Section 2. Background

.01 Section 412(c)(5)(A) of the Internal Revenue Code (“the Code”), as amended, and section 302(c)(5)(A) of the Employee Retirement Income Security Act of 1974 (ERISA), Pub. L. 93-406, 1974–3 C.B. 1, 40, as amended, state that if the funding method of a plan is changed, the new funding method shall become effective only if the change is approved by the Secretary.

.02 Section 1.412(c)(2)–1 of the Income Tax Regulations generally provides that a change in the actuarial valuation method used to value the assets of a plan is a change in funding method that requires approval under § 412(c)(5) of the Code.

.03 Rev. Proc. 95–51 provides approval for certain changes in funding method. Section 3 of Rev. Proc. 95–51 provides approval for changes to certain specific methods including certain asset valuation methods. Section 4 of Rev. Proc. 95–51 provides various special ap

provals for changes. Section 5 of Rev. Proc. 95–51 provides rules relating to the establishment and maintenance of amortization bases upon changing methods. Section 6 of Rev. Proc. 95–51 provides restrictions under the revenue procedure.

.04 Rev. Proc. 98–10, 1998–2 I.R.B. 35, modified Rev. Proc. 95–51 to provide approval for additional changes in asset valuation method and for certain changes in valuation software. Rev. Proc. 98–10 also clarified and modified other provisions of Rev. Proc. 95–51.