Tips for Requesting a Private Letter Ruling on Actuarial Issues


In an effort to reduce processing delays and improve your experience with the actuarial private letter ruling process, we identified the following list of common errors and issues that tend to slow down the process.

The most common issues causing delay include:

  • An incomplete Form 2848
  • Insufficient detail describing the proposed transaction
  • Using calculation shortcuts where a shortcut is not appropriate

General issues

  • Directions from the annual revenue procedure (currently Revenue Procedure 2021-4) are not followed:
    • The ruling request is submitted to the wrong mailing address or business unit (for example, EEE vs. EP)
    • The ruling request does not include the proper User Fee

Form 2848

  • The plan’s actuary is not listed as an authorized representative on Form 2848 in submissions that are actuarial in nature
  • The box permitting an authorized representative to receive written correspondence, such as information requests, is not checked
  • If an additional Form 2848 is submitted, the box on line 6 is left unchecked preventing the previous Form 2848 from remaining in effect
  • If multiple plans are involved in a ruling request (for example, mergers, spinoffs, substitute mortality tables, etc.), the Form 2848 fails to allow the authorized representative to discuss all the plans
  • The individual submitting the ruling request is not the taxpayer or an authorized representative
  • The individual signing Form 2848 is not a company officer

Change in funding method requests

  • Additional transactions requiring approval are discovered in the submission, but rulings on them were not requested
  • The ruling requested is overly broad and fails to adequately describe the proposed method(s), transition into the proposed method(s) as appropriate, or contain the detailed descriptions required by Revenue Procedure 2017-56; (for example, “We seek a ruling on a change in funding method due to a mid‑year plan merger” or “We seek a ruling on the method used to determine the minimum required contribution”)
  • The ruling is requested on numerical results instead of on the method by which these determinations will be made, (for example, whether quarterly contributions are required or whether benefit restrictions apply)
  • The submission does not contain all the supporting documents required by the applicable Revenue Procedures (for example, Rev. Proc. 2017-56, etc.)
  • A special ‘valuation’ is utilized but is in fact only a roll-forward of a prior valuation
  • When an asset averaging method is used, such as in a merger, the proposed asset averaging method fails to:
    • Reconstruct actual cash flows when determination periods are changing
    • Preserve historical expected rates of return, which may involve using multiple expected rates of return during the determination period
    • Continues the same treatment of receivable contributions when it may no longer be appropriate to do so under the regulations due to a change in determination periods
  • Allocation of shortfall amortization bases under a spinoff fails to consider both assets and liabilities of the portions of original plan
    • Should not just rely on the split of assets (ERISA Section 4044)
    • The method outlined in Rev. Rul. 81-212 remains an acceptable safe harbor
  • The target normal cost, such as in a short plan year, should be based on benefit accruals (i.e., a simple proration may not be appropriate)
    • Consider compensation timing (bonuses, raises, etc.) when appropriate
    • Consider how benefit accrual service is earned
    • Consider the timing of non-recurring expenses paid from plan assets

Substitute mortality tables

  • Significant changes in coverage occurring after the beginning of the study period are not properly reflected; potential events may include:
    • Risk transfer activity (for example, lump sum windows, annuity purchases, etc.)
    • Mergers/spinoffs
    • Changes in the plan sponsor’s control group or newly affiliated plans

Amortization extensions

  • An extension can only be considered for bases eligible to be extended; bases of concern include:
    • bases resulting from a change in funding method
    • shortfall bases created under the shortfall funding method
  • The plan must be reasonably expected to remain solvent throughout the full term of the extended bases