SERVICE EXTENDS DEADLINE FOR CONFORMING EMPLOYEE PLAN YEAR TO EMPLOYER'S TAX YEAR.

Announcement 88-97

This announcement provides guidance to employers who wish to conform the plan year of their employee retirement plan(s) to the first required calendar tax year of the employer under section 806 of the Tax Reform Act of 1986, Public Law 99-514 (TRA). TRA amended sections 441(i), 706(b), and 1378 of the Internal Revenue Code to require certain taxpayers to change their taxable year to a calendar year. Section 806 of TRA is effective for taxable years beginning after December 31, 1986.

After TRA was enacted, some employers changed their tax and plan years to the calendar year, other employers changed only their tax year, while other employers made no change in tax or plan year. On December 22, 1987, section 10206 of the Omnibus Budget Reconciliation of Act of 1987, Public law 100-203 (OBRA), was enacted, adding section 444 to the Code. This section allows certain employer to elect a taxable year other than a calendar year (section 444 election). Employers who are ineligible or who decline to make a section 444 election must comply with the Code as amended by section 806 of TRA.

Rev. Proc. 87-27, 1987-1 C.B. 769, sets forth guidelines for changing the plan year of employee retirement plans and the trust year of a tax exempt employee's trust. Section 4 of the Revenue Procedure provides that all employers must complete all actions necessary to implement the change of plan year or file Form 5308 by the last date of the initial short plan year.

This Announcement extends the deadline in Rev. Proc. 87-27 for making plan year changes to conform the plan year with the first required calendar tax year of the employer under section 806 of TRA December 31, 1987 to August 26. Notwithstanding this extension, all other restrictions in section 4 and 5 of Rev. Proc. 87-27 apply to the changes.

The Service is considering the extent to which employers who changed their plan year to conform with changes in their fiscal year required by section 806 of TRA may reinstate their plan year along with their fiscal year. Such guidance will be forthcoming in the near future.

This document serves as an "administrative pronouncement" as that term is described in section 1.6661-3(b)(2) of the Income Tax Regulations and may be relied upon to the same extent as a revenue ruling or a revenue procedure.

The principal author of this announcement is Paul Nassal of the Employee Plan Technical and Actuarial Division. For further information regarding this announcement contact the Employee Plans Taxpayer Assistance Number on (202) 566-6783 (NOT a toll-free call). Mr. Nassal's number is (202) 566-3149 (also NOT a toll-free call).