Benefits & ERISA Law

IRS Expands Transitional Relief for Defined Benefit Plans

By Suzanne Wynn

One impact of Congress’ failure so far to pass any version of the Pension Protection Technical Corrections Act is that defined benefit plans have been forced to operate while awaiting guidance. Earlier this year, the IRS issued transitional relief in Notice 2008-21. Today, the IRS issued Notice 2008-73 which expands that transitional relief. Specifically, it states:

“Because technical corrections to PPA have not yet been enacted, many small plans that would have otherwise retained end-of-year valuation dates will adopt beginning-of-year valuation dates for the 2008 plan year. This change will make those plans ineligible for the transition relief set forth in Section III.B of Notice 2008-21. Accordingly, these plans may have difficulty in complying with the timing requirements for certifying the plan?s AFTAP. To address these difficulties, the transition relief of Section III.B of Notice 2008-21 is expanded to apply with respect 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. The Service 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.”

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Full post as published by Pension Protection Act Blog on September 04, 2008 (boomark / email).