dmb Posted February 2, 2016 Posted February 2, 2016 Employer made election in 2010 to use Market Value of Assets for PPA funding. Can employer now elect to use Average Value of Assets without any strings attached? Thanks.
AndyH Posted February 2, 2016 Posted February 2, 2016 Not unless I missed some automatic approval notice. Don't think so. Apparently expected "soon" though.
My 2 cents Posted February 2, 2016 Posted February 2, 2016 Not unless I missed some automatic approval notice. Don't think so. Apparently expected "soon" though. I can remember that the IRS allows going from segment rates to a full yield curve or from using the segment rates for the month of the valuation date to the segment rates from a lookback month (but neither vice versa nor from one lookback month to another) without specific IRS approval. I was just wondering myself whether changing from market value to smoothed value had automatic approval (very doubtful) or from smoothed value to market value (just a tiny bit less doubtful) could be done without IRS approval. I am having trouble finding anything on point, but my suspicion is that the asset valuation method will probably have to stay where it is until the IRS does issue a list of automatic approval method changes. I would love to be pointed at something that would permit making such a change (one presumes that direct application under 2000-41, which is still in effect, is unlikely to be worth the cost or the effort). Always check with your actuary first!
tymesup Posted February 2, 2016 Posted February 2, 2016 No low-hanging fruit on the COPA board saying you can change asset valuation method. Rev-Proc 2000-40 might give permission, but consensus is that it no longer applies and/or isn't worth the risk.
david rigby Posted February 3, 2016 Posted February 3, 2016 IMHO, parts of 2000-40 still apply, because there is no official statement (that I can remember) from IRS otherwise. However, I agree that it's not worth the risk. As AndyH implies,we expect some more guidance "soon". As far as post-PPA permission to change, I think that expired in 2010. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
AndyH Posted February 3, 2016 Posted February 3, 2016 David, I agree there may be no official statement that 2000-40 no longer applies to such circumstances, but I have seen unofficial ones, and I was also specifically told that by a high ranking IRS official a few years ago.
david rigby Posted February 3, 2016 Posted February 3, 2016 Exactly my point. In the past, the IRS has made official statements. Why nothing here? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
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