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Employee Plans Compliance Unit (EPCU) - Completed Projects - Funding Waiver Project

Funding Waiver Project Summary

Employee Plans Compliance Unit

The EPCU Funding Waiver Project was established to ensure that plan sponsors who received an approved waiver were complying with IRC section 412 and any other previously agreed upon conditions in the ruling letter. If the conditions of the waiver were not met, the waiver could be determined to be null and void.


Pension plan sponsors subject to the minimum funding standard may request a waiver if meeting the standard would cause the employer to suffer temporary substantial business hardship and it would be adverse to the interest of plan participants in the aggregate. All approved waivers are subject to the conditions in IRC section 412(c) (as in effect after 2007). This section provides that, while the waived funding deficiency is being amortized, the plan may not adopt any of the following:

  • An amendment to increase benefits
  • A rate change in the accrual of benefits
  • Any change in the rate of vesting 

This requirement is also applicable to any other plan of the sponsor that covers employees in the plan that received the approved waiver. Other conditions may also be required as outlined in the ruling letter approving the waiver.

Results of the Funding Waiver Sample

This EPCU project ran from January 2006 to July 2007. The project involved a sample of 42 waiver cases, out of a universe of 76 waiver cases closed in 2003. The data included approved waiver requests, denied waiver requests, and waiver requests that were withdrawn.

Approximately 31% of the waiver cases in the sample were closed in 2003 due to denied waiver requests, withdrawn requests, or non-responses. Listed below are the results of the remaining 69% which were approved waivers from the sample.

Approved Funding Findings/Results


Type of Closure 

 Number of Cases





 Waiver Conditions Verified - No Subsequent Issue



 Return Secured/Change to Related Return



 Future Impact - Subsequent Action Required



 Case Referred for Audit






Based on our statistical sample, the following conclusions can be made related to the entire universe of waiver cases closed during the year of 2003:

  • Approximately 52% of plans approved for a funding waiver during the year of 2003, resulted in bankruptcy and/or being taken over by the PBGC.
  • Approximately 31% of plans which entered into the funding waiver process were closed in 2003 due to denied waiver requests, withdrawn requests, or non-responses. 
    Approximately 27% of the approved funding waiver cases closed in 2003 would require additional compliance and/or enforcements. 
  • Approximately 21% of plans with an approved funding waiver (closed during 2003) did not have any reportable problems related to funding in subsequent years.     

There were 53 cases worked in the entire project: 42 from the random sample, 3 from an initial judgment sample, and 8 related cases.

Page Last Reviewed or Updated: 15-Aug-2016