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IRS Clarifies Minimum Funding Rules for DB Plans of Cooperatives, Charities

The IRS in Notice 2015-58, which it issued on Aug. 28, has provided guidance on the minimum funding requirements for defined benefit plans maintained by groups of cooperatives and related entities, and by groups of charities. The notice clarifies the application of the Cooperative and Small Employer Charity Pension Flexibility Act, which was enacted on April 7, 2014.

In a question-and-answer format, the notice addresses rules for CSEC plans, elections to cease to be an eligible charity plan beginning in 2014, extended amortization elections and reporting requirements.

Specifically, the guidance discusses:
 

  • what a CSEC plan is;

 

  • how the funding standard account and related items are established for the 2014 plan year for certain plans;

 

 

  • whether a plan sponsor of an eligible charity plan can elect for the plan to cease to be treated as an eligible charity plan;

 

 

  • whether a plan sponsor of an eligible charity plan can elect extended amortization if it elects to cease to be treated as an eligible charity plan;

 

 

  • how the rules for plans that are subject to Internal Revenue Code Section 433 should be reflected on the Schedule SB for 2014 and 2015;

 

 

  • how certain elections should be reflected on the Schedule SB for 2014 and later years; and

 

 

  • whether a plan sponsor must file a revised 2014 Schedule SB if the guidance in Notice 2015-58 affects the computations on the Schedule SB filed with the Form 5500 or Form 5500-SF for the 2014 plan year.


Notice 2015-58 will appear in Internal Revenue Bulletin 2015-37, which will be issued on Sept. 14, 2015.