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Changing valuation date to BOY


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The general answer is no. This ability has not been restored since the Pension Protection Act was passed. Now, there is an exception IF the number of participants has grown to over 100 and then it becomes mandatory to have a BOY valuation.

Many actuaries are anxiously awaiting the ability to have an automatic approval for a change in valuation date to BOY (it was previously permitted pre-PPA I believe under Revenue Procedure 2000-40).

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I'm not so sure it's that simple. Has the IRS stated that Rev. Proc. 2000-40 is invalid? (Maybe they have. If so, please tell me.)

Sure, some parts of it are no longer valid (such as all the non-UC funding methods), but that condition may not apply to the entire Rev. Proc. Should we assume that section 3.13 has been invalidated in the absence of any clear statement from the IRS?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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For what it's worth (if I may be so bold as to quote myself, as though some sort of authority), I posted the following comment last year:

It is my understanding (for what that is worth) that if the plan has grown to 100+ participants, the valuation date must be changed to the first day of the plan year, so no application, no fee, it just happens. Otherwise, pending any new IRS procedures specifying automatic approval situations (could happen!), to change the valuation date to the first day of the plan year for a plan with less than 100 participants requires explicit application (with fee) to the IRS under 2000-41.

In the introduction to the question in question 5 of the 2012 Gray Book, it is observed that Rev Proc 2000-40 no longer applies to single employer plans (and the question goes on to ask when one can expect approval and when not).

2014 Gray Book question 1 says that the valuation date remains the same for a small plan from year to year unless "the sponsor obtains approval for a change". That question was focused on a small plan with a 7/1-6/30 plan year that used the first day of the plan year as its valuation date and then changed to a calendar plan year. Unless approval is obtained, the valuation date would stay at July 1 each year (ugh!).

Always check with your actuary first!

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Hi all responders,

Thank you for your comments. Very helpful. It explains how 2 actuaries could have a different take. The comments overall, and especially "2 cents" which was worth way more than 2 cents, it seems very clear that the RP2000-40 does not trump the otherwise clear statement in 1.430-(g)(1).

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Gray Book 2012-5 includes this statement in the question, not in the answer:

Revenue Procedure 2000-40, which provides for automatic approval of certain funding method changes, no longer applies to single-employer pension plans covered by the PPA funding rules.



Gray Book 2012-14 includes this statement in the answer:

Since Rev. Proc. 2000-40 no longer applies to single employer plans subject to PPA,...


Thus, the IRS has two indirect references on the applicability of RP 2000-40: Gray Book 2012-14 and Reg. 1.430(g)-1(b). The lack of a simple and direct statement from the IRS to answer this question strikes me as inadequate.

IMHO, you may be able to build a case for saying that the permission in section 3.13 is still valid (frankly, I'm shocked that the IRS would not retain this particular permission), not that I'm going to push it.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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