SECTION 1. PURPOSE AND SCOPE

.01 The purpose of this revenue procedure is to update Rev. Proc. 2000–40, 2000–2 C.B. 357, to take into account the provisions of § 430 of the Internal Revenue Code (Code), which was enacted as part of the Pension Protection Act of 2006, Pub. L. 109–280. This revenue procedure provides automatic approval for certain changes in funding method used for single-employer defined benefit plans for calculations described under § 430. A funding method is a recognized actuarial technique utilized for establishing the amount and incidence of the annual actuarial cost of pension plan benefits and expenses. The approvals under this revenue procedure are granted in accordance with § 412(d)(1) of the Code and section 302(d)(1) of the Employee Retirement Income Security Act of 1974, Pub. L. 93– 406, as amended (ERISA). .02 Section 3 of this revenue procedure provides automatic approval for three asset valuation method changes, automatic approval for two valuation date changes, and automatic approval for one type of change in the treatment of benefits funded through insurance contracts. Section 4 of this revenue procedure provides automatic approval for a change in funding method in special situations in which there is a change in the plan’s actuary, actuarial software, or the data elements used in the actuarial valuation, and for fully funded terminating plans. Section 5 of this revenue procedure provides automatic approval for a change in funding method in connection with a plan merger.

.03 Taxpayers, plan administrators, and enrolled actuaries are cautioned to consider the overall restrictions on use of automatic approval under this revenue procedure (see section 6 of this revenue procedure), and the specific restrictions with respect to each of the approvals.

.04 The application of a funding method approved under this revenue procedure must conform to all of the requirements of the regulations under § 430. Thus, for example, the funding method must comply with the requirements for the determination of target normal cost and funding target, as required under § 1.430(d)–1. Similarly, in accor

dance with § 1.430(a)–1(c)(2), the difference in the funding shortfall attributable to the change in funding method is used, in conjunction with the present value of existing amortization installments, to determine the shortfall amortization base for the year of the change.