IRS Updates Defined Benefit Plan Funding Method Change Procedures (Rev. Proc. 2017-56; Rev. Proc. 2017-57)

The IRS has updated its procedures for defined benefit plans changing funding methods and revoking an election related to interest rates. The revised procedures are effective January 1, 2018. However,  taxpayers may elect to apply them for earlier requests.

Funding Method Change

Rev. Proc. 2000-40 provided procedures for obtaining automatic approval for certain funding method changes by defined benefit plans. Rev. Proc. 2000-41 provided procedures for obtaining approval for a change in funding method. These procedures predate the changes to the minimum funding requirements enacted after they were issued. Under these legislative changes, single-employer plans are generally subject to the Code Sec. 430 rules, while multiemployer and CSEC plans are subject to the pre-Code Sec. 430 funding rules.

Single-Employer Defined Benefit Plan

The new procedures under Rev. Proc. 2017-56, provide automatic approval for  certain funding method changes used by single-employer defined benefit plans for calculations under Code Sec. 430. Going forward, Rev. Proc. 2000-40 no longer applies to plans subject to Code Sec. 430. However, it does continue to apply to other plans. The updated procedure is effective for plan years commencing on or after January 1, 2018. But, taxpayers may elect to apply this revenue procedure for earlier plan years. Also, the new procedure modifies certain announcements to provide they do not apply to a change in funding method for a plan year beginning on or after January 1, 2018.

Any Defined Benefit Plan

New Rev. Proc. 2017-57 provides procedures for obtaining IRS approval to change funding method for any defined benefit plan. Additionally, it provides procedures for obtaining IRS approval to revoke an interest rate election under Code Sec. 430. The updated procedure applies to funding method requests submitted on or after January 1, 2018. However, taxpayers may elect to apply it for earlier requests.

Rev. Proc. 2017-56

Rev. Proc. 2017-57

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