Reflecting mid-year and end-of-year retroactive amendments

[richard]

Assume you use a January 1, 2000 valuation date for a calendar year plan year.

If there is a plan amendment adopted July 1, 2000 retroactive to January 1, 2000, do you reflect it in full, in part, or not at all for the 2000 valuation?

If there is a plan amendment adopted March 1, 2001 retroactive to January 1, 2000, do you reflect it in full, in part, or not at all for the 2000 valuation?

Same pair of questions except assume you are using a December 31, 2000 valuation date for the 2000 valuation.

(I vaguely remember there was an old Revenue Ruling that dealt with this -- something like Rev. Rul. 77-2 or so.)

[david rigby]

My own vague recollection is that the way you recognize an amendment adopted and effective during the current year is part of your method. Thus, if you choose to ignore the 7/1/2000 amendment, that is OK as long as that is the consistent application of how your method recognizes amendments. Alternatively, you can recognize it in some prorated fashion, again with consistent application, obviously taking into account just what the amendment really does that needs to be prorated.

W/r/t the 3/1/2001 amendment, I think that you ignore it at 1/1/2000 or 12/31/2000 because it is effective in a later plan year.

The exception could (not must) be the recognition of an amendment adopted under a collective bargaining agreement.

[This message has been edited by pax (edited 01-12-2000).]

[Guest Brian4]

The reference the Rev. Ruling 77-2 is correct. Also, look at Code 412©(8) and Regulation 11.412©-7.

The IRS does not hold one to consistency requirement is for the purpose of Section3 of Revenue Ruling 77-2. The Grey Book for the 1999 Enrolled Actuaries meeting, question 10, says: "Thus, while the method cannot be changed for a given year, it need not be the same from year to year."

The amendment made March 1, 2001, retroactive to January 1, 2000, for the January 1 valuation date scenario, could be reflected, as allowed under the Code and Regulation.