Plan Sponor Agreement to Change in Funding Method

[Guest merlin]

A plan's funding method is changed as per Rev. Proc. 2000-40. Is it sufficient to answer "yes" to item 7 on Schedule R,along with his signature on the return itself, to signify the sponsor's agreement to the change? Or must there be a separate signed statement attached to Sch. B as well?

[david rigby]

It ir my understanding the purpose of that line was to replace the need for a separate signed agreement.

[mwyatt]

One other situation to consider: 5500-EZ filings. Note that no question exists on the 5500-EZ filing, so you definitely want to have some sort of written agreement by the plan sponsor. We've been using an attachment for this situation like this (thanks to Larry Deuscht at the 1998 EA meeting for the gist of the language):

Attachment to Schedule B of 2000 Form 5500

Justification for a Change in Funding Method

Plan Sponsor: XYZ Co., Inc.

Plan Name: XYZ Co., Inc. Defined Benefit Pension Plan

EIN/PN: 01-1234567/001

Actuarial Certification:

I hereby certify that I have changed the funding method for the above plan in accordance with Sections 3.04 and 3.13 of Revenue Procedure 2000-40. I further certify that the funding method that I have used has met the requirements of Sections 5 and 6 of Revenue Procedure 2000-40. As of January 1, 2000, the funding method is being changed as follows:

Cost Method: The funding method is being changed from the Level Dollar Individual Aggregate Method to the Level Percent of Compensation Individual Aggregate Method. This change was made in accordance with IR Rev. Proc. 2000-40, Section 3.04.

Valuation Date: The valuation date was changed from the end of the plan year to the beginning of the plan year. This change was made in accordance with IR Rev. Proc. 2000-40, Section 3.13.

____________________________________

Actuary #02-1234

__________________

Date

As the representative of the Plan Sponsor, I certify that this statement has been prepared in accordance with the requirements of Section 6.02 of Revenue Procedure 2000-40. I agree with the change in the funding method described above in the statement of the Enrolled Actuary. I also note that the 2000 Form 5500EZ makes no provision for my approval of the funding method change. This signed statement indicates my agreement to the funding method change. This change in funding method is to take effect for the plan year beginning January 1, 2000.

____________________________________

Plan Sponsor

______________

Date