SECTION 4. APPROVAL FOR

CHANGES IN FUNDING METHOD IN SPECIAL SITUATIONS

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 4.01, 4.02, 4.03 or 4.04 of this revenue procedure, approval is granted for a change in funding method described in this section 4.

.01 Approval for change in funding method for takeover plans . Approval is granted for a change in funding method, including a change in the valuation date to the last day of the plan year (without regard to whether there is also a change in plan year) or a change in software, if all the conditions set forth in paragraphs (1) through (4) of this section 4.01 are satisfied.

(1) Both the enrolled actuary for the plan and the business organization providing actuarial services to the plan have changed.

(2) The new method is substantially the same as the method used by the prior enrolled actuary and is consistent with the description of the method contained in the prior actuarial report or prior Schedule SB (disregarding any difference attributable to a change in funding method for which automatic approval is provided without regard to this section 4.01).

(3) The funding target and target normal cost (without regard to any adjustments for employee contributions and plan-related expenses), as determined by the new enrolled actuary as of the valuation date for the prior plan year (using the actuarial assumptions of the prior enrolled actuary and using the data elements and valuation software of the new enrolled actuary), are both within 3% of those values as determined for that prior plan year by the prior enrolled actuary.

(4) The actuarial value of plan assets, as determined by the new enrolled actuary as of the valuation date for the prior plan year (using the actuarial assumptions of the prior enrolled actuary), is within 2% of the value for that prior plan year as determined by the prior enrolled actuary.

Alternatively, the comparisons described in paragraphs (3) and (4) of this section 4.01 may be made on the basis of the current plan year, provided that the

Bulletin No. 2017–44 467 October 30, 2017

prior enrolled actuary has issued an actuarial report that includes the results for the current plan year (or has provided a signed Schedule SB to the new enrolled actuary for the current plan year, to the extent guidance issued by the IRS would permit the new enrolled actuary to revise those entries on that Schedule SB).

For purposes of this revenue procedure, an actuarial report must be signed by the enrolled actuary for the plan and must meet the applicable standards of performance under regulations issued by the Joint Board for the Enrollment of Actuaries. See 20 CFR 901.20. In addition, for purposes of this section 4.01, the current plan year means the first plan year for which a Schedule SB is signed by the new enrolled actuary, and the prior plan year means the plan year that immediately precedes the current plan year.

.02 Approval for change in funding method due to change in valuation soft- ware . Approval is granted for a change in funding method that results from a change in valuation software if all the conditions set forth in paragraphs (1) through (5) of this section 4.02 are satisfied. Note that certain changes in valuation software may not constitute changes in funding method. For example, the update of the valuation software to incorporate the actual social security taxable wage base for the current year is not a change in funding method. Also, if all of the results of each specific computation are the same after the change in valuation software, there is no change in funding method.

(1) The enrolled actuary for the plan is the same as the enrolled actuary for the plan for the prior plan year or the business organization providing actuarial services to the plan is the same as the business organization that provided actuarial services to the plan for the prior plan year. (Accordingly, the approval under section 4.01 of this revenue procedure is not available.)

(2) The new method is substantially the same as the method used for the prior plan year (disregarding any difference attributable to a change in funding method for which automatic approval is provided without regard to this section 4.02).

(3) The new valuation software generally will be used by the enrolled actuary for the single-employer plans to which the enrolled actuary provides actuarial services.

(4) For either the prior plan year or the current plan year, the funding target, target normal cost (without regard to any adjustments for employee contributions and plan-related expenses), and actuarial value of assets determined under the new valuation software are each within 1% of the respective values determined under the valuation software used for the prior plan year (all other factors being held constant). However, the 1% threshold is increased to 2% of the respective values if the approval under this section 4.02 was not used in the prior year.

(5) The modifications to the computations in the valuation software or the use of a different valuation software system are designed to produce results that are no less accurate than the results produced prior to the modifications or change.

.03 Approval for change in funding method due to change in selection of data elements . Approval is granted for a change in funding method used in valuing liabilities due to a change in the selection of data elements ¹⁷³ that are used in the actuarial valuation if all of the conditions set forth in paragraphs (1) through (4) of this section 4.03 are satisfied. For example, a change from using the prior years’ actual compensation with an adjustment to the current valuation date to using the current annual rate of pay is approved, if the applicable conditions are satisfied.

(1) The enrolled actuary for the plan is the same as the enrolled actuary for the plan for the prior plan year or the business organization providing actuarial services to the plan is the same as the business organization that provided actuarial services to the plan for the prior plan year.

(2) Other than the change in data elements described in this section 4.03, the new method is the same (disregarding any difference attributable to a change in funding method for which automatic approval is provided without regard to this section 4.03).

(3) The funding target and target normal cost (without regard to any adjustments for employee contributions and plan-related expenses) determined using the all of the new data elements (for either the current plan year or the prior plan year) are each within 1% of the respective values determined using the prior data elements (with all other factors being held constant).

(4) The use of any new data element is designed to produce results that are no less accurate than the results produced prior to the modifications or change.

.04 Approval for change in funding method for fully funded terminated plans . Approval is granted for a change in funding method described in paragraph (1) of this section 4.04 for the plan year in which the plan is terminated, if all the conditions set forth in paragraph (2) of this section 4.04 are satisfied. (1) Any or all of the following changes in funding method may be made:

(a) The asset valuation method may be changed to a method that determines the value of plan assets as the fair market value of assets, even if that change does not otherwise satisfy the conditions of section 3.01 of this revenue procedure.

(b) For a plan that is eligible to designate any day during the plan year as its valuation date pursuant to § 430(g)(2)(B), the valuation date may be changed to the date of termination or the first day of the plan year, even if the change does not otherwise satisfy the conditions of section 3.02 of this revenue procedure. (c) The funding method may be changed as a result of a change in both the enrolled actuary for the plan and the business organization providing actuarial services to the plan, even if the change does not otherwise satisfy the conditions of section 4.01 of this revenue procedure.

(d) The funding method may be changed as a result of a change in the valuation software, even if the change does not otherwise satisfy the conditions of section 4.02 of this revenue procedure.

(e) The funding method may be changed as a result of a change in the data elements, even if the change does not oth

173Data elements are types of data, such as compensation, dates of birth or hire, or gender, used to value the plan liabilities. See section 3.02 of Rev. Proc. 2017-57 for examples of changes in the selection of data elements.

October 30, 2017 468 Bulletin No. 2017–44

erwise satisfy the conditions of section 4.03 of this revenue procedure. (2) The conditions which must be satisfied to receive automatic approval under this section 4.04 are:

(a) As of the date of termination, the assets of the plan (exclusive of contributions receivable) are sufficient to satisfy all benefit liabilities (whether or not the corresponding benefits are vested).

(b) If applicable, a timely notice of intention to terminate was filed with the Pension Benefit Guaranty Corporation pursuant to section 4041(b)(2)(A) of ERISA.