short plan year to accelerate 415(e) repeal date?

[Lorraine Dorsa]

At the DB panel discussion at the ASPA conference, one of the speakers mentioned that a DC plan cannot be amended to have a short plan year (e.g. 11/1/99-12/31/99) so that a DB plan can be established with a calendar plan year beginning 1/1/00 with no 415(e) limitations?

The reason given was that a plan cannot be amended to accelerate the effective date of legislation. In this case, the amendment would be the amendment of the limitation year to the calendar year since the effective date of the 415(e) repeal is for the limitation year beginning after 12/31/99.

Does anyone have a cite for this?

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[Guest Brian4]

The IRS has taken many negative positions with respect to changing plan or limitation years to control the effective date of changes in rules.

For example, in Notice 87-21, Answer 12, a change in the limitation year cannot change the otherwise applicable date for the the pre-TRA 1986 accrued benefit.

Also, in Revenue Ruling 95-29, the freeze date must be determined without regard to any change in the plan or limitation year that would delay the effective date of the new rules.

As an actuary and benefits professional, I am concerned that attempting this type of approach would further damage the reputation of benefits professionals, adding on top of the comments made about cash balance plans.