The Internal Revenue Service is trying to be more flexible about how it will apply new defined benefit plan rules.
The IRS has described the changes in IRS Notice 2008-73, “Transition Guidance for New Funding Rules and Funding-Related Benefit.”
Section 430 of the Internal Revenue Code, which was created by the federal Pension Protection Act of 2006, will be placing new limits on underfunded defined pension plans.
The IRS announced in IRS Notice 2008-21 that it will be offering temporary relief for small plans, to ease the rules for deciding whether a plan is underfunded, officials write in the notice.
In some cases, because of the way the guidance has been written, small plans with the wrong end-of-year valuation dates might not be able to take advantage of the temporary relief, officials write.
To fix that problem, the IRS now will expand the Notice 2008-21 relief to “to any plan that had an end-of-year valuation date for both the 2006 and 2007 plan years, regardless of the plan’s valuation date for 2008,” officials write.
The IRS “and the Treasury Department are considering the extent to which automatic approval to change valuation dates and to make other funding method changes should be granted for the 2009 plan year,” officials write