Automatic Approval of Change in Funding Method for Takeover Plans, IRS Advises

The Internal Revenue Service in Announcement 2015-3 advised that automatic approval of a change in funding method is provided with respect to a single-employer defined benefit plan under certain circumstances in which the change in method results from a change in the plan’s enrolled actuary. 

The automatic approval will apply for plan years beginning on or after January 1, 2013, provided that all of the conditions set forth in the announcement are satisfied.  

The IRS explains that the current announcement expands upon the automatic approval for takeover plans under Announcement 2010-3 by allowing the five percent tests to be performed for the year in which the takeover occurs, and permits the newly hired enrolled actuary to use a signed actuarial valuation report issued by the prior enrolled actuary for the plan in lieu of the Schedule SB. This change facilitates the filing of an amended Schedule SB for the 2013 plan year for a takeover plan without the need for the newly hired enrolled actuary to perform the five percent test using the valuation results for the 2012 plan year. 

IRS Announcement 2015-3