Change from 2007 EOY to 2008 BOY val.

[Guest GMP]

My understanding was that Notice 2008-73 provided one year relief to small plans to switch from a 2007 EOY val to a 2008 BOY val. If this is correct, was this change of val date automatic, or did it have to be applied for with the IRS?

[JAY21]

PPA 2006 allows you to use any Val date for the 2008 plan year.

[Guest GMP]

PPA 2006 allows you to use any Val date for the 2008 plan year.

Thanks for the answer JAY21. My problem is how paragraph 1.430(g)-1(b)(2)(iv) of the 12/31/07 proposed regs (following) should be interpreted.

(iv) Valuation date is part of funding method. The selection of a plan’s valuation date is part of the plan’s funding method and, accordingly, may only be changed with the consent of the Commissioner. The change of a plan’s valuation date that is required by section 430 is treated as having been approved by the Commissioner and does not require the Commissioner’s prior specific approval.

If interpreted literally, this would seem to preclude and automatic change of valuation date date from 12/31/07 to 1/1/08. However, that does seem to be exactly what is provided in the transitional relief in Notice 2008-73. Or am I once again barking at air molecules?

[Blinky the 3-eyed Fish]

You are barking. Change is automatically allowable.

[Mister Met]

What about 2009? I hadn't seen that you could automatically use 1/1/09 val date for 2009 AFTAP in the case where 12/31 val date was historically used. What would you do for your 2009 AFTAP since you really can't certify until 12/31/09?

[Blinky the 3-eyed Fish]

I don't understand the question. The discussion related to changing to a BOY val for 2008, which has automatic approval. A 2009 switch does not have automatic approval (yet).

So in your question, the plan would have had a 2008 BOY val and now a 2009 BOY val. The AFTAP is determined using the 2009 val numbers, not 12/31/2009.

[Mister Met]

To clarify:

For 2007: val date was 12/31/07

For 2008: val date was 1/1/08, since PPA allowed you switch to BOY under transitional rule for 2008 only

For 2009: since no final guidance was issued, go back to 12/31/09 val date

How would you determine the 2009 AFTAP (since due by 10/1/09 and the 12/31/09 val isn't done yet)

can we automatically switch the val date for 2009 to 1/1/09?

[Blinky the 3-eyed Fish]

The question is not can we automatically switch to 1/1/09 for 2009, it's can we switch to 12/31/09 for 2009. The automatic approval to switch val dates in 2008 carries forward to the next year, so your val date for 2009 is 1/1/2009. The switch for 2008 is not a one-year change.

Right now there is no automatic approval to switch val dates in 2009.

[AndyH]

Oh, Blinky, you're no fun. That sounded like a modern version of flip flop funding.