SECTION 3. APPROVAL FOR

SPECIFIED CHANGES IN FUNDING METHOD

Subject to the restrictions of section 6 of this revenue procedure and to the conditions under the applicable change in funding method described in section 3.01, 3.02, or 3.03 of this revenue procedure, approval is granted for a change in funding method described in this section 3.

.01 Approval for changes in asset val- uation method . Approval is granted for the following changes in asset valuation method, provided that the asset valuation method was not changed in any of the four preceding plan years.

(1) A change in asset valuation method to a method that determines the value of plan assets as fair market value, as defined in § 1.430(g)–1(c)(1)(ii).

(2) A change in asset valuation method to a method that determines the value of plan assets as the average of the fair market value on the valuation date and the adjusted fair market value of assets determined for one or more earlier determination dates, as described in § 430(g)(3)(B) and the regulations and other published guidance thereunder. (See § 1.430(g)– 1(c)(2) and Notice 2009–22, 2009–14 I.R.B. 741.) The asset value determined under the method must be restricted so that it is not greater than 110% and not less than 90% of the fair market value, as described in § 1.430(g)–1(c)(2)(iii).

(3) A change in asset valuation method to a method that applies a phase-in for the determination of the value of plan assets. Under this method, the value of plan assets is determined as the average of the fair market value on the valuation date and the adjusted fair market value of assets determined for one or more earlier determination dates, as described below. The asset value determined under this method must be restricted so that it is not greater than 110% and not less than 90% of the fair market value, as described in § 1.430(g)–1(c)(2)(iii).

In the first plan year this asset valuation method is used, the value of plan assets is the fair market value. In the second plan

year this asset valuation method is used, the value of plan assets is the average of the fair market value of assets on the valuation date and the adjusted fair market value of assets from the immediately preceding valuation date. In the third plan year this asset valuation method is used, the value of plan assets is the average of the fair market value of assets on the valuation date and the adjusted fair market value of assets from the two immediately preceding valuation dates.

The phase-in that applies under this method is not a change in funding method in years two and three. The first plan year of the four-year limitation on changes receiving automatic approval as described in this section 3.01 starts in the first year of this phase-in method. Failure to apply this method for the second or third plan year would be considered a change in funding method for the year for which the failure occurred, which would require approval for that year.

This approval is available only if the determination dates used for the adjusted fair market values after the phase-in of the new asset valuation method are not the same as the determination dates used for this purpose prior to the change in asset valuation method. Accordingly, this automatic approval may not be used merely to restart the asset valuation method in use prior to the change in funding method.

.02 Approval for changes in valuation date . Approval is granted for the following changes in valuation date, provided that the valuation date was not changed in any of the four preceding plan years.

(1) A change in the valuation date to the day that is the first day of the plan year.

(2) A change in the valuation date to the last day of the plan year, if there was a change in the plan year and the valuation date for the prior plan year was the last day of that plan year.

.03 Approval for change in treatment of benefits funded through insurance con- tracts . Approval is granted for a change in the treatment of benefits funded through insurance contracts if, as of the prior plan year’s valuation date, none of the plan benefits were funded through insurance contracts.