Valuation date change

[Guest Marino13]

Can you change your plan valuation date from beginning of year to end of year?

i.e. current valuation date is 1/1/2003...can you change this to 12/31/2003?

I'm guessing the answer is no.

[WDIK]

Revenue Procedure 2000-40 gives approval for a change in the valuation date to the first day of the plan year, but not to the last.

Revenue Procedure 2000-41 outlines the procedure to apply for a change in funding methods with the IRS (including changing the valuation date).

[david rigby]

Correct.

Don't assume such request would not be approved. Lots of examples where EOY is a better choice than BOY.

[Blinky the 3-eyed Fish]

I would say there is a very good chance it would be approved. It's just a pain to go through the application.

[mwyatt]

This might be a little OT, but thought I'd bring it up anyway. Suppose you have a plan that you've been valuing EOY, and the plan is then terminated during the plan year. Some cases we've been trying to anticipate this by changing to BOY valuation in the year prior to termination, but what if you don't? Do folks wait to have the termination date be the end of the year, or how do you handle the valuation for the final year?

[Blinky the 3-eyed Fish]

I am sure you will get different answers on this. For me, in cases where I wasn't able to switch it to a BOY valuation date the year prior to the termination, I try and coordinate the distribution closely with the valuation. Say the distributions are scheduled for September 30, for a calendar year plan. I let the distributions occur, get the value immediately and run the valuation with the liabilities and assets pre-distribution. If there is a contribution required, I have the client make the contribution and make a second distribution immediately.

Being a small plan actuary, often times it's the owner that receives less for the first distribution and then gets all of the final year's contribution. If there is no contribution required, it works well, in that the plan year ends 9/30 and the val date occured 9/30. When there is a contribution, then the final distribution may occur 10/10 or so. I go ahead and report the valuation date as 10/10 on the Schedule B even though it was 9/30 to avoid any discrepancies and because there is no better way that I can think of.