Changing Plan Year

[flosfur]

Does changing a PY requires IRS approval?

At a recent conference, during one of those off the topic conversations between the panel members, I heard some reference to changing a plan year and then Jim Holland chimed in saying, you will need to obtain an approval from the IRS to change the PY.

[david rigby]

PPA text here: http://www.aspa.org/government/gacpdf/HWC_373_xml.pdf

See modifed IRC 412, beginning on page 108. Subsection (d)(1) is at page 120.

[Andy the Actuary]

So for a new plan, would a short plan year followed by the full plan hear (e.g., 7/1/2008-12/31/2008, calendar year thereafter) require IRS approval? There does not appear to be an exception for new plan short first year plan years.

How do you apply for such approval?

[Guest Sieve]

The requirement has been around since ERISA (i.e., pre-PPA IRC Section 412©(5)(A)). I believe that approval of a plan year change is still automatic--i.e. without approval of the IRS and without filing a Form 5308--if the automatic approval requirements listed on Form 5308 are met. That Form has not been revised since before PPA.

Don't know about the short plan year issue, but it would seem to me that you're not really changing the plan year but are just starting with a less than 12-month year with a specific year-end date that will remain the same (even though subsequent plan years will have 12 months)