Section 4. Application

.01 A plan administrator, plan sponsor, or the authorized representative of either who desires to obtain approval for a change in funding method should make a written request (no form is prescribed for requesting approval) to:

Internal Revenue Service Commissioner, TE/GE Attention: T:EP:RA P.O. Box 27063, McPherson Station Washington, DC 20038 .02 (1) The request should be made no later than the close of the plan year for which the change is to be effective. However, requests made after the close of the plan year, but no later than 2 1/2 months after the close of the plan year, will generally be considered, at the discretion of the Service, if a statement is attached to the request detailing an adequate reason for the delay. Requests made after 2 1/2 months after the close of the plan year generally will not be considered. However, if a request for approval of a change in funding method involves a plan merger, the request should be made no later than 4 months before the filing deadline for Schedule B (Actuarial Information) of Form 5500 (of the merged plan) for the plan year in which the merger took place.

(2) If a change to an element of a funding method was recently approved and a subsequent modification of the same element is requested, the subsequent modification generally will not be considered. For example, if a plan was using a 5-year smoothing asset valuation method prior to 1999 and the plan sponsor received approval to set the actuarial value of assets at market value for 1999 (with a phase-in of gains and/or losses in subsequent years), a request in 2001 to set the actuarial value of assets to market value for 2001 (with a phase-in of gains and/or losses in subsequent years) will not be considered.

(1) The employer identification

number, the plan name and number, and the name and address of the plan administrator or plan sponsor. (2) A copy of the actuarial valuation

report for the plan year preceding the year of change, and, if available, a draft of the actuarial valuation report for the year of change. For requests involving mergers, a copy of each of the valuation reports for all the merging plans for the plan year preceding the change and, if available, a draft of the actuarial valuation report for the year of change, should be included. (3) A copy of the Schedule B (Actu arial Information) of Form 5500, including attachments thereto, that has been filed for the plan year preceding the year of change. For requests involving mergers, a copy of the most recent Schedule B that has been filed for a plan year preceding the year of change should be included for each of the merging plans. (4) A statement of the plan year first

affected by the proposed change. (5) A description of the current

funding method and the proposed funding method. The method can be described by reference to a method contained in Rev. Proc. 2000–40. For example, the level percent of compensation individual entry age normal method may be described by reference to section 3.08 of Rev. Proc. 2000–40. The method can also be described by indicating a

October 16, 2000 372 2000–42 I.R.B.

particular variation of a method described in Rev. Proc. 2000–40. The description of a method should be such that it would allow two independent actuaries to arrive at the same valuation results using the same method and assumptions for a given plan. If applicable, the description should indicate whether the method involves the use of a certain rule in the first year of the change and a different rule in subsequent years. For example, an asset valuation method change may restart at market value in the year of change, and may phase-in gains and losses in subsequent years. Additionally, if the method is an asset valuation method not described in Rev. Proc. 2000–40, a numerical illustration demonstrating the calculation of the actuarial value of assets under the current method and the proposed method should be included. If the change in funding method involves a plan merger, a description of the funding method that was used by each of the merging plans before the merger and the proposed funding method that is used by the merged plan should be included. (6) A brief statement of the reason

for the proposed change and a statement why automatic approval under Rev. Proc. 2000–40 cannot be used to make the change. (7) A statement of whether a change

in funding method was previously requested. (8) A statement of other changes

being made for the year of change, such as a change in plan year or change in actuarial assumptions. (9) Technical Information

mation below should be shown (1) prior to any change in plan provisions, assumptions, or funding methods that apply in the year of change, and (2) after the change in funding method and other changes that occur in the year of change: (i) A list of the amortization

bases maintained (including, for each base, the type of base, outstanding balance, amortization period, and amortization amount). Note that the bases maintained prior to and after implementing all current year changes will differ by the inclusion of the new base(s). The calculation of the new base(s) should also be shown. If bases are combined and offset in the year of change, in addition to the resulting single base, show information on each of the bases involved. (ii) The unfunded liability of

the plan. For immediate gain methods, show the actuarial value of assets prior to any adjustments. (iii) The basic funding formula

(A) A worksheet should be pre

pared by the enrolled actuary for the plan. The worksheet should contain the information described below determined as of the valuation date in the year of the change in funding method. The infor

(or equation of balance). If the equation of balance is not satisfied, explain the effect on the operation of the funding method in the year of change. In the case of a plan change involving a merger, the above information should be provided for all merging plans as of the date of the merger. If the plan change involves a spin-off, the above information should be provided for the original plan immediately prior to the spinoff date and for the plans immediately after the spin-off date. (B) The calculation of the § 412

full funding limitation for the plan year prior to the plan year of change, and for the plan year of change. In the case of a plan merger, the cal

culation of the § 412 full funding limitation should be given for all merging plans immediately prior to the merger and for the merged plan after the merger. (10) A statement of whether a

waiver of the minimum funding standard is currently in effect and whether a request for a waiver is currently pending or is expected to be submitted in the near future. A checklist has been provided in Appendix A for the convenience of the taxpayer submitting the request. In certain cases some of the material described above may be inappropriate or burdensome to furnish. In such cases, the request for approval should include a statement indicating why such material is not being furnished.

.05 The Service may request additional information as needed.

.06 If a conference has been requested, a conference will be granted only in accordance with section 12 of Rev. Proc. 2000–4. Furthermore, if the Service proposes an adverse holding, the taxpayer will be offered a conference in accordance with section 12.02 of Rev. Proc. 2000–4. .07 If the request for the change in funding method is approved, the instructions under line 5 of Schedule B (Actuarial Information) of Form 5500 should be followed in reporting the change. Currently, this requires entering the date of the ruling letter on line 5k of Schedule B.