, and
elects for that year to extend the funding
improvement period or rehabilitation period under section 205, then the funding
improvement period or rehabilitation period for the plan as determined in accordance with the 2009 election would continue to be 13 years (or 18 years, if applicable) for as long as the funding improvement plan or rehabilitation plan remains in effect. The same result would apply if the plan sponsor makes an election
under section 204 where the plan’s section 432 status is unchanged for the election year, in which case no update to the
funding improvement plan or rehabilita-

858

tion plan would be required for the election
year.
As another example, a plan sponsor
may elect for the plan year beginning in
2009 both to freeze the plan’s section 432
status as endangered, as permitted under
section 204 (rather than operate in accordance with an actuarial certification of
critical status for that year), and to extend
the funding improvement period to 13
years as permitted under section 205. If,
however, the plan is subsequently certified
as being in critical status for the plan year
beginning in 2010, then the section 205
election to extend the funding improvement period to 13 years (or 18 years, if
applicable) would no longer be applicable
because the funding improvement plan
would have to be replaced by a rehabilitation plan. Moreover, the sponsor could
not then elect to extend the rehabilitation
period to 13 years because the initial critical year for the plan would not be until
2010 (a year as of which no election under
section 205 is available).
IV. ELECTION PROCEDURES
1. Timing of elections
Pursuant to the authority granted to the
Secretary and his delegate under section
204(c)(1)(A) of WRERA to prescribe the
time and manner for making an election, an
election under section 204 must be made
by the later of April 30, 2009 and the date
that is 30 days after the due date of the annual certification of section 432 status for
the election year. For example, the sponsor
of a plan with a plan year beginning July 1
whose actuary certifies on September 23,
2009 as to the plan’s status for the plan year
beginning July 1, 2009, and who wishes to
make an election under section 204, must
do so by October 28, 2009 (the 30th day
after September 28, 2009, the due date of
the certification of section 432 status for
the election year). As another example, the
sponsor of a plan with a plan year beginning October 1, 2008 who wishes to make
an election under section 204 must do so
by April 30, 2009 (which is the later of the
two dates for that plan).
Pursuant to the authority granted to the
Secretary and his delegate under section
205(b)(1) to prescribe the time and manner for making an election under section
205, such an election must be made by the

2009–16 I.R.B.

last day of the plan year as of which the
election is being made, or, if earlier, by the
date a funding improvement plan, rehabilitation plan, or update is adopted that takes
into account the election. However, in no
event is the election required to be made
earlier than April 30, 2009.

d.

2. Submission of election to the Service
The sponsor must submit any election
under section 204 or 205 to the Internal
Revenue Service. If the election is made
on or before the date the annual certification of section 432 status for the election
year is submitted to the Secretary, the election must be included with the certification. If the election is made after the date
the annual certification of section 432 status for the election year is submitted to the
Secretary, the election must be submitted
by the date that is 30 days following the
date of the election.
Elections should be sent to the Employee Plans Compliance Unit (EPCU),
which is the same office as to which
annual certifications are submitted. Instructions for filing WRERA elections
electronically with the EPCU may be
found at http://www.irs.gov/retirement/article/0,,id=171015,00.html. Alternatively,
WRERA elections may be mailed to the
following address:
Internal Revenue Service
EPCU
Group 7602
SE:TEGE:EP
Room 1700 — 17th Floor
230 Dearborn Street
Chicago, IL 60604
3. Content of election
An election under section 204 or 205
of WRERA must be signed by an authorized trustee who is a current member of
the board of trustees that is the plan sponsor and contain each of the following items
of information, as applicable:
a.
b.

c.

Name, address, telephone number,
and EIN of the plan sponsor.
Name, plan EIN (if different from
sponsor EIN), and plan number of the
plan for which the election is being
made.
A statement that the election is intended to be an election under section

2009–16 I.R.B.

e.

204, section 205, or both sections 204
and 205.
If the election is under section 204 (or
under both sections 204 and 205):
i. A statement of the plan year for
which the election (or elections)
is being made.
ii. The section 432 status of the plan
for the election year taking the
section 204 election into account
(this is the same as the section
432 status of the plan for the prior
year).
iii. If section 432 of the Code did
not apply to the plan for the prior
year (because the prior year began before January 1, 2008), an
attachment of an actuarial certification of what would have been
the plan’s section 432 status for
the prior year had section 432 applied to the plan for the prior year.
If the election is under section 205 of
WRERA, and no election under section 204 of WRERA applies for the
year, a statement of the plan year as of
which the section 205 election is being made.

2. Content of notice
The notice provided pursuant to section
204(c)(2)(A)(ii) of WRERA must be written in a manner calculated to be understood
by the average employee to whom the notice applies, and must contain each of the
following items of information, as applicable:
a.

b.

c.

d.

V. SPECIAL NOTICE
REQUIREMENT FOR PLANS
IN NEITHER ENDANGERED NOR
CRITICAL STATUS AS A RESULT
OF FREEZE ELECTION
1. General notice requirements
As described above, if the plan sponsor elects to freeze the plan’s section 432
status for the election year as neither endangered nor critical, despite an actuarial
certification of endangered or critical status for the election year, then the sponsor
must provide a special notice. The notice
must be provided to participants and beneficiaries, the bargaining parties, the Pension Benefit Guaranty Corporation, and
the Secretary of Labor.
As described in section 204(c)(2)(A)(ii)
of WRERA, the notice must be provided
no later than 30 days after the later of,
1) the actuarial certification for the election year, or 2) the date of the election.
The notice must be provided either in the
form of a paper document or in an electronic form that satisfies the requirements
of § 1.401(a)–21 of the Treasury regulations.

859

e.

f.

The name of the plan, the EIN of the
plan sponsor, the EIN of the plan, and
the plan number.
That an election has been made under section 204 of WRERA to treat the
plan as being neither in endangered
nor critical status for the plan year beginning on [fill in the date that is the
first day of the election year].
The plan’s endangered or critical status for the election year as certified by
the plan’s actuary (that is, the plan’s
status if no section 204 election were
made).
An explanation that: (i) the election
applies only for the current plan year;
and (ii) if the plan is certified to be
in endangered or critical status for the
year following the election year, the
plan sponsor will provide notice of the
plan’s status (i.e., endangered or critical) for that following year and steps
will have to be taken to improve the
plan’s funded situation, which steps
may include increases in contributions
and reductions in future benefit accruals.
Solely in the case of a plan certified
to be in critical status for the election
year, an explanation that, if the plan is
certified to be in critical status for the
year following the election year, the
steps that will have to be taken to improve the plan’s funded situation will
include a surcharge on employer contributions and the suspension of the
payment of lump sums and similar accelerated distributions for individuals
who commence receiving benefits after notice is provided of the plan’s critical status, and may include amendments to reduce early retirement benefits or other adjustable benefits for
such individuals.
Information on how to obtain additional information about the election
from the plan administrator, includ-

April 20, 2009

ing a telephone number, address, and
email address (if appropriate).
3. Submission of notice to PBGC and
DOL
A notice provided pursuant to section
204(c)(2)(A)(ii) of WRERA must be submitted to the Pension Benefit Guaranty
Corporation and the Department of Labor.
The notice should be sent to the following
addresses:
Pension Benefit Guaranty Corporation
Multiemployer Program Division
1200 K Street, N.W., Suite 930
Washington, D.C. 20005

U. S. Department of Labor
Employee Benefits Security
Administration
Public Disclosure Room, N–1513
200 Constitution Ave., N.W.
Washington, DC 20210
Alternatively,
the
notice
may
be
submitted
electronically
to
multiemployerprogram@pbgc.gov and to
wreranotice@dol.gov.
WRERA notices received by the Department of Labor will be available for
public inspection at the Public Disclosure
Room, and accessible electronically at
http://www.dol.gov/ebsa.
VI. EFFECT OF WRERA ELECTION
ON FORM 5500, SCHEDULE MB
AND SCHEDULE R FILINGS
A Form 5500, Annual Report/Return of
Employee Benefit Plan, that is filed for
a multiemployer plan must be accompanied by Schedule MB, Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information, and by
Schedule R, Retirement Plan Information.
Schedule MB requires the actuary for a
multiemployer plan to report the plan’s
section 432 status. The instructions indicate that Schedule MB should be completed based on the actuary’s certification
of the status, and that the actuary should
include supporting documentation for the
certification. If a multiemployer plan is
in endangered or critical status, the instructions indicate that the plan sponsor
must submit with Schedule R a summary
of the multiemployer plan’s funding im-

April 20, 2009

provement or rehabilitation plan, or an update of the plan, as applicable.
As described above, an election under
section 204 of WRERA affects whether
a funding improvement or rehabilitation
plan must be adopted or updated. Schedules MB and R and the related instructions for plan years beginning in 2008 have
already been issued and do not address
the effect of an election under section 204
of WRERA. However, such an election
can be made with respect to a plan year
beginning between October 1, 2008, and
December 31, 2008. Therefore, the instructions for the 2008 Schedule MB and
Schedule R must be revised to address the
reporting for a multiemployer plan with a
plan year beginning between October 1,
2008, and December 31, 2008, for which
an election is made under section 204 of
WRERA.
Under the revised instructions:

•

•

The section 432 status of the plan that
is reported on Schedule MB is the status of the multiemployer plan as certified by the plan actuary without taking
into account an election under section
204 of WRERA.
The plan sponsor must include an attachment to the Schedule R which provides information about the election
under section 204 of WRERA, and its
effect on the plan’s section 432 status
and on the requirement to adopt a funding improvement plan or rehabilitation
plan.

those plan sponsors making an election.
The likely respondents are sponsors of
multiemployer defined benefit retirement
plans.
We estimate the total number of respondents to be 1,600 for 2009.
We estimate it will take 1 hour to comply.
Estimates of the annualized cost to respondents for the hour burdens shown are
not available at this time.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
Drafting Information
The principal author of this notice is
Diane S. Bloom of the Employee Plans,
Tax Exempt and Government Entities
Division. For further information regarding this notice, please contact the
Employee Plans taxpayer assistance answering service at 1–877–829–5500 (a
toll-free number) or e-mail Ms. Bloom at
RetirementPlanQuestions@irs.gov.
26 CFR 601.602: Tax forms and instructions.
(Also: Part I, §§ 24, 25A, 32, 132, and 179.)

Rev. Proc. 2009–21
SECTION 1. PURPOSE

VII. PAPERWORK REDUCTION
ACT
The collections of information contained in this notice have been approved
by the Office of Management and Budget
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(c)).
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number. The OMB approval
number for this notice is 1545–2141.
The collections of information in this
notice are in sections IV, V, and VI. The
information is required in order to implement an election under sections 204
and 205 or WRERA and to provide the
required notice of the election. The collections of information are mandatory for

860

This revenue procedure modifies and
supersedes section 3.04 of Rev. Proc.
2007–66, 2007–45 I.R.B. 970, to reflect a
statutory amendment by the Tax Extenders
and Alternative Minimum Tax Relief Act
of 2008, Div. C of Pub. L. No. 110–343,
122 Stat. 3765 (2008) (TEAMTRA).
This revenue procedure also modifies and
supersedes sections 3.04, 3.05, 3.06(1),
3.12, and 3.20 of Rev. Proc. 2008–66,
2008–45 I.R.B. 1107, to reflect statutory
amendments by the American Recovery
and Reinvestment Tax Act of 2009, Tit. I
of Div. B of Pub. L. No. 111–5, 123 Stat.
115 (2009) (ARRTA).
SECTION 2. BACKGROUND
.01 Section 501(a) of TEAMTRA
added § 24(d)(4) of the Code to provide

2009–16 I.R.B.