Internal Revenue Bulletin 2011-2 (PDF rendition): IRS Announcements

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

Bulletin No. 201
1-2
January 10, 2011
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
SPECIAL ANNOUNCEMENT
Notice 2011–4, page 282.
This notice provides procedures for a taxpayer to obtain au-
tomatic consent to change its method of accounting for un-
earned premiums by reason of section 833(c)(5) of the Code.
Rev. Proc. 2008-52 modified. Notice 2010-79 clarified and
modified.
INCOME TAX
Rev. Rul. 2011–2, page 256.
Federal rates; adjusted federal rates; adjusted federal
long-termrateandthelong-termexemptrate.For pur-
poses of sections 382, 642, 1274, 1288, and other sections
of the Code, tables set forth the rates for January 2011.
Notice 2011–2, page 260.
This notice provides guidance on the application of section
162(m)(6) of the Code. Section 162(m)(6) limits the allowable
deduction for remuneration for services provided by individuals
to certain health insurance providers. Section 162(m)(6) was
enacted as part of the Patient Protection and Affordable Care
Act (2010).
Notice 2011–4, page 282.
This notice provides procedures for a taxpayer to obtain au-
tomatic consent to change its method of accounting for un-
earned premiums by reason of section 833(c)(5) of the Code.
Rev. Proc. 2008-52 modified. Notice 2010-79 clarified and
modified.
Rev. Proc. 2011–12, page 297.
Cost-of-living adjustments for 2011.This procedure sets
forth the 2011 cost-of-living adjustments to certain items due
to inflation as required under various provisions of the Code.
EMPLOYEE PLANS
Rev. Rul. 2011–1, page 251.
This ruling modifies the rules for group trusts described in Rev.
Rul. 81-100, 1981-1 C.B. 326, as clarified and modified by
Rev. Rul. 2004-67, 2004-2 C.B. 28. The modifications revise
the generally applicable rules for these group trusts and, if cer-
tain requirements are met, permit the participation in group
trusts of custodial accounts under section 403(b)(7), retire-
ment income accounts under section 403(b)(9), and govern-
mental retiree benefit plans under section 401(a)(24). This
ruling also modifies the transition relief provided in Rev. Rul.
2008-40, 2008-2 C.B. 166, relating to plans qualifying under
section 1165 of the Puerto Rico Internal Revenue Code (Puerto
Rico Code). In addition, this ruling provides related model lan-
guage that may be used by group trusts to comply with these
new provisions. Rev. Ruls. 81–100, 2004–67, and 2008–40
modified.
(Continued on the next page)
Finding Lists begin on page ii.

Notice 2011–1, page 259.
This notice addresses the timing of the application of the Af-
fordable Care Act provisions prohibiting insured group health
plans from discriminating in favor of highly compensated indi-
viduals. It states that the Treasury Department and the IRS,
as well as the Departments of Labor and Health and Human
Services, have determined that compliance with these require-
ments should not be required (and thus, any sanctions for fail-
ure to comply do not apply) until after regulations or other ad-
ministrative guidance of general applicability has been issued.
Thenoticeincludesarequestforpubliccomments.
Notice 2011–2, page 260.
This notice provides guidance on the application of section
162(m)(6) of the Code. Section 162(m)(6) limits the allowable
deduction for remuneration for services provided by individuals
to certain health insurance providers. Section 162(m)(6) was
enacted as part of the Patient Protection and Affordable Care
Act (2010).
Notice 2011–3, page 263.
Special rules relating to funding relief for single-em-
ployer pension plans under PRA 2010.This notice pro-
vides guidance on the special rules relating to funding relief for
single-employer defined benefit pension plans (including multi-
ple employer defined benefit pension plans) under the Preserva-
tion of Access to Care for Medicare Beneficiaries and Pension
Relief Act of 2010 (PRA 2010).
EXEMPT ORGANIZATIONS
Rev. Proc. 2011–9, page 283.
Determination letters and rulings.This document sets forth
procedures for issuing determination letters and rulings on the
exempt status of organizations under sections 501 and 521 of
the Code. The procedures also apply to the revocation and
modification of determination letters or rulings, and provide
guidance on the exhaustion of administrative remedies for pur-
poses of declaratory judgment under section 7428. Rev. Proc.
2010-9 superseded.
Rev. Proc. 2011–10, page 294.
This document sets forth updated procedures with respect to
issuing rulings and determination letters on private foundation
status under section 509(a) of the Code, operating foundation
status under section 4942(j)(3), and exempt operating founda-
tion status under section 4940(d)(2), of organizations exempt
from Federal income tax under section 501(c)(3). This docu-
ment also applies to the issuance of determination letters on
the foundation status under section 509(a)(3) of nonexempt
charitable trusts described in section 4947(a)(1). Rev. Procs.
72-50 and 76-34 modified and superseded. Announcements
85-88 and 2009-62 obsoleted.
ADMINISTRATIVE
REG–124018–10, page 301.
Proposed regulations under Part 300 of the Code would amend
regulations relating to the imposition of user fees for enrolled
agents and enrolled retirement plan agents. A public hearing
is scheduled for January 14, 2011.
Notice 2011–4, page 282.
This notice provides procedures for a taxpayer to obtain au-
tomatic consent to change its method of accounting for un-
earned premiums by reason of section 833(c)(5) of the Code.
Rev. Proc. 2008-52 modified. Notice 2010-79 clarified and
modified.
Announcement 2011–1, page 304.
Update to Publication 1220 (Revised 8-2010).This an-
nouncement contains an update to Publication 1220, Specifi-
cations for Filing Forms 1097–BTC, 1098, 1099, 3921, 3922,
5498, 8935, and W-2G Electronically (Revised 8-2010) con-
cerning the filing of Form 1099-R.
January 10, 20112011–2 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
2011–2 I.R.B.January 10, 2011

January 10, 20112011–2 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 24.—C
hild Tax
Credit
The Service pr
ovides inflation adjustments for the
valueusedind
etermining the amount of the credit
that may be ref
unded for taxable years beginning in
2011. See Rev
. Proc. 2011-12, page 297.
Section 25A.—Hope and
Lifetime Learning Credits
For taxable years beginning in 2011, the Ser-
vice provides inflation adjustments for the amount
of qualified tuition and related expenses that are
taken into account in determining the amount of the
Hope Scholarship Credit, and for the amount of a
taxpayer’s modified adjusted gross income that is
taken into account in determining the reduction in
the amount of the Hope Scholarship and Lifetime
Learning Credits otherwise available. See Rev. Proc.
2011-12, page 297.
Section 32.—Earned
Income
The Service provides inflation adjustments to the
limitations on the earned income credit for taxable
years beginning in 2011. See Rev. Proc. 2011-12,
page 297.
Section 42.—Low-Income
Housing Credit
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2011. See Rev. Rul. 2011-2, page 256.
Section 63.—Taxable
Income Defined
The Service provides inflation adjustments to the
standard deduction amounts (including the limitation
in the case of certain dependents, and the additional
standard deduction for the aged or blind) for taxable
years beginning in 2011. See Rev. Proc. 2011-12,
page 297.
Section 132.—Certain
Fringe Benefits
The Service provides inflation adjustments to the
limitations on the exclusion of income for a qualified
transportation fringe benefit for taxable years begin-
ning in 2011. See Rev. Proc. 2011-12, page 297.
Section 151.—
Allowance
of Deductions
for Personal
Exemptions
The Service pr
ovides inflation adjustments to the
personal exem
ption amount out for taxable years be-
ginning in 20
11. See Rev. Proc. 2011-12, page 297.
Section 221.—Interest on
Education Loans
The Service provides inflation adjustments to the
income limitations used to determine the allowable
deduction for interest on education loans for taxable
years beginning in 2011. See Rev. Proc. 2011-12,
page 297.
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term rates
are set forth for the month of January 2011. See Rev.
Rul. 2011-2, page 256.
Section 382
.—Limitation
on Net Opera
ting Loss
Carryforwards and Certain
Built-in Losses Following
Ownership Change
The adjustable applicable federal long-term rate is
set forth for the month of January 2011. See Rev. Rul.
2011-2, page 256.
Section 412.—Minimum
Funding Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2011. See Rev. Rul. 2011-2, page 256.
Section 467.—Certain
Payments for the Use of
Property or Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2011. See Rev. Rul. 2011-2, page 256.
Section 468.—
Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2011. See Rev. Rul. 2011-2, page 256.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
Federal short-term, mid-term, and long-term rates
are set forth for the month of January 2011. See Rev.
Rul. 2011-2, page 256.
Section 483.—Interest on
Certain Deferred Payments
The adjustable applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2011. See Rev. Rul. 2011-2, page 256.
Section 501.—Exemption
From Tax on Corporations,
Certain Trusts, Etc.
26 CFR 1.501(a)–1: Exemption from taxation.
(Also §§ 401, 403; 1.401(a)–2, 1.403(b)–8.)
This ruling modifies the rules for group
trusts described in Rev. Rul. 81-100,
1981-1 C.B. 326, as clarified and modi-
fied by Rev. Rul. 2004-67, 2004-2 C.B.
28. The modifications revise the gener-
ally applicable rules for these group trusts
and, if certain requirements are met, per-
mit the participation in group trusts of cus-
todial accounts under section 403(b)(7),
retirement income accounts under section
403(b)(9), and governmental retiree ben-
efit plans under section 401(a)(24). This
ruling also modifies the transition relief
provided in Rev. Rul. 2008-40, 2008-2
C.B. 166, relating to plans qualifying un-
der section 1165 of the Puerto Rico In-
ternal Revenue Code (Puerto Rico Code).
In addition, this ruling provides related
model language that may be used by group
trusts to comply with these new provi-
sions. Rev. Ruls. 81–100, 2004–67, and
2008–40 modified.
2011–2 I.R.B.251January 10, 2011

Rev. Rul. 2011–1
PURPOSE
This revenue ruling modifies the rules
for group trusts described in Rev. Rul.
81–100, 1981–1 C.B. 326, as clarified
and modified by Rev. Rul. 2004–67,
2004–2 C.B. 28. The modifications re-
vise the generally applicable rules for
these group trusts and, if certain require-
ments are met, permit the participation in
group trusts of custodial accounts under
§ 403(b)(7), retirement income accounts
under § 403(b)(9), and governmental re-
tiree benefit plans under § 401(a)(24).
In addition, this revenue ruling provides
related model language that may be used
by group trusts to comply with these new
provisions. This revenue ruling also mod-
ifies the transition relief provided in Rev.
Rul. 2008–40, 2008–2 C.B. 166, relating
to plans qualifying under section 1165 of
the Puerto Rico Internal Revenue Code
(PuertoRicoCode).
ISSUE
Under what conditions may the as-
sets of qualified plans under § 401(a),
individual retirement accounts (IRAs)
under § 408 (including Roth IRAs un-
der §408A), and eligible governmental
plans under § 457(b) be pooled in a group
trust described in Rev. Rul. 81–100 with
the assets of custodial accounts under
§ 403(b)(7), retirement income accounts
under § 403(b)(9), and governmental plans
under § 401(a)(24) without affecting the
tax status of these entities or the group
trust?
LAW AND ANALYSIS
Section 401(a) provides that a trust cre-
ated or organized in the United States and
forming a part of a stock bonus, pension, or
profit-sharing plan of an employer for the
exclusive benefit of its employees or their
beneficiaries is qualified if it meets certain
requirements. Section 401(a)(1) provides
that one of these requirements is that con-
tributions be made to the trust by the ap-
plicable employer or employees, or both,
for the purpose of distributing to such em-
ployees or their beneficiaries thecorpus
and income of the fund accumulated in ac-
cordance with such plan. Section 501(a)
provides, in part, that a trust described in
§ 401(a) is exempt from income tax. Sec-
tion 401(a)(2) provides, in part, that under
each trust instrument it must be impossi-
ble, at any time prior to the satisfaction
of all liabilities with respect to employ-
ees and their beneficiaries under the plan
and the trust, for any part of thecorpusor
income of the trust to be used for or di-
verted to purposes other than for the exclu-
sive benefit of the employees or their ben-
eficiaries. Similarly, § 408 provides that
an IRA means a trust created or organized
“for the exclusive benefit of an individual
or his beneficiaries” and § 457(g) provides
that the assets of an eligible governmental
plan under § 457(b) must be held in trust
“for the exclusive benefit of participants
and their beneficiaries.”
Section 401(a)(24) provides that any
group trust that otherwise meets the re-
quirements of § 401(a) does not fail to
satisfy such requirements due to the par-
ticipation or inclusion of the monies of
a plan or governmental unit described in
§ 818(a)(6) in the group trust. Section
818(a)(6) contains special rules regarding
the definition of the term “pension plan
contract.” Section 818(a)(6)(A) defines the
term to include a contract purchased by
a governmental plan (within the meaning
of § 414(d)) and an eligible governmental
plan under § 457(b). Section 818(a)(6)(B)
further defines the term to include a con-
tract purchased by the Government of the
United States, the government of any state
or political subdivision thereof, or by any
agency or instrumentality of the foregoing,
or any organization (other than a govern-
mental unit) exempt from tax under subti-
tle A (income taxes), for use in satisfying
an obligation of such government, political
subdivision, agency, instrumentality, or or-
ganization to provide a benefit under a plan
described in § 818(a)(6)(A).
1
Section 401(f)(1) provides that a cus-
todial account, an annuity contract, or a
contract (other than a life, health or acci-
dent, property, casualty, or liability insur-
ance contract) issued by an insurance com-
pany qualified to do business in a State
is treated as a qualified trust under § 401
if the custodial account or contract would
constitute a qualified trust under § 401, ex-
cept for the fact that it is not a trust. Sec-
tion 401(f)(2) requires that the assets in
any such custodial account are to be held
by a bank within the meaning of § 408(n)
or “another person” that demonstrates that
it will hold the assets in a manner consis-
tent with the requirements of § 401. See
§ 1.408–2(e) of the Income Tax Regula-
tions for rules regarding nonbank trustees.
Section 403(b) generally provides that
amounts contributed by an employer for
an annuity contract are excluded from the
gross income of the employee for the tax-
able year if certain requirements are satis-
fied. Section 403(b) applies to contribu-
tions made: for an employee by an em-
ployer described in § 501(c)(3) which is
exempt from taxation under § 501(a); for
an employee who performs services for
an educational organization described in
§ 170(b)(1)(A)(ii) by an employer which is
a State, a political subdivision of a State, or
an agency or instrumentality of any one of
the foregoing; or for a minister described
in § 414(e)(5)(A) by the minister or by an
employer.
Section 403(b)(7)(A) provides, in part,
that amounts paid by an employer de-
scribed in § 403(b)(1) to a custodial ac-
count which satisfies the requirements of
§ 401(f)(2) are treated as amounts con-
tributed for an annuity contract for the
employee if the amounts are to be invested
in regulated investment company stock to
be held in that custodial account. Section
403(b)(7)(B) provides that a custodial ac-
count which satisfies the requirements of
§ 401(f)(2) is treated as an organization
described in § 401(a) solely for purposes
of subchapter F of chapter 1 of subtitle A
of the Code (§§ 501–530) and subtitle F
of the Code (pertaining to procedure and
administration) with respect to amounts
received by the account and with respect
to income from the investment of these
amounts. Section 1.403(b)–8(d)(2)(i) pro-
vides that all of the amounts held in the
account must be invested in the stock of a
regulated investment company (as defined
in § 851(a)). Section 1.403(b)–8(d)(2)(i)
provides that the assets of a custodial
1
The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub. L. No. 97–248, added § 401(a)(24) to the Code. With respect to that section, the TEFRAconference report explains
that “the tax-exempt status of a group trust will not be adversely affected merely because the trust accepts monies from (a) a retirement plan of a Stateor local government, whether or not
the plan is a qualified plan and whether or not the assets are held in trust, or (b) any State or local government monies for use in satisfying an obligation of such State or local government to
provide a retirement benefit under a governmental plan.” H.R.Conf. Rep. No. 760, 97th Cong., 2nd Sess. 81, 1982–2 C.B. 682.
January 10, 20112522011–2 I.R.B.

account under § 403(b)(7) cannot be com-
mingled in a group trust with any assets
other than those of a regulated investment
company described in § 851(a). Section
1.403(b)–8(d)(2)(iii) provides that a cus-
todial account under § 403(b)(7) must
contain a written statement that the assets
held in a custodial account cannot be used
for, or diverted to, purposes other than for
the exclusive benefit of plan participants
or their beneficiaries.
Section 403(b)(9)provides that a re-
tirement income account is treated as an
annuity contract andamountspaidbyan
employer described in § 403(b)(1)(A) to a
retirement income account are treated as
amounts contributedto an annuity contract
for the employee. Section 403(b)(9)(B)
provides that a retirement income account
means a defined contribution program
established or maintained by a church,
or convention or association of churches,
including an organization described in
§ 414(e)(3)(A), to provide benefits under
§ 403(b) for an employee described in
§ 403(b)(1) or the employee’s beneficia-
ries. Section 1.403(b)–9(a)(2)(i) requires
separate accounting for the retirement in-
come account’s interest in the underlying
assets, and that a § 403(b)(9) retirement
income account contain a written state-
ment that the assets held in the retirement
income account cannot be used for, or
diverted to, purposes other than for the
exclusive benefit of plan participants or
their beneficiaries.
Rev. Rul. 81–100, as clarified and
modified by Rev. Rul. 2004–67, holds
that if specified requirements are satisfied,
a group trust is exempt from taxation un-
der § 501(a) with respect to its funds which
equitably belong to participating trusts de-
scribed in § 401(a) and is exempt from
taxation under § 408(e) with respect to
its funds which equitably belong to IRAs.
Rev. Rul. 81–100, as clarified and modi-
fied by Rev. Rul. 2004–67, sets forth the
following requirements for a group trust:
(1) the group trust must be adopted as
a part of each adopting employer’s plan
or each adopting individual retirement ac-
count; (2) the group trust instrument must
expressly limit participation in the group
trust to pension, profit-sharing, and stock
bonus trusts or custodial accounts qualify-
ing under § 401(a) that are exempt under
§ 501(a), individual retirement accounts
that are exempt under § 408(e), and eligi-
ble governmental plan trusts or custodial
accounts under § 457(b)that are exempt
under § 457(g) (adopting entities); (3) the
group trust instrument must prohibit any
part of itscorpusor income that equitably
belongs to any adopting entity from be-
ing used for or diverted to any purpose
other than for the exclusive benefit of the
employees (and the individual for whom
an individual retirement account is main-
tained) and their beneficiaries who are en-
titled to benefits under such adopting en-
tity; (4) the group trust instrument must
prohibit the assignment by an adopting en-
tity of any part of its equity or interest in
the group trust; and (5) the group trust must
be created or organized in the United States
and be maintained at all times as a domes-
tic trust in the United States.
To ensure that the assets of a group trust
described in Rev. Rul. 81–100, as clarified
and modified by Rev. Rul. 2004–67 (gen-
erally referred to hereinafter as an 81–100
group trust), are only commingled with the
assets of similar plans or arrangements,
each entity adopting the group trust must
be tax-exempt under § 501(a) of the Code
(or not subject to Federal income taxation)
and must be part of a plan that satisfies
an exclusive benefit rule that is similar to
the exclusive benefit rule of § 401(a) and
§ 1.401(a)–2, as more fully described in
paragraph (5) of theHoldingof this rev-
enue ruling. For this purpose, the group
trust must also keep separate records of
each adopting entity’s interest in the group
trust, as more fully described in paragraph
(6) of theHoldingof this revenue ruling.
The Service has received several in-
quiries as to whether a governmental
plan that provides retiree welfare bene-
fits will be treated as a plan described in
§ 401(a)(24) and may invest in an 81–100
group trust. Section 401(a)(24) applies
to governmental plans that provide pen-
sion benefits and to governmental plans
that provide other employee benefits for
retirees such as retiree welfare benefits
(a § 401(a)(24) governmental plan). Ac-
cordingly, a governmental plan providing
retiree welfare benefits may be treated as
a governmental plan under § 401(a)(24)
and may invest in an 81–100 group trust.
The Service has also received inquiries
as to whether a plan described in section
1022(i)(1) of the Employee Retirement
Income Security Act of 1974 (ERISA)
(a section 1022(i)(1) plan) may partici-
pate in an 81–100 group trust. Some of
these inquiries have arisen in the context
of Rev. Rul. 2008–40, which holds that
a transfer of assets and liabilities from
a qualified plan to a plan that satisfies
section 1165 of the Puerto Rico Code is
treated as a distribution from the trans-
feror plan, even if the recipient plan is
described in section 1022(i)(1) of ERISA.
Rev. Rul. 2008–40 also provides, how-
ever, that this holding is not effective for
a transfer if the date of the transfer is be-
fore January 1, 2011. The inquiries state
that sponsors of qualified plans currently
participating in 81–100 group trusts want
to transfer assets and liabilities to section
1022(i)(1) plans prior to January 1, 2011,
but are concerned that such plans may
not be able to participate in an 81–100
group trust. If a section 1022(i)(1) plan is
not permitted to participate in an 81–100
group trust then, upon a transfer of assets
and liabilities from a qualified plan to a
section 1022(i)(1) plan prior to January 1,
2011, pursuant to the relief set forth in
Rev. Rul. 2008–40, the assets that are
transferred to a section 1022(i)(1) plan that
were previously invested in the 81–100
group trust will need to be distributed to
the plans from the group trust and the plans
will lose the advantages of participating in
the group trust.
Section 4042(d) of ERISA authorizes
the Pension Benefit Guaranty Corporation
(PBGC) as statutory trustee to take control
of the assets of a terminated plan. Under
ERISA section 4042(a), the PBGC main-
tains certain commingled trust funds to
hold and invest such assets upon becom-
ing statutory trustee. These commingled
trust funds are limited to (i) assets attrib-
utable to terminated tax-qualified defined
benefit plans for which the PBGC has be-
come statutory trustee, and (ii) assets trans-
ferred to the PBGC under ERISA section
4050 from terminated tax-qualified plans
which, under ERISA section 4050(a)(2),
are treated as assets attributable to termi-
nated tax-qualified defined benefit plans
for which the PBGC has become statu-
tory trustee. Thus, from time to time, a
group trust may hold assets attributable to
PBGC’s commingled trust funds.
HOLDING
Accordingly, on or after January 10,
2011, provided that the requirements be-
2011–2 I.R.B.253January 10, 2011

low are satisfied, the assets of qualified
plans under § 401(a), IRAs, and eligible
governmental plans under § 457(b) may be
pooled in a group trust described in Rev.
Rul. 81–100, as clarified and modified by
Rev. Rul. 2004–67 and this revenue rul-
ing, with the assets of custodial accounts
under § 403(b)(7), retirement income ac-
counts under § 403(b)(9), and § 401(a)(24)
governmental plans without affecting the
tax status of the group trust or the tax
status of each of the separate group trust
retiree benefit plans participating in the
group trust. For purposes of this revenue
ruling, all of the entities listed in the pre-
ceding sentence are collectively referred to
as “group trust retiree benefit plans.”
A custodial account under § 403(b)(7)
will fail to satisfy § 1.403(b)–8(d)(2)(i) if
the assets of the account are invested other
than in the stock of a regulated investment
company, and any group trust in which the
assets of a § 403(b)(7) custodial account is
invested must comply with this restriction.
Accordingly, as a result of this investment
restriction, the assets of a custodial account
under § 403(b)(7) generally will be com-
mingled in a group trust that solely con-
tains the assets of other § 403(b)(7) custo-
dial accounts.
If the requirements below are satisfied,
the tax status of the group trust will be de-
rived from the tax status of the participat-
ing entities to the extent of their equitable
interests in the group trust. Thus, for ex-
ample, a group trust is exempt from tax-
ation under § 501(a) with respect to the
assets of the group trust which equitably
belong to participating trusts described in
§ 401(a) that are exempt from tax under
§ 501(a).
The requirements are as follows:
(1) The group trust is itself adopted
as a part of each adopting group trust
retiree benefit plan.
(2) The group trust instrument ex-
pressly limits participation to: pension,
profit-sharing, and stock bonus trusts
or custodial accounts qualifying un-
der § 401(a) that are exempt under
§ 501(a); individual retirement ac-
counts that are exempt under § 408(e);
eligible governmental plan trusts or
custodial accountsunder § 457(b) that
are exempt under § 457(g); custodial
accounts under § 403(b)(7); retirement
income accounts under § 403(b)(9);
and § 401(a)(24) governmental plans.
(3) The group trust instrument ex-
pressly prohibits any part of itscor-
pusor income that equitably belongs to
any adopting group trust retiree benefit
plan from being used for, or diverted to,
any purpose other than for the exclusive
benefit of the participants and the ben-
eficiaries of the group trust retiree ben-
efit plan. For example, plan assets are
treated as used for, or diverted to, a pur-
pose other than for the exclusive benefit
of the plan participants or beneficiaries
if the assets of one group trust retiree
benefit plan are used to provide benefits
under another group trust retiree benefit
plan even if the plan participant or ben-
eficiary receiving the benefits is a par-
ticipant or beneficiary under both plans.
(4) Each group trust retiree benefit
plan entity which adopts the group trust
is itself a trust, a custodial account, or
a similar entity that is tax-exempt under
§ 408(e) or § 501(a) (or is treated as tax-
exempt under § 501(a)). A group trust
retiree benefit plan that is a § 401(a)(24)
governmental plan is treated as meeting
this requirement if it is not subject to
Federal income taxation.
(5) Each group trust retiree bene-
fit plan which adopts the group trust
expressly provides in its governing doc-
umentthatitisimpossibleforanypart
of thecorpusor income of the group
trust retiree benefit plan to be used for,
or diverted to, purposes other than for
the exclusive benefit of the plan partic-
ipants and their beneficiaries. For this
purpose, assets of a group trust retiree
benefit plan are treated as used for, or
diverted to, purposes other than for the
exclusive benefit of the plan partici-
pants and their beneficiaries if there
is a loan or other extension of credit
from assets in the group trust to the
employer. In addition, plan assets are
used for, or diverted to, purposes other
than for the exclusive benefit of the
plan participants and their beneficiaries
if the assets of one group trust retiree
benefit plan are used to provide ben-
efits under another group trust retiree
benefit plan even if the plan participant
or beneficiary receiving the benefits is
a participant or beneficiary under both
plans. The exclusive benefit require-
ment described in this paragraph (5)
must be irrevocable. Plans that satisfy
the following regulations, with respect
to each type of adopting plan to which
the regulations apply, will satisfy this
paragraph (5): § 1.401(a)–2 (for qual-
ified plans); § 1.403(b)–8(d)(2)(iii)
(for § 403(b)(7) custodial ac-
counts); § 1.403(b)–9(a)(2)(i)(C) (for
§ 403(b)(9) retirement income ac-
counts); § 1.408–2(b) (for IRAs); and
§ 1.457–8(a)(2)(i) (for eligible govern-
mental plans described in § 457(g)).
(6) The group trust instrument ex-
pressly limits the assets that may be
held by the group trust to assets that
are contributed by, or transferred from,
a group trust retiree benefit plan to the
group trust (and the earnings thereon),
and the group trust instrument expressly
provides for separate accounts (and ap-
propriate records) to be maintained to
reflect the interest which each adopting
group trust retiree benefit plan has in
the group trust, including separate ac-
counting for contributions to the group
trust from the adopting plan, disburse-
ments made from the adopting plan’s
account in the group trust, and invest-
ment experience of the group trust al-
locable to that account. A transaction
or accounting method which has the ef-
fect of directly or indirectly transferring
value from the account of one adopting
plan into the account of another adopt-
ing plan violates this separate account-
ing requirement. However, a transac-
tion that merely exchanges investments
at fair market value between the ac-
counts of one adopting plan to another
account of that adopting plan does not
violate this separate accounting require-
ment.
(7) The group trust instrument ex-
pressly prohibits an assignment by an
adopting group trust retiree benefit plan
of any part of its equity or interest in the
group trust.
(8) The group trust is created or
organized in the United States and is
maintained at all times as a domestic
trust in the United States.
In addition, under ERISA section
4042(a), the PBGC maintains certain com-
mingled trust funds which are limited to (i)
assets attributable to terminated tax-qual-
ified defined benefit plans for which the
PBGC has become statutory trustee under
section 4042 of ERISA, and (ii) assets
transferred to the PBGC under ERISA
section 4050 from terminated tax-quali-
January 10, 20112542011–2 I.R.B.

fied plans which, under ERISA section
4050(a)(2), are treatedas assets attribut-
able to terminated tax-qualified defined
benefit plans for which the PBGC has
become statutory trustee. A group trust
will not be treated as failing to satisfy the
foregoing enumerated requirements of this
revenue ruling merely because the PBGC,
rather than a qualified plan, holds the in-
terest in the group trust or merely because
the group trust holds assets attributable to
PBGC’s commingled trust funds.
MODEL AMENDMENTS
There are two model amendments set
forth below. Amendment 1 is for a group
trust that received a determination letter
from the Service prior to January 10, 2011,
that the group trust satisfies Rev. Rul.
81–100, but that does not satisfy the sep-
arate account requirement of paragraph
(6)oftheHoldingin this revenue ruling.
Amendment 2 is for a group trust that
received a determination letter from the
Service prior to January 10, 2011, that the
group trust satisfies Rev. Rul. 81–100, and
that intends to permit custodial accounts
under § 403(b)(7), retirement income ac-
counts under § 403(b)(9), or § 401(a)(24)
governmental retirement plans to partici-
pate in the group trust. Both model amend-
ments should be adopted by group trusts
that do not satisfy the separate account
requirement and intend to permit custodial
accounts under § 403(b)(7), retirement
income accounts under § 403(b)(9), or
§ 401(a)(24) governmental retirement
plans to participate in the group trust.
AMENDMENT 1 — GROUP
TRUSTS THAT DO NOT SATISFY
THE SEPARATE ACCOUNT
REQUIREMENT
In general, group trusts that have re-
ceived favorable determination letters
from the Service currently satisfy the sep-
arate account requirement of paragraph
(6)oftheHoldingin this revenue ruling.
However, a sponsor of a group trust that
satisfies Rev. Rul. 81–100, as modified
by Rev. Rul. 2004–67, but that does not
currently provide for separate accounts,
must amend its group trust instrument by
January 10, 2012, to provide for separate
accounts as required under this revenue
ruling. A sponsor of a group trust may
satisfy this requirement by amending its
group trust instrument to include the model
language below:
“A separate account will be maintained
to reflect the interest of each adopting
group trust retiree benefit plan, includ-
ing separate accounting for contribu-
tions to the group trust by each such
plan, disbursements made from each
such plan’s account, and the investment
experience of the group trust as alloca-
ble to that account.”
AMENDMENT 2 — GROUP TRUSTS
INTENDING TO PERMIT OTHER
GROUP TRUST RETIREE BENEFIT
PLANS TO PARTICIPATE
A sponsor of a group trust that satisfies
Rev. Rul. 81–100, as modified by Rev.
Rul. 2004–67, may amend its group trust
instrument to include the model language
below to reflect this revenue ruling:
“This group trust is operated or
maintained exclusively for the com-
mingling and collective investment of
funds from other trusts that it holds.
Notwithstanding any contrary provi-
sion in this group trust, the trustee of
this group trust is permitted, unless
restricted in writing by the named fidu-
ciary, to hold in this group trust funds
that consist exclusively of trust assets
held under plans qualified under Inter-
nal Revenue Code (Code) § 401(a) that
are exempt under Code § 501(a); funds
from Code § 401(a)(24) governmental
retiree benefit plans that are not sub-
ject to Federal income taxation; funds
from retirement income accounts under
Code § 403(b)(9); funds from individ-
ual retirement accounts that are exempt
under Code § 408(e); and funds from
eligible governmental plan trusts or
custodial accounts under Code § 457(b)
that are exempt under Code § 457(g).
The trustee of this group trust is also
permitted, unless restricted in writing
by the named fiduciary, to hold funds
in this group trust that consist of as-
sets of custodial accounts under Code
§ 403(b)(7), provided that if assets of
a custodial account under § 403(b)(7)
are invested in the group trust, all as-
sets of the group trust, including the
§ 403(b)(7) custodial accounts, are
solely permitted to be invested in stock
of regulated investment companies.
For this purpose, a trust includes a cus-
todial account that is treated as a trust
under Code § 401(f), 403(b)(7), 408(h),
or 457(g)(3).
“For purposes of valuation, the value
of the interest maintained by the fund
with respect to any plan or account in
such group trust shall be the fair market
value of the portion of the fund held
for that plan or account, determined in
accordance with generally recognized
valuation procedures.”
RELIANCE BY TRUSTEES WITH
PRIOR DETERMINATION LETTER
If a group trust instrument provides
that amendments to the group trust will
automatically pass-through to the group
trust retiree benefit plan, and the trustee of
the group trust is otherwise entitled to rely
on a favorable determination letter issued
to it prior to January 10, 2011, regarding
eligibility of its group trust under Rev.
Rul. 81–100, the group trust trustee will
not lose its right to rely on its determina-
tion letter merely because it adopts Model
Amendment 1 or Model Amendment 2
set forth above in this revenue ruling on a
word-for-word basis (or adopts an amend-
ment that is substantially similar in all
material respects). Thus, such a trustee
may adopt Model Amendment 1 or Model
Amendment 2 on a word-for-word basis
(or adopt an amendment that is substan-
tially similar in all material respects) and
continue to rely on the previously issued
determination letter regarding its group
trust without filing a request with the Ser-
vice for a new determination letter.
A trustee of a group trust that satis-
fies the above requirements and amends its
group trust to include Model Amendment
1 or Model Amendment 2 on a word-for-
word basis (or adopts an amendment that
is substantially similar in all material re-
spects) will also not lose its right to rely
on its prior determination letter merely be-
cause it becomes necessary, as a result of
the adoption of such model amendment (or
an amendment that is substantially simi-
lar in all material respects), to modify or
delete a prior provision that is inconsistent
with the model amendment so adopted (or
an amendment that is substantially similar
in all material respects that is so adopted).
Generally, the group trust instrument
will provide that amendments to the group
2011–2 I.R.B.255January 10, 2011

trust will automatically pass through to the
group trust retiree benefit plans. However,
a group trust that has received a favor-
able determination letter under Rev. Proc.
2010–6, 2010–1 I.R.B. 193 (or its prede-
cessors), that does not contain such a pass-
through provision may not adopt Model
Amendment 1 or Model Amendment 2 and
automatically continue to rely on its deter-
mination letter.
PLANS DESCRIBED IN SECTION
1022(i)(1) OF ERISA
The Service anticipates issuing guid-
ance as to whether a plan described in sec-
tion 1022(i)(1) of ERISA may participate
in an 81–100 group trust. Until such guid-
ance is issued, the Service will not treat
a group trust as failing to satisfy the re-
quirements of this revenue ruling merely
because the group trust includes the assets
of a section 1022(i)(1) plan as long as the
section 1022(i)(1) plan (1) was participat-
ing in the group trust as of January 10,
2011, or (2) holds assets that had been held
by a qualified plan immediately prior to
the transfer of those assets to the section
1022(i)(1) plan pursuant to the transition
relief in Rev. Rul. 2008–40, as modified
by this revenue ruling. In addition, Rev.
Rul. 2008–40 is hereby modified to extend
the transition relief for transfers from a
qualified plan to a section 1022(i)(1) trans-
feree plan for an additional year. Thus,
“January 1, 2012” is substituted for “Jan-
uary 1, 2011” each place it appears in
the Transition Relief section of Rev. Rul.
2008–40.
EFFECT ON OTHER DOCUMENTS
Rev. Ruls. 81–100, 2004–67, and
2008–40 are modified.
REQUEST FOR COMMENTS
The IRS requests comments on
whether annuity contracts and/or other
tax-favored accounts held by plans de-
scribed in § 401(a) or § 403(b), such
as pooled separate accounts support-
ing annuity contracts that are treated
as trusts under § 401(f), should be per-
mitted to invest in the group trusts de-
scribed in this revenue ruling. Com-
ments should be submitted by April 11,
2011, to CC:PA:LPD:PR (Rev. Rul.
2011–1), Room 5203, Internal Revenue
Service, POB 7604 Ben Franklin Station,
Washington, D.C. 20044. Comments may
be hand delivered Monday through Friday
betweenthehoursof8a.m. and4p.m.
to CC:PA:LPD:PR (Rev. Rul. 2011–1),
Courier’s Desk, Internal Revenue
Service, 1111 Constitution Ave., N.W.,
Washington D.C. Alternatively, comments
may be submitted via the Internet at
Notice.comments@irscounsel.treas.gov.
Please include “Rev. Rul. 2011–1”
in the subject line of any electronic
communication. All materials submitted
will be available for public inspection and
copying.
DRAFTING INFORMATION
The principal author of this rev-
enue ruling is Robert Walsh of the Em-
ployee Plans, Tax Exempt and Gov-
ernment Entities Division. For further
information regarding this revenue rul-
ing, please contact the Employee Plans’
taxpayer assistance telephone service
at 1–877–829–5500 (a toll-free num-
ber) between the hours of 8:00 a.m.
and 4:30 p.m. Eastern Time, Monday
through Friday, or e-mail Mr. Walsh at
RetirementPlanQuestions@irs.gov.
Section 642.—Special
Rules for Credits and
Deductions
Federal short-term, mid-term, and long-term rates
are set forth for the month of January 2011. See Rev.
Rul. 2011-2, page 256.
Section 807.—Rules for
Certain Reserves
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2011. See Rev. Rul. 2011-2, page 256.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2011. See Rev. Rul. 2011-2, page 256.
Section 1274.—Determi-
nation of Issue Price in the
Case of Certain Debt Instru-
ments Issued for Property
(Also sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)
Federal rates; adjusted federal rates;
adjusted federal long-term rate and the
long-term exempt rate.For purposes of
sections 382, 642, 1274, 1288, and other
sections of the Code, tables set forth the
rates for January 2011.
Rev. Rul. 2011–2
This revenue ruling provides various
prescribed rates for federal income tax
purposes for January 2011 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month
for purposes of section 1274(d) of the
Internal Revenue Code. Table 2 contains
the short-term, mid-term, and long-term
adjusted applicable federal rates (ad-
justed AFR) for the current month for
purposes of section 1288(b). Table 3 sets
forth the adjusted federal long-term rate
and the long-term tax-exempt rate de-
scribed in section 382(f). Table 4 contains
the appropriate percentages for deter-
mining the low-income housing credit
described in section 42(b)(1) for build-
ings placed in service during the current
month. However, under section 42(b)(2),
the applicable percentage for non-feder-
ally subsidized new buildings placed in
service after July 30, 2008, and before
December 31, 2013, shall not be less than
9%. Table 5 contains the federal rate
for determining the present value of an
annuity, an interest for life or for a term
of years, or a remainder or a reversionary
interest for purposes of section 7520.
Finally, Table 6 contains the deemed
rate of return for transfers made during
calendar year 2011 to pooled income funds
described in § 642(c)(5) that have been
in existence for less than 3 taxable years
immediately preceding the taxable year in
which the transfer was made.
January 10, 20112562011–2 I.R.B.

REV. RUL. 2011–2 TABLE 1
Applicable Federal Rates (AFR) for January 2011
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR.43%.43%.43%.43%
110% AFR.47%.47%47%.47%
120% AFR
.52%.52%.52%.52%
130% AFR
.56%.56%.56%.56%
Mid-term
AFR
1.95%
1.94%1.94%1.93%
110% AFR2.14%2.13%2.12%2.12%
120% AFR2.34%2.33%2.32%2.32%
130% AFR
2.54%2.52%2.51%2.51%
150% AFR
2.93%2.91%2.90%2.89%
175% AFR
3.43%3.40%3.39%3.38%
Long-term
AFR3.88%3.84%3.82%3.81%
110% AFR4.26%4.22%4.20%4.18%
120% AFR4.66%4.61%
4.58%4.57%
130% AFR
5.05%
4.99%4.96%4.94%
REV. RUL. 2011–2 TABLE 2
Adjusted AFR for January 2011
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted
AFR
.69%.69%.69%.69%
Mid-term adjusted AFR1.79%1.78%1.78%1.77%
Long-term adjusted
AFR
4.10%4.06%4.04%4.03%
REV. RUL. 2011–2 TABLE 3
Rates Under Section 382 for January 2011
Adjusted federal long-term rate for the current month4.10%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted
federal long-term rates for the current month and the prior two months.)4.10%
REV. RUL. 2011–2 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for January 2011
Note: Under Section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after
July 30, 2008, and before December 31, 2013, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit7.67%
Appropriate percentage for the 30% present value low-income housing credit3.29%
2011–2 I.R.B.257January 10, 2011

REV. RUL. 2011–2 TABLE 5
Rate Under Section 7520 for January 2011
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest2.4%
REV. RUL. 2011–2 TABLE 6
Deemed Rate for Transfers to New Pooled Income Funds During 2011
Deemed rate of return for transfers during 2011 to pooled income funds that have been in existence for
less than 3 taxable years2.8%
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2011. See Rev. Rul. 2011-2, page 256.
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2011. See Rev. Rul. 2011-2, page 256.
Section 7872.—Treatment
of Loans With Below-Market
Interest Rates
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of January 2011. See Rev. Rul. 2011-2, page 256.
January 10, 20112582011–2 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Affordable Care Act
Nondiscrimination Provisions
Applicable to Insured Group
Health Plans
Notice 2011–1
I. PURPOSE
This notice addresses the timing of
the application of the Affordable Care
Act provisions prohibiting insured group
health plans from discriminating in favor
of highly compensated individuals.
II. BACKGROUND
The Patient Protection and Affordable
Care Act (the Affordable Care Act), Pub.
L. 111–148, was enacted on March 23,
2010; the Health Care and Education Rec-
onciliation Act, Pub. L. 111–152, was en-
acted on March 30, 2010. The Affordable
Care Act adds § 9815(a)(1) to the Code and
§ 715(a)(1) to the Employee Retirement
Income Security Act (ERISA) to incorpo-
rate the provisions of part A of title XXVII
of the Public Health Service Act (PHS Act)
into the Code and ERISA.
Section 10101(d) of the Affordable
Care Act adds § 2716 to the PHS Act.
PHS Act § 2716 (§ 2716) provides that
a group health plan (other than a self-in-
sured plan) must satisfy the requirements
of § 105(h)(2) of the Code and that “rules
similar to the rules contained in paragraphs
(3) [nondiscriminatory eligibility classi-
fications], (4) [nondiscriminatory bene-
fits], and (8) [certain controlled groups]
of § 105(h) of such Code shall apply.”
Section 2716 also provides that the term
“highly compensatedindividual” has the
meaning given by § 105(h)(5). Section
2716 is included in the PHS Act sections
incorporated by § 9815 of the Code into
chapter 100 of the Code.
Section 2716 references the substan-
tive nondiscrimination requirements of
§ 105(h) of the Code (but not the taxes
on highly compensated individuals in
§ 105(h)(1)) and applies them to insured
group health plans. An insured group
health plan that fails to comply with these
rules may be subject to: (1) an excise tax
that generally applies for a plan failing to
comply with the requirements of chapter
100 of the Code (generally, an excise tax
under § 4980D of $100 for each day in the
noncompliance period with respect to each
individual to whom such failure relates,
limited in the case of failures due to rea-
sonable cause and not applicable in limited
circumstances, such as where a failure is
due to reasonable cause and not to willful
neglect and is corrected within a specified
time period), (2) in the case of a non-Fed-
eral governmental group health plan, civil
money penalties under title XXVII of the
PHS Act (generally up to $100 per day
per individual for each day the plan does
not comply with the requirement, also not
applicable in limited circumstances), or
(3) a civil action to enjoin a noncompliant
act or practice or for other appropriate eq-
uitable relief under part 5 of ERISA. Thus,
if a self-insured plan fails to comply with
§ 105(h), highly compensated individu-
als lose a tax benefit; if an insured group
health plan fails to comply with § 2716,
the plan or plan sponsor may be subject
to an excise tax, civil money penalty, or a
civil action to compel it to provide nondis-
criminatory benefits.
Section2716doesnotapplytograndfa-
thered health plans. See § 54.9815–1251T,
29 CFR 2590.715–1251, and 45 CFR
147.140. The rules of § 105(h) of the
Code continue to apply to any self-insured
medical reimbursement plan regardless of
whether the plan is a grandfathered health
plan.
III. TIMING OF APPLICATION OF
§2716
Notice 2010–63, 2010–41 I.R.B. 420,
issued on September 20, 2010, requested
public comments on guidance needed
regarding § 2716. Comments raised fun-
damental concerns about plan sponsors’
ability to comply with § 2716 without
regulatory guidance, including, in partic-
ular, guidance regarding the meaning of
§ 2716(b)(1), which provides that “[r]ules
similar tothe rules contained in paragraphs
(3), (4) and (8) of section 105(h) of such
Code shall apply” [emphasis added] to
insured plans. The § 2716(b)(1) reference
to rules “similar to” means that guidance
must specify in what respects insured
plans are subject to the same statutory
provisions that apply to self-insured plans
under § 105(h)(3), (4) and (8) and in what
respects insured plans are subject to rules
reflecting a different (although “similar”)
application of those statutory provisions.
Because regulatory guidance is essential
to the operation of the statutory provisions,
the Treasury Department and the IRS,
as well as the Departments of Labor and
Health and Human Services (collectively,
the Departments), have determined that
compliance with § 2716 should not be re-
quired (and thus, any sanctions for failure
to comply do not apply) until after regu-
lations or other administrative guidance
of general applicability has been issued
under § 2716. In order to provide insured
group health plan sponsors time to im-
plement any changes required as a result
of the regulations or other guidance, the
Departments anticipate that the guidance
will not apply until plan years beginning
a specified period after issuance. Before
the beginning of those plan years, an in-
sured group health plan sponsor will not
be required to file IRS Form 8928 with
respect to excise taxes resulting from the
incorporation of § 2716 into § 9815 of the
Code.
The United States Department of La-
bor and the United States Department of
Health and Human Services have reviewed
this notice and have requested the Depart-
ment of the Treasury and the IRS to state
that the Departments of Labor and Health
and Human Services agree with the notice.
IV. REQUEST FOR COMMENTS
As noted, comments submitted in re-
sponse to Notice 2010–63 maintained that,
without regulations or other administrative
guidance under § 2716, plan sponsors are
uncertain how to apply the nondiscrim-
ination provisions. In addition to what
is meant by rules “similar to,” comments
raised a number of other issues regarding
the application of § 2716. Comments sug-
gested that guidanceaddress the applica-
tion of § 2716 before plan years begin-
ning in 2014 (when the State Exchanges,
employer responsibility and penalty provi-
sions, and related provisions take effect)
and also in and after 2014. The Depart-
ments recognize that the guidance under
§ 2716 must take into consideration the
Exchange operations and individual and
2011–2 I.R.B.259January 10, 2011

plan sponsor requirements that go into ef-
fect after 2013.
The Departments anticipate issuing
guidance under § 2716. As a more spe-
cific follow-up to the public comments
provided in response to Notice 2010–63,
additional public comments are requested
on the issues that should be addressed
in that guidance and on the suggested
resolution of those issues, including the
following:
1. The basis on which the determination
of what constitutes nondiscriminatory
benefits under § 105(h)(4) should be
made and what is included in the term
“benefits.” For example, is the rate
of employer contributions toward the
cost of coverage (or the required per-
centage or amount of employee con-
tributions) or the duration of an el-
igibility waiting period treated as a
“benefit” that must be provided on a
nondiscriminatory basis?
2. The suggestion made in previous
comments that the Departments have
the authority to provide for an alter-
native method of compliance with
§ 2716 that would involve only an
availability of coverage test.
3. The application of § 2716 to insured
group health plans beginning in 2014
when the health insurance exchanges
become operational and the employer
responsibility provisions (§ 4980H
of the Code), the premium tax credit
(§ 36B of the Code), and the individ-
ual responsibility provisions (§ 5000A
of the Code) and related Affordable
Care Act provisions are effective.
4. The suggestion in previous comments
that the nondiscriminatory classifica-
tion provision in § 105(h)(3)(A)(iii)
couldbeusedasabasistopermitan
insured health care plan to use a highly
compensated employee definition in
§ 414(q) of the Code for purposes of
determining the plan’s nondiscrimina-
tory classification.
5. The suggestion in previous comments
that the nondiscrimination standards
should be applied separately to em-
ployers sponsoring insured group
health plans in distinct geographic
locations and on whether application
of the standards on a geographic basis
should be permissive or mandatory.
6. The suggestion in previous comments
that the guidance should provide for
“safe harbor” plan designs. Specifi-
cally, comments are requested on po-
tential safe and unsafe harbor designs
that are consistent with the substantive
requirements of § 105(h).
7. Whether employers should be permit-
ted to aggregate different, but sub-
stantially similar, coverage options for
purposes of § 2716 and, if so, the ba-
sis upon which a “substantially simi-
lar” determination could be made.
8. The application of the nondiscrimina-
tion rules to “expatriate” and “inpatri-
ate” coverage.
9. The application of the nondiscrimina-
tion rules to multiple employer plans.
10. The suggestion in previous comments
that coverage provided to a “highly
compensated individual” (as defined
in § 105(h)(5)) on an after-tax ba-
sis should be disregarded in applying
§ 2716.
11. The treatment of employees who vol-
untarily waive employer coverage in
favor of other coverage.
12. Potential transition rules following a
merger, acquisition, or other corporate
transaction.
13. The application of the sanctions for
noncompliance with § 2716.
Comments must be submitted by
March 11, 2011. All materials submitted
will be shared with the Departments of
Labor and Health and Human Services
and will be available for public inspection
and copying. Comments should be
submitted to Internal Revenue Service,
CC:PA:LPD:RU (Notice 2011–1), Room
5203, PO Box 7604, Ben Franklin Station,
Washington, DC 20224. Submissions
may also be hand-delivered Monday
through Friday between the hours of 8 a.m.
and 4 p.m. to the Courier’s Desk, 1111
Constitution Avenue, NW, Washington,
DC 20224, Attn: CC:PA:LPD:RU (Notice
2011–1), Room 5203. Submissions
may also be sent electronically via the
internet to the following e-mail address:
Notice.Comments@irscounsel.treas.gov.
Include the notice number (Notice 2011–1)
in the subject line.
V. DRAFTING INFORMATION
The principal author of this notice is
Jamie Dvoretzky of the Office of Division
Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities), though
other Treasury Department and IRS offi-
cials participated in its development. For
further information on the submission of
comments or the comments submitted,
contact Regina Johnson at (202) 622–7180
(not a toll-free number). For further in-
formation on all other provisions of this
notice, contact Ms. Dvoretzky at (202)
622–6060 (not a toll-free number).
Guidance on the Application
of Section 162(m)(6)
Notice 2011–2
I. PURPOSE
This notice provides guidance on the
application of section 162(m)(6) of the
Internal Revenue Code (Code). Section
162(m)(6) limits the allowable deduction
for remuneration for services provided
by individuals to certain health insurance
providers. Section 162(m)(6) was added
to the Code by section 9014 of the Pa-
tient Protection and Affordable Care Act
(Public Law 111–148, 124 Stat. 119, 868
(2010)).
Section III of this notice provides guid-
ance on certain issues the Treasury De-
partment and the IRS have determined re-
quire immediate guidance. Section V re-
quests comments as to the application of
theprovisionsofthisnoticeaswellasall
other aspects of the application of section
162(m)(6). The Treasury Department and
the IRS anticipate that the guidance pro-
vided in this notice will be incorporated
into future regulations issued under section
162(m)(6).
January 10, 20112602011–2 I.R.B.

II. BACKGROUND
Section 162(m)(6) limits the allowable
deduction to $500,000 for “applicable in-
dividual remuneration” and “deferred de-
duction remuneration”attributable to ser-
vices performed by “applicable individu-
als” that is otherwise deductible by a “cov-
ered health insurance provider” in taxable
years beginning after December 31, 2012.
Section 162(m)(6)(C)(i)(I) provides
that for taxable years beginning af-
ter December 31, 2009, and before
January 1, 2013, the term “covered
health insurance provider” means any
employer that is a health insurance issuer
as defined in section 9832(b)(2) and
which receives premiums from providing
health insurance coverage (as defined in
section 9832(b)(1)) (“pre–2013 covered
health insurance provider”). For taxable
years beginning after December 31,
2012, section 162(m)(6)(C)(i)(II) provides
that the term “covered health insurance
provider” means any employer that is
a health insurance issuer as defined in
section 9832(b)(2) and with respect to
which not less than 25% of the gross
premiums received from providing health
insurance coverage (as defined in section
9832(b)(1)) are from minimum essential
coverage (as definedin section 5000A(f))
(“post–2012 covered health insurance
provider”).Section 162(m)(6)(C)(ii)
provides that two or more persons who
are treated as a single employer under
section 414(b), (c), (m), or (o) are treated
as a single employer for purposes of
section 162(m)(6), except that in applying
section 1563(a) for purposes of any such
subsection, paragraphs (2) and (3) thereof
are disregarded.
Section 162(m)(6) applies to applica-
ble individual remuneration attributable to
services performed in a “disqualified tax-
able year” beginning after December 31,
2012 that is otherwise deductible in such
taxable year. Section 162(m)(6)(B) pro-
vides that a disqualified taxable year for
any employer is any taxable year for which
the employer is a covered health insur-
ance provider. Section 162(m)(6)(D) pro-
vides that applicable individual remuner-
ation for any disqualified taxable year is
the aggregate amount otherwise allowable
as a deduction for such taxable year for
remuneration for services performed by
such individual (whether or not during the
taxable year), but does not include any
deferred deduction remuneration with re-
spect to services performed during the dis-
qualified taxable year.
In addition, section 162(m)(6) ap-
plies to deferred deduction remuneration
attributable to services performed in a
disqualified taxable year beginning after
December 31, 2009 that is otherwise de-
ductible in a taxable year beginning after
December 31, 2012. Section 162(m)(6)(E)
provides that deferred deduction remu-
neration is compensation for services that
an applicable individual performs during
a disqualified taxable year but that is not
deductible until a later taxable year (for
example, nonqualified deferred compen-
sation). In the case of deferred deduction
remuneration attributable to services per-
formed in a disqualified taxable year, the
unused portion of the $500,000 limit (if
any) for the taxable year in which the
services to which the deferred deduction
remuneration is attributable were per-
formed is carried forward to the taxable
year or years in whichsuch compensation
is otherwise deductible, and applied in
calculating the allowable deduction with
respect to such amount.
Section 162(m)(6)(F) provides that an
applicable individual, with respect to any
covered health insurance provider for any
disqualified taxable year, is any individual
(i) who is an officer, director, or employee
in such taxable year, or (ii) who provides
servicesfororonbehalfofsuchcovered
health insurance provider during such tax-
able year.
III. GUIDANCE
A. Application of Deduction Limitation
to Deferred Deduction Remuneration
for 2010 through 2012 Taxable Years
The deduction limitation under section
162(m)(6) applies to applicable individ-
ual remuneration and deferred deduction
remuneration attributable to services per-
formed in a disqualified taxable year
beginning after December 31, 2012 that is
otherwise deductible by a covered health
insurance provider in a taxable year begin-
ning after December 31, 2012. In addition,
the deduction limitation under section
162(m)(6) applies to deferred deduction
remuneration attributable to services per-
formed in a taxable year beginning after
December 31, 2009 and before January 1,
2013 if (1) the employer was a pre–2013
covered health insurance provider for
the taxable year in which the services
were performed to which the deferred
deduction remuneration is attributable, and
(2) the employer is a post–2012 covered
health insurance provider for the taxable
year in which such deferred deduction
remuneration is otherwise deductible.
The following examples illustrate this
rule:
Example 1. Corporation A is a calendar year tax-
payer. For 2010, 2011, and 2012, Corporation A is
a pre–2013 covered health insurance provider. Cor-
poration A is a post–2012 covered health insurance
provider for all taxable years after 2012 because 25%
or more of its gross premiums from health insurance
coverage (as defined in section 9832(b)(1)) are from
minimum essential coverage (as defined in section
5000A(f)). Corporation A is a covered health insur-
ance provider for all taxable years. Accordingly, de-
ferred deduction remuneration attributable to services
performed in 2010, 2011, and 2012 is subject to the
section 162(m)(6) deduction limitation in the taxable
years after 2012 in which such amounts are otherwise
deductible.
Example 2.AssumethesamefactsasinExample
1, except that for all taxable years after 2012, Cor-
poration A remains a health insurance issuer (as de-
fined in section 9832(b)(2)), but does not qualify as a
post–2012 covered health insurance provider because
less than 25% of its gross premiums from health in-
surance coverage (as defined in section 9832(b)(1))
are from minimum essential coverage (as defined in
section 5000A(f)). For all taxable years beginning
after 2012, Corporation A is not a covered health in-
surance provider. Accordingly, any deferred deduc-
tion remuneration attributable to services performed
in 2010, 2011, and 2012 is not subject to the section
162(m)(6) deduction limitation in the taxable year in
which such amounts are otherwise deductible.
Example 3. Assume the same facts as inExam-
ple 1, except that after its 2012 taxable year, Cor-
poration A remains a health insurance issuer (as de-
fined in section 9832(b)(2)), but does not qualify as
a post–2012 covered health insurance provider for
the 2013, 2014 and 2015 taxable years because less
than 25% of its gross premiums from health insur-
ance coverage (as defined insection 9832(b)(1)) are
from minimum essential coverage (as defined in sec-
tion 5000A(f)). However, for 2016 and subsequent
taxable years, Corporation A qualifies as a post–2012
covered health insurance provider because 25% or
more of its gross premiums from health insurance
coverage (as defined in section 9832(b)(1)) are from
minimum essential coverage (as defined in section
5000A(f)). Corporation A is a covered health in-
surance provider during its 2010, 2011, 2012, 2016
and subsequent taxable years. Accordingly, deferred
deduction remuneration attributable to services per-
formed in 2010, 2011, and 2012 that is otherwise de-
ductible in 2016 and subsequent years is subject to
the deduction limitation under section 162(m)(6) in
the year in which such amounts are otherwise de-
ductible. Any deferred deduction remuneration at-
tributable to services performed in 2010, 2011, and
2011–2 I.R.B.261January 10, 2011

2012 that is otherwise deductible in 2013, 2014, or
2015 is not subject to the deduction limitation under
section 162(m)(6) in the year in which such amounts
are otherwise deductible. Any deferred compensa-
tion attributable to services performed in Corporation
A’s 2013 through 2015 taxable years is not subject to
the deduction limitation under section 162(m)(6) for
the taxable years in which such amounts are other-
wise deductible.
Example 4: Assume the same facts as inExample
1, except that for its 2010, 2011, and 2012 taxable
years, Corporation A is not a pre–2013 covered
health insurance provider. However, Corporation A
is a post–2012 covered health insurance provider for
its 2013 taxable year and all subsequent years be-
cause 25% or more of its gross premiums from health
insurance coverage (as defined in section 9832(b)(1))
are from minimum essential coverage (as defined
in section 5000A(f)). Accordingly, any deferred
compensation attributable to services performed in
Corporation A’s 2010, 2011, and 2012 taxable years
is not subject to the deduction limitation under sec-
tion 162(m)(6) for the taxable years in which such
amounts are otherwise deductible.
B.De MinimisRule
An employer (including an em-
ployer as determined in accordance
with the aggregation rules under section
162(m)(6)(C)(ii)) will not be treated as a
covered health insurance provider within
the meaning of section 162(m)(6)(C)(i)(I)
for a taxable year beginning after Decem-
ber 31, 2009 and before January 1, 2013
if the premiums received by the employer
for providing health insurance coverage
as defined in section 9832(b)(1) are less
than 2% of the employer’s gross revenues
for that taxable year. For taxable years
beginning after December 31, 2012, an
employer will not be treated as a covered
health insurance provider within the mean-
ing of section 162(m)(6)(C)(i)(II) for a
taxable year beginning after December 31,
2012 if the premiums received for provid-
ing health insurance coverage as defined in
section 9832(b)(1) that are from providing
minimum essential coverage (as defined
in section 5000A(f)) for that taxable year
are less than 2% of the employer’s gross
revenues for that taxable year.
The following example illustrates this
rule:
Example. Corporations D and E are treated as a
single employer under section 162(m)(6)(C)(ii). Cor-
porations D and E are calendar year taxpayers. Cor-
poration E does not receive any health insurance pre-
miums within the meaning of section 9832(b)(1) for
the 2010 taxable year. Corporation D receives health
insurance premiums within the meaning of section
9832(b)(1) for the 2010 taxable year in an amount
that is less than 2% of the combined gross revenues of
D and E. Accordingly, Corporations D and E are not
treated as a covered health insurance provider within
the meaning of section 162(m)(6)(C) for the 2010
taxable year. Deferred compensation attributable to
services performed in the2010 taxable year that is
otherwise deductible for taxable years after 2012 is
not subject to the deduction limitation under section
162(m)(6).
C. Definition of Applicable Individual
Section 162(m)(6)(F) provides that
an applicable individual, with respect to
any covered health insurance provider for
any disqualified taxable year, is any in-
dividual (i) who is an officer, director, or
employee in such taxable year, or (ii) who
provides services for or on behalf of such
covered health insurance provider during
such taxable year. For purposes of section
162(m)(6)(F), the term “applicable indi-
vidual” for a taxable year does not include
an independent contractor with respect to
whom a compensation arrangement would
not be subject to section 409A pursuant
to Treasury Regulation §1.409A–1(f)(2)
(generally excepting arrangements with
independent contractors providing sub-
stantial services to multiple unrelated
customers).
D. Certain Reinsurers Are Not Covered
Health Insurance Providers
Solely for purposes of determining
whether a taxpayer is a “covered health
insurance provider” within the meaning of
section 162(m)(6)(C), premiums received
under an indemnity reinsurance contract
are not treated as premiums from provid-
ing health insurance coverage.
IV. EFFECTIVE DATE
The guidance provided in section III of
this notice is effective for taxable years be-
ginning on or after January 1, 2010. The
Treasury Department and the IRS antici-
pate incorporating this guidance into reg-
ulations. Any future guidance, including
regulations, addressing the issues covered
by this notice in a manner that would ex-
pand the coverage of section 162(m)(6),
such as a modification of, or a restriction
on, the application of thede minimisrule in
section III.C, or broadening of the defini-
tion of an applicable individual under sec-
tion III.D, will apply prospectively.
V. REQUEST FOR COMMENTS
The Treasury Department and the IRS
request comments as to the application of
this notice, as well as all aspects of the
application of section 162(m)(6). Specif-
ically, comments are requested on the
application of the deduction limitation
to remuneration for services performed
for insurers who are captive or who pro-
vide reinsurance or stop loss insurance,
and specifically with respect to stop loss
insurance arrangements that effectively
constitute a direct health insurance ar-
rangement because the attachment point
is so low. Comments are also requested
on the application of the term “covered
health insurance provider”, including the
de minimisrule set forth in this notice
and possible alternativede minimisrules.
Comments are also requested on the ap-
plication of the term “covered health
insurance provider” in the case of a cor-
porate event such as a merger, acquisition
or reorganization. Comments are also re-
quested as to whether the allocation rules
set forth in Notice 2008–94, 2008–2 C.B.
1070, Q&A–9, should be applied for pur-
poses of determining the services and the
taxable year to which deferred deduction
remuneration is attributable and as to any
alternatives to those rules, including the
services and the taxable year to which
deferred deduction remuneration is attrib-
utable in the case of a corporate event
such as a merger, acquisition or reorga-
nization. Comments may be submitted
through March 23, 2011 to Internal Rev-
enue Service, CC:PA:LPD:RU (Notice
2011–02), Room 5203, PO Box 7604, Ben
Franklin Station, Washington DC 20044.
Submissions may also be hand-delivered
Monday through Friday between the hours
of 8 a.m. and 4 p.m. to the Courier’s Desk
at 1111 Constitution Avenue, NW, Wash-
ington DC 20224, Attn: CC:PA:LPD:RU
(Notice 2011–02), Room 5203. Submis-
sions may also be sentelectronically via
the internet to the following email address:
Notice.comments@irscounsel.treas.gov.
Include the notice number (Notice
2011–02) in the subject line.
VI. DRAFTING INFORMATION
The principal author of this notice is
Ilya Enkishev of the Office of Division
Counsel/Associate Chief Counsel (Tax Ex-
January 10, 20112622011–2 I.R.B.

empt and Government Entities), although
other Treasury and IRS officials partici-
pated in its development. For further in-
formation on the provisions of this notice,
contact Ilya Enkishev at (202) 622–6030
(not a toll-free number).
Funding Relief for
Single-Employer Pension
Plans under PRA 2010
Notice 2011–3
I. PURPOSE
This notice provides guidance on the
special rules relating to funding relief for
single-employer defined benefit pension
plans (including multiple employer de-
fined benefit pension plans) under the
Preservation of Access to Care for Medi-
care Beneficiaries and Pension Relief
Act of 2010 (PRA 2010), Pub. L. No.
111–192.
II. BACKGROUND
Section 430 of the Internal Revenue
Code (Code) specifies the minimum fund-
ing requirements that apply to single-em-
ployer defined benefit pension plans pur-
suant to § 412. For purposes of calcu-
lating the minimum required contribution,
§ 430 generally requires a plan to estab-
lish a shortfall amortization base with re-
spect to a plan year for which the value of
a plan’s assets is less than the amount of the
plan’s funding target. Section 430(c)(2)
generally provides for amortization of a
shortfall amortization base over 7 years.
Section 201(b)(1) of PRA 2010 adds
§ 430(c)(2)(D) which permits a plan spon-
sor to elect, in lieu of the otherwise appli-
cable amortization schedule, to amortize
the shortfall amortization base established
for certain plan years under one of two
alternative amortization schedules: the
2 plus 7-year amortization schedule, or
the 15-year amortization schedule. The
2 plus 7-year amortization schedule is
described in § 430(c)(2)(D)(ii) and the
15-year amortization schedule is described
in § 430(c)(2)(D)(iii). Section 201(b)(2)
of PRA 2010 amends § 430 by adding
§ 430(c)(7), which provides for an accel-
eration of the required installments under
an alternative amortization schedule in the
case of certain compensatory payments,
dividends, and stock redemptions.
Under § 430(c)(2)(D)(v), an election to
use an alternative amortization schedule
may generally be made only with respect
to one or two eligible plan years, and, un-
der § 430(c)(2)(D)(iv)(II), if the plan spon-
sor makes the election for two plan years,
the same amortization schedule must be
used for both plan years. An eligible plan
year is a plan year that begins in 2008,
2009, 2010, or 2011, but only if the due
date for the minimum required contribu-
tion to the plan for such plan year un-
der § 430(j)(1) occurs on or after June 25,
2010 (the date of enactment of PRA 2010).
Section 430(c)(2)(D)(iv)(III) provides that
any such election may be revoked only
with the consent of the Secretary, after con-
sultation with the Pension Benefit Guar-
anty Corporation.
Pursuant to § 430(c)(2)(D)(vi), a plan
sponsor that makes an election under
§ 430(c)(2)(D) for a plan year is required
to provide notice of the election to partici-
pants and beneficiaries of the plan. Under
§ 430(c)(2)(D)(vi)(II), the plan sponsor
must also inform the Pension Benefit
Guaranty Corporation of such election in
such form and manner as the Director of
the Pension Benefit Guaranty Corporation
may prescribe.
Sections 104, 105, and 106 of the Pen-
sion Protection Act of 2006 (PPA ’06),
Pub. L. No. 109–280, provide that the
effective dates for the minimum funding
rules under § 430 and funding-based bene-
fit restrictions under § 436 are delayed for
certain plans. For plans described in sec-
tion 104 or 105 of PPA ‘06, these provi-
sions do not generally apply for plan years
beginning before January 1, 2017, and Jan-
uary 1, 2014, respectively. For plans de-
scribed in section 106 of PPA ‘06, the pro-
visions of §§ 430 and 436 of the Code do
not apply for plan years beginning before
January 1, 2011.
Section 202(a) of PRA 2010 amends Ti-
tle I of PPA ’06 to allow a plan sponsor
of a plan described in section 104 or 105
of PPA ’06 to elect, for any two eligible
plan years (using the same definition as
applies under § 430), one of two alterna-
tive amortization schedules with respect to
a portion of the plan’s unfunded new lia-
bility. The schedules, set forth in sections
107(b) and 107(c) of PPA ’06, as amended
by PRA 2010, are generally similar to the 2
plus 7-year amortization schedule and the
15-year amortization schedule.
Section202(a)ofPRA2010alsopro-
vides for the election of one of the alterna-
tive amortization schedules for plans de-
scribed in section 106 of PPA ’06. Such
plans are subject to the minimum funding
rulesof§430oftheCodeforplanyears
beginning on or after January 1, 2011, and
the election to use an alternative amortiza-
tion schedule under section 202(a) of PRA
2010 is available for these plans only for
one eligible year beginning in 2008, 2009,
or 2010. Sponsors of these plans may also
make an election under section 201(b)(1)
of PRA 2010 to use an alternative amor-
tization schedule to amortize the shortfall
amortization base for a plan year begin-
ning in 2011.
Section 202(b) of PRA 2010 amends
section 104 of PPA ‘06 to provide a de-
layed effective date for application of the
minimum funding requirements of § 430
and the funding-based benefit restrictions
under § 436 to certainplans maintained
by eligible charities. Under this provi-
sion, eligible charity plans (certain plans
maintained by employers described in
§ 501(c)(3)) generally will not be sub-
ject to the rules of §§ 430 and 436 for
plan years beginning before January 1,
2017. However, plan sponsors may elect
to have the provisions of §§ 430 and
436 apply for plan years beginning af-
ter December 31, 2007, and on or before
December 31, 2008.
Section 303(c)(2) of the Employee
Retirement Income Security Act of
1974, as amended (ERISA), is parallel
to § 430(c)(2) of the Code, and section
201(a)(1) of PRA 2010 amends section
303(c)(2) of ERISA in a manner parallel
to the amendments made to § 430(c)(2)
of the Code by section 201(b)(1) of PRA
2010. Section 201(a)(2) of PRA 2010
adds section 303(c)(7) of ERISA, which is
parallel to new § 430(c)(7). Under section
101 of Reorganization Plan No. 4 of 1978
(43 FR 47713), the Secretary of the Trea-
sury has interpretive jurisdiction over the
subject matter of this notice for purposes
of ERISA as well as the Code. Thus, this
notice applies for both purposes.
Notice 2010–55, 2010–33 I.R.B. 253,
states that the Service expects to issue
future guidance on the special funding
rules under PRA 2010 for single-employer
plans. Notice 2010–55 also states that, in
2011–2 I.R.B.263January 10, 2011

the case of a plan year that ends before
the guidance is issued, the plan sponsor
will be permitted to elect to use an alter-
native amortization schedule under PRA
2010 without regard to whether the Form
5500 (and Schedule SB) has been filed for
that plan year. This notice constitutes the
guidance anticipated in Notice 2010–55.
III. QUESTIONS AND ANSWERS
The questions and answers in this notice
relate to the following topics:
G — General rules
I — Installment acceleration amounts
C — Excess compensation amounts
S — Excess shareholder payment amounts
M — Mergers and acquisitions
E — Elections to use an alternative amortization schedule
N — Notification to participants, beneficiaries, and the PBGC
CP — Eligible charity plans
R — Reporting requirements
T—Transitionrules
G. GENERAL RULES
Q G–1: For which plan years can
the sponsor of a single-employer defined
benefit pension plan elect to use an al-
ternative amortization schedule under
§430(c)(2)(D),asaddedbysection201of
PRA 2010?
A G–1: (a) In general, an alter-
native amortization schedule under
§ 430(c)(2)(D) may be elected for one
or two of the plan years beginning in
2008, 2009, 2010, or 2011, as long as the
deadline for the minimum required contri-
bution for the plan year occurs on or after
June 25, 2010. Pursuant to § 430(j)(1),
this deadline is 8½ months after the end
of the plan year. Therefore, in general,
plan years ending on or after October 10,
2009, and beginning before January 1,
2012 (eligible plan years) are eligible for
this relief.
(b) However, for plans described in sec-
tion 106 of PPA ’06, the election to use
an alternative amortization schedule under
§ 430(c)(2)(D) can only be made for a plan
year beginning in 2011, which is the first
year for which these plans are covered by
§ 430. See section 202 of PRA 2010 for
similar rules pertaining to funding relief
for plans described in sections 104 through
106 of PPA ’06 with respect to plan years
to which § 430 does not apply.
Q G–2: What rules generally apply to
the alternative amortization schedules?
A G–2: (a) In lieu of the otherwise
applicable amortization schedule for a
shortfall amortization base established for
a plan year that is an eligible plan year
asdefinedinQ&AG–1ofthisnotice,
a plan sponsor may elect to apply either
of two alternative amortization schedules
to the shortfall amortization base: the
2 plus 7-year amortization schedule de-
scribed in Q&A G–3 of this notice, or the
15-year amortization schedule described
in Q&A G–4 of this notice. A plan year for
whichsuchanelectionismadeisknownas
anelection yearunder § 430(c)(2)(D)(i).
If an election is made to use an alternative
amortization schedule for two eligible plan
years, the same schedule must be elected
for both years.
(b) In certain circumstances, the amor-
tization installments under an alternative
amortization schedule must be increased,
as described in section III.I of this no-
tice relating to installment acceleration
amounts.
(c) See Q&A R–5 of this notice for a
description of how to report the shortfall
amortization installments in years affected
by an election to use an alternative amorti-
zation schedule.
Q G–3: How are the installment
amounts for a shortfall amortization base
calculated under the 2 plus 7-year amorti-
zation schedule?
AG–3:(a)Ifanelectionismadetoap-
ply the 2 plus 7-year amortization sched-
ule to a shortfall amortization base, the in-
stallment for each of the first two years is
determined by multiplying the amount of
the shortfall amortization base established
for the election year by the effective inter-
est rate for the plan for the election year.
The installment for each of the remaining 7
years is the level amount calculated so that
the present value of the 9 installments as
of the valuation date for the election year
equals the amount of the shortfall amor-
tization base established for the election
year.
(b) The present value of the 9 install-
ments is determined using the segment
rates or rates from the full yield curve
used to determine the target normal cost
(or the funding target, if the target normal
cost is zero) for the election year. See
§ 1.430(h)(2)–1(e) of the Income Tax Reg-
ulations for a description of the interest
rates that may be used for this purpose,
and § 1.430(h)(2)–1(f)(2) for rules regard-
ing the use of segment rates to determine
the amount of shortfall amortization in-
stallments.
Example G–1: (a) Assume that the sponsor of a
pl
an with a calendar year plan year and a January 1
valuation date elects to amortize the shortfall amor-
tization base of $1,000,000 established for the 2010
pl
an year using the 2 plus 7-year amortization sched-
ule. The first and second segment rates used to deter-
mine the target normal cost for the 2010 plan year are
4
.81% and 6.69%, respectively, and the effective in-
terest rate for the plan for the 2010 plan year is 6.00%.
(b) Each of the shortfall amortization installments
f
or the 2010 and 2011 plan years is $60,000, de-
termined by multiplying the amount of the shortfall
amortization base by the effective interest rate for
t
he plan for the 2010 plan year ($1,000,000 x 6%
= $60,000). After taking into account these install-
ments, the remaining shortfall amortization base is
equal to the amount of the shortfall amortization base,
minus the first two installments adjusted to the Jan-
uary 1, 2010 valuation date using the first segment
rate of 4.81%, or $882,754 ($1,000,000 - $60,000 -
($60,000 ÷ 1.0481)). The shortfall amortization in-
stallment for each of the next 7 plan years (2012
through 2018) is $168,458, determined as the level
amount necessary to amortize the remaining balance
of $882,754 using the first segment rate of 4.81%
for the shortfall amortization installments for 2012
through 2014, and the second segment rate of 6.69%
for the shortfall amortization installments for 2015
through 2018. The total present value of all 9 pay-
ments is $1,000,000, calculated using the first seg-
ment rate of 4.81% for installments due for plan years
2010 through 2014 and the second segment rate of
6.69% for plan years 2015 through 2018.
January 10, 20112642011–2 I.R.B.

Q G–4: How are the installment
amounts for a shortfall amortization base
calculated under the 15-year amortization
schedule?
A G–4: If an election is made to ap-
ply the 15-year amortization schedule to
a shortfall amortization base, the install-
ment amount for each plan year (i.e.,the
election year and the subsequent 14 plan
years) is the level amount needed to amor-
tize the shortfall amortization base estab-
lished for the election year over a period
of 15 years. A shortfall amortization base
for which relief is elected is amortized us-
ing the segment rates or rates from the full
yield curve used to determine the target
normal cost (or the funding target, if the
target normal cost iszero) for the election
year. See § 1.430(h)(2)–1(e) for a descrip-
tion of the interest rates that may be used
for this purpose, and § 1.430(h)(2)–1(f)(2)
for rules regarding the use of segment rates
to determine the amount of shortfall amor-
tization installments.
Example G–2: The facts are the same as inExam-
ple G–1, except that the plan sponsor elects to use the
15-year amortization schedule. The shortfall amorti-
zation installment due for each of the 15 plan years
from 2010 through 2024 is $99,394. The shortfall
amortization installment is determined using the first
segment rate of 4.81% for the installments due for
plan years 2010 through 2014 and the second segment
rate of 6.69% for the installments due for plan years
2015 through 2024.
Q G–5: How does the calculation of
shortfall amortization installments change
if the valuation date is not the first day of
the plan year?
A G–5: (a) The shortfall amortization
installments are calculated using the same
principles as the installments under the
corresponding amortization schedule for
plans with valuation dates on the first day
of the plan year. For example, the amorti-
zation installments for the first two years
of the 2 plus 7-year amortization sched-
ule are equal to the product of the shortfall
amortization base and the plan’s effective
interest rate for the election year, without
further adjustment for interest.
(b) Each installment, regardless of
whether the 2 plus 7-year or the 15-year
amortization schedule is used, is assumed
to be paid on the valuation date when
determining the amount of the shortfall
amortization installments.
Q G–6: How is an election to use an
alternative amortization schedule applied
to a multiple employer plan?
A G–6: (a) In the case of a multiple
employer plan to which § 413(c)(4)(A) ap-
plies, the rules of § 430 and this notice are
applied separately for each employer un-
der the plan, as if each employer main-
tained a separate plan. Accordingly, the
rules of this section apply to each plan
sponsor separately, and a plan sponsor may
independently elect to use an alternative
amortization schedule for up to two el-
igible years with respect to the portion
of the plan attributable to that sponsor.
Other sponsors of the multiple employer
plan may elect to use a different alternative
amortization schedule for different eligible
plan years, or may decide not to use an al-
ternative amortization schedule.
(b) In the case of a multiple employer
plan to which § 413(c)(4)(A) does not ap-
ply, the rules of § 430 are applied as if all
participants in the plan were employed by
a single employer. Therefore, if an election
is made to use an alternative amortization
schedule, such election applies to the en-
tire plan and the rules of this notice apply
to the entire plan.
Q G–7: Will an election to use an al-
ternative amortization schedule for a plan
affect the plan sponsor’s ability to obtain a
funding waiver for that plan?
A G–7: Each request for a funding
waiver is reviewed based on the facts and
circumstances applying to that individual
plan. See section 2.03 of Rev. Proc.
2004–15, 2004–1 C.B. 490. One rele-
vant factor is whether the combination of a
funding waiver and an election to use an al-
ternative amortization schedule would re-
duce the minimum required contributions
to a point where the granting of the waiver
would be adverse to the interest of plan
participants in the aggregate. To ensure
that the granting of the waiver is not ad-
verse to the interest of participants in the
aggregate, the Service may impose addi-
tional requirements relating to any election
of an alternative amortization schedule as
a condition for granting a funding waiver.
I. INSTALLMENT ACCELERATION
AMOUNTS
Section 430(c)(7)(A) provides that
if there is an installment acceleration
amount with respect to a plan for any plan
year in the restriction period with respect
to a plan year for which an alternative
amortization schedule is elected, then the
shortfall amortization installment other-
wise determined under § 430(c)(2)(D) is
increased by the installment acceleration
amount, subject to the limitation under
§ 430(c)(7)(B). Section § 430(c)(7)(F)(ii)
defines the restriction period as the
3-plan-year period (in the case of a plan
using the 2 plus 7-year amortization sched-
ule) or the 5-plan-year period (in the case
of a plan using the 15-year amortiza-
tion schedule) beginning with the later
of the election year or the first plan year
beginning after December 31, 2009. In-
stallment acceleration amounts for a plan
year which exceed the limitation are car-
ried over to the following plan year if
that year is within the period described in
§ 430(c)(7)(C)(iii)(III). See Q&A I–6 of
this notice.
Section 430(c)(7)(C) defines an install-
ment acceleration amount with respect to
a plan year within the restriction period.
In general, the installment acceleration
amount is equal to the sum of the aggregate
amount of excess employee compensation
determined under § 430(c)(7)(D) (referred
to in this notice as theexcess compensa-
tion amount) and the aggregate amount
of dividends and redemptions determined
under § 430(c)(7)(E) (referred to in this
notice as theexcess shareholder payment
amount).
Under § 430(c)(7)(C)(ii), the install-
ment acceleration amount applied to a
shortfall amortization installment for any
plan year (referred to in this notice as the
acceleration adjustment) is limited to the
excess (if any) of the sum of the short-
fall amortization installments for the plan
year and all preceding plan years in the
amortization period, determined without
regard to the election of an alternative
amortization schedule, over the sum of
the shortfall amortization installments for
such plan year and all such preceding
plan years, determined after application
of the alternative amortization schedule.
Section 430(c)(7)(B)(ii) further provides
that if an acceleration adjustment applies,
subsequent shortfall amortization install-
ments are reduced (beginning with the last
payment due) so that the present value
of the adjusted amortization schedule is
equal to the present value of the remaining
unamortized shortfall amortization base.
Thus, the effect of an installment accel-
eration adjustment is to accelerate, rather
2011–2 I.R.B.265January 10, 2011

than increase, the installments otherwise
required.
Q I–1: What are the general rules for
installment acceleration amounts?
A I–1: (a) For any plan year that is
within the restriction period described
in Q&A I–2, an installment accelera-
tion amount is calculated for a shortfall
amortization base for which an alternative
amortization schedule has been elected.
The installment acceleration amount for
a plan year is determined as the sum of
the excess compensation amount as de-
scribed in section III.C of this notice and
the excess shareholder payment amount as
describedinsectionIII.Softhisnotice.
(b) The amount added to the shortfall
amortization installment for a plan year
is based on the installment acceleration
amount but is limited as described in
Q&A I–4 of this notice. If the limitation
described in Q&A I–4 of this notice is
exceeded, the excess amounts are carried
over to subsequent plan years in accor-
dance with Q&A I–5 and Q&A I–6 of this
notice. No amounts are added to the short-
fall amortization installments on account
of installment acceleration amounts after
the period described in Q&A I–6.
(c)Foranyyearinwhichanamountis
added under paragraph (b) of this Q&A
I–1, the remaining shortfall amortiza-
tion installments for the affected shortfall
amortization base are reduced as described
in Q&A I–3, so that the present value of the
future shortfall amortization installments
is the same after reflecting the acceleration
adjustment as determined disregarding the
increase for the installment acceleration
amount.
(d) If an alternative amortization sched-
ule has been elected for more than one
plan in the plan sponsor’s controlled group
(within the meaning of § 412(d)(3)), the in-
stallment acceleration amount is allocated
among all plans (i) for which the plan
sponsor has elected to use an alternative
amortization schedule and (ii) for which
the current plan year falls within the re-
striction period with respect to the election
year. The rules related to the allocation of
the installment acceleration amount are de-
scribedinQ&AI–7andQ&AI–8ofthis
notice. See Q&A I–9 and Q&A I–10 of
this notice for additional considerations if
the plan sponsor has elected to use an alter-
native amortization schedule for more than
one election year for one or more plans in
the controlled group.
(e) Quarterly installments required un-
der § 430(j)(3) are determined without
regard to any increase due to an install-
ment acceleration amount, whether the
required annual payment for a plan year
is based on 90% of the minimum required
contribution for that plan year under
§ 430(j)(3)(D)(ii)(I) or 100% of the min-
imum required contribution for the prior
plan year under § 430(j)(3)(D)(ii)(II).
Q I–2: What is the restriction period
with respect to an election year?
A I–2: (a) If the plan sponsor elects to
use the 2 plus 7-year amortization schedule
for a plan year, therestriction periodwith
respect to that election year is the 3-year
period beginning with the later of the elec-
tion year or the first plan year beginning
after December 31, 2009. If the plan spon-
sor elects to use the 15-year amortization
schedule for a plan year, the restriction pe-
riod with respect to that election year is the
5-year period beginning with the later of
the election year or the first plan year be-
ginning after December 31, 2009.
(b) For example, if the sponsor of a
calendar-year plan elects to use the 2
plus 7-year amortization schedule for
the shortfall amortization base estab-
lished for the plan year beginning in
2009 (the 2009 election year), the re-
striction period would be the 3-year
period beginning January 1, 2010, and
ending December 31, 2012. If instead,
the plan sponsor elects to use the 15-year
amortization schedule with a 2010 election
year, the restriction period would be the
5-year period beginning January 1, 2010,
and ending December 31, 2014.
Q I–3: How does the acceleration ad-
justment affect shortfall amortization in-
stallments for future years?
A I–3: Installment acceleration
amounts are intended to accelerate the
timing of shortfall amortization install-
ments, not increase the total amount of
installments associated with a shortfall
amortization base. When an acceleration
adjustment is added to the amortization in-
stallment for a shortfall amortization base
for a plan year, the subsequent shortfall
amortization installments are reduced to
the extent necessary so that the present
value of the remaining shortfall amortiza-
tion installments for that base (including
the installment for the current year) is the
same as the present value of the remaining
shortfall amortization installments for that
base before the increase for the accelera-
tion adjustment. Under § 430(c)(7)(B)(ii),
these reductions areappliedinreverse
order, beginning with the last shortfall
amortization installment due for the short-
fall amortization base. For this purpose,
the present value of the remaining pay-
ments is determined using the segment
rates or the full yield curve used to deter-
mine the target normal cost (or the funding
target, if the target normal cost is zero) for
the year for which the acceleration adjust-
ment is added to the shortfall amortization
installment.
Example I–1. (a) The facts are the same as inEx-
ample G–1, except that an acceleration adjustment
of $214,000 is added to the shortfall amortization
installment for the 2012 plan year for the shortfall
amortization base for which the alternative amortiza-
tion schedule was elected. Assume for purposes of
this example that the first and second segment rates
used to calculate the target normal cost for the 2012
plan year are 5.50% and 6.25%, respectively, and that
there were no installment acceleration amounts for
any previous plan years.
(b) The shortfall amortization installment for the
2012 plan year, increased to reflect the acceleration
adjustment, is $382,458. This is equal to the other-
wise-applicable shortfall amortization installment of
$168,458 under the 2 plus 7-year amortization sched-
ule, plus the acceleration adjustment of $214,000.
(c) Prior to applying the acceleration adjustment,
seven shortfall amortization installments of $168,458
each remain as of January 1, 2012. Using the segment
rates for the 2012 plan year, the present value of these
remaining installments is $1,000,426.
(d) The subsequent amortization installments
are reduced or eliminated as required under
§ 430(c)(7)(B)(ii). Accordingly, the shortfall amor-
tization installment for the 2018 plan year is elimi-
nated, and the installment for the 2017 plan year is
reduced to $37,233. This results in the following
shortfall amortization installments, which have the
same present value ($1,000,426) as the remaining
installments prior to applying the acceleration ad-
justment:
January 10, 20112662011–2 I.R.B.

Shortfall amortization installments
Year
Before adjustmentAfter adjustment
2012
$168,458$382,458
2013
168,458168,458
2014
168,458168,458
2015168,458168,458
2016
168,458168,458
2017
168,458
37,233
2018
168,458
0
Present value as of January 1, 2012
$1,000,426$1,000,426
Q I–4: How is the § 430(c)(7)(C)(ii) an-
nual limitation on the increase in the short-
fall amortization installment applied?
A I–4: (a) The annual limitation on
the increase in the shortfall amortization
installment is determined for a shortfall
amortization base as the excess of (i) the
sum (without interest) of the shortfall
amortization installments for the plan year
and all preceding plan years, determined
as if the sponsor had not elected the alter-
native amortization schedule, over (ii) the
sum (without interest) of the actual short-
fall amortization installments for the plan
year and all preceding plan years, reflect-
ing the alternative amortization schedule
elected by the plan sponsor. The short-
fall amortization installments in clause
(ii) of the preceding sentence reflect any
acceleration adjustments for all preceding
plan years, but not for the current plan
year. Thus, as of the end of the plan year
for which a shortfall amortization install-
ment for a shortfall amortization base is
increased, the cumulative amount of the
shortfall amortization installments for that
base, including any increase on account of
an installment acceleration amount, will
not be greater than the cumulative amount
of the shortfall amortization installments
for that base determined as if the alterna-
tive amortization schedule had not been
elected.
In addition, the increase is limited
so that it does not cause the increased
shortfall amortization installment for that
plan year to exceed the present value of
the remaining shortfall amortization in-
stallments for that base, determined as
of the valuation date (without regard to
theincreaseattributable to the installment
acceleration amount for the plan year).
(b) The annual limitation is applied sep-
arately to the increase in the shortfall amor-
tization installment for each affected short-
fall amortization base. The resulting in-
crease in the shortfall amortization install-
ment for a base is not affected by whether
or not the increases in the shortfall amor-
tization installments for any other affected
base exceed the annual limitation for that
base.
Example I–2: (a) The facts are the same as in
Example I–1, except that the installment accelera-
tion amount determined for the 2012 plan year is
$250,000.
(b) Based on the first and second segment rates
for the 2010 election year of 4.81% and 6.69% re-
spectively, each shortfall amortization installment
would have been $167,698 under the 7-year amor-
tization schedule that would have applied absent an
election to use an alternative amortization schedule.
The annual limitation on the installment acceleration
amount is the excess of (1) the sum of shortfall amor-
tization installments under the 7-year amortization
schedule that would have applied absent the election
to use an alternative amortization schedule, over (2)
the sum of the shortfall amortization installments
under the 2 plus 7-year amortization schedule elected
by the plan sponsor, or $214,636, as shown in the
table below:
Shortfall amortization installments
Year
Without alternative amortization schedule (a)Reflecting alternative amortization schedule (b)
2010
$167,698$ 60,000
2011167,69860,000
2012167,698
168,458
Total
$503,094$288,458
Excess of (a) over (b)
$214,636
(c) Using the first and second segment rates for
the 2012 plan year of 5.50% and 6.25%, respectively,
the present value of the remaining shortfall amorti-
zation installments prior to application of the install-
ment acceleration amount for 2012 is $1,000,426.
The increase in the shortfall amortization installment
for the 2012 plan year is limited to the smaller of this
amount or the annual limitation in § 430(c)(7)(C)(ii),
or $214,636. The increased shortfall amortization
installment for 2012 for the affected shortfall amor-
tization base is therefore $168,458 + $214,636, or
$383,094.
Q I–5: What carryover rules apply if the
otherwise-applicableincrease in the short-
fall amortization installment for an amor-
tization base exceeds the annual limitation
describedinQ&AI–4ofthisnotice?
A I–5: (a) If the otherwise-applicable
increase in the shortfall amortization in-
stallment for a shortfall amortization base
exceeds the annual limitation described in
Q&A I–4 of this notice for that base for a
plan year, the excess (referred to in this no-
tice as anexcess installment acceleration
amount) is carried over and added to the in-
crease in the shortfall amortization install-
ment for that base for the following plan
year if that plan year is within the carry-
over period described in Q&A I–6 of this
notice. Any carryover of an excess install-
ment amortization amount is added only
to the installments for the shortfall amor-
tization base to which it was originally at-
tributed.
(b) The acceleration adjustment added
to the shortfall amortization installment
for any plan year within the carryover pe-
riod described in Q&A I–6 of this notice
2011–2 I.R.B.267January 10, 2011

is equal to (i) the installment accelera-
tion amount for that shortfall amortization
base, if that base is within the restriction
period, plus (ii) any installment acceler-
ation amount carried over from previous
years in accordance with this Q&A I–5,
with that sum limited by the annual limi-
tationinQ&AI–4ofthisnotice.
Example I–3. (a) The facts are the same as in
Example I–2. The amount carried over to the 2013
plan year is equal to $35,364, which is the excess of
the installment acceleration amount determined for
the 2012 plan year, or $250,000, over the amount that
was added to the shortfall amortization installment
for the 2012 plan year after application of the annual
limitation, or $214,636. No installment acceleration
amount is applicable for the 2013 plan year, because
the 2013 plan year is not within the restriction period
for the shortfall amortization base established for the
2010planyear.
(b) Before application of the annual limit under
§ 430(c)(7)(C)(ii) and Q&A I–4 of this notice, the
shortfall amortization installment for 2013 would be
increased to $168,458 + $35,364, or $203,822. The
annual limitation for the 2013 plan year is the ex-
cess of (i) the sum of the shortfall amortization in-
stallments for the 2010 through 2013 plan years, de-
termined as if the sponsor had not elected the al-
ternative amortization schedule, over (ii) the sum of
the actual shortfall amortization installments for the
2010 through 2013 plan years reflecting the alterna-
tive amortization schedule elected by the plan spon-
sor, including acceleration adjustments added to the
shortfall amortization installments through 2012. Ac-
cordingly, the annual limitation for the 2013 plan year
is $0, as shown in the table below:
Shortfall amortization installments
Year
Without alternative amortization schedule (a)Reflecting alternative amortization schedule (b)
2010
$167,698$ 60,000
2011167,69860,000
2012167,698383,094
2013167,698
168,458
Total
$670,792$671,552
Excess of (a) over (b)
$0
Q I–6: For how long will excess in-
stallment acceleration amounts be carried
over?
A I–6: (a) In general, any excess install-
ment acceleration amount for a shortfall
amortization base is carried over each plan
year until there is no longer an excess in-
stallment acceleration amount for the asso-
ciated shortfall amortization base or until
the associated shortfall amortization base
is completely amortized. However, in no
event is an excess installment acceleration
amount carried over to a plan year which
begins after the first plan year following
the last plan year in the restriction period
for a base being amortized using the 2 plus
7-year amortization schedule. For a base
being amortized using the 15-year amorti-
zation schedule, no excess installment ac-
celeration amount is carried over to a plan
year which begins after the second plan
year following the last plan year in the re-
striction period for that base.
(b) For example, if the sponsor of a
plan with a calendar-year plan year elected
to amortize the shortfall amortization base
established for the 2010 plan year using
the 2 plus 7-year amortization schedule,
the restriction period would end in 2012
(the end of the 3-year period beginning
with the election year of 2010) and the
last year for which any installment ac-
celeration amounts would be carried over
from previous years is the following year,
2013. Any excess installment accelera-
tion amounts remaining at the end of 2013
would not be added to the remaining short-
fall amortization installments for that base
(or any other base) for any future years.
(c) If, instead, the plan sponsor elected
to amortize the shortfall amortization base
established for 2010 using the 15-year
amortization schedule, the restriction pe-
riod would end in 2014 (the end of the
5-year period beginning with the election
year of 2010) and the last year for any
installment acceleration amounts to be car-
ried over from previous years is the second
year following the end of the restriction
period, or 2016. Any excess installment
acceleration amounts remaining at the end
of 2016 would not be added to the remain-
ing shortfall amortization installments for
that base (or any other base) for any future
years.
Q I–7: How is an installment accel-
eration amount for a plan year allocated
among plans for which the sponsor has
elected to use an alternative amortization
schedule?
A I–7: (a) Under § 430(c)(7)(F)(iii), if a
plan sponsor elects to use alternative amor-
tization schedules for two or more plans,
the installment acceleration amount for a
plan year is allocated among those plans.
If the plan sponsor has elected to use an
alternative amortization schedule for only
one election year for each plan, the install-
ment acceleration amount for a plan year is
allocated among all plans of the plan spon-
sor’s controlled group for which a short-
fall amortization base is being amortized
using an alternative amortization schedule,
butonlyifthatshortfallamortizationbase
is still in its restriction period for the plan
year for which the installment acceleration
amount is being allocated. These plans are
referred to in this notice asaffected plans.
If the plan year for which the installment
acceleration amount is determined is later
than the last year of a restriction period for
all shortfall amortization bases for a plan,
that plan is not an affected plan, and is dis-
regarded in allocating the installment ac-
celeration amount for that plan year. See
Q&A I–9 and Q&A I–10 of this notice
for rules regarding the allocation of install-
ment acceleration amounts if an election to
use an alternative amortization schedule is
made for more than one election year for
one or more plans in the controlled group.
(b) The first step in allocating the in-
stallment acceleration amount among the
affected plans is to identify the shortfall
amortization bases for which the shortfall
amortization installments are determined
using an alternative amortization schedule,
and which are still in their restriction pe-
riod as described in Q&A I–2 of this notice
(affected shortfall amortization bases).
The second step is to determine, for each
affected shortfall amortization base, the
difference between (i) the shortfall amor-
tization installment without reflecting the
alternative amortization schedule, and (ii)
January 10, 20112682011–2 I.R.B.

the shortfall amortization installment for
the first year of the alternative amortiza-
tion schedule, determined without regard
to any installment acceleration amount
that may have applied for that first year.
This difference is referred to in this notice
as thefirst-year reductionwith respect to
the affected shortfall amortization base.
(c) The portion of the installment ac-
celeration amount allocated to an affected
plan for a plan year (theallocated por-
tion) is determined by multiplying the in-
stallment acceleration amount for that plan
year by a fraction, the numerator of which
is the first-year reduction for that plan, and
the denominator of which is the sum of the
first-year reductionsfor all affected plans.
Each amount so allocated is limited as de-
scribed in Q&A I–4 and Q&A I–5 of this
notice, and the resulting acceleration ad-
justment is added to the corresponding af-
fected shortfall amortization base.
Example I–4. (a) Assume that a plan sponsor has
two plans (with calendar year plan years) for which
an alternative amortization schedule has been elected:
PlanPlan APlan B
Election year20092011
Alternative amortization schedule elected2 plus 7-year
15-year
Shortfall amortization installments for first year of amortization
schedule:
Without alternative schedule
$167,698$252,579
Reflecting alternative schedule60,000146,878
First-year reduction
$107,698$105,701
Installment acceleration amounts of $100,000 and
$300,000 are calculated for the plan years beginning
Janua
ry 1, 2010, and January 1, 2011, respectively.
(b) The installment acceleration amount of
$100,000 determined for the plan year beginning
Janua
ry 1, 2010, is applied only to the shortfall amor-
tization installment for Plan A, and the carryover of
any amount over the annual limitation for 2010 and
futu
re years is applied only to Plan A. No portion
of the installment acceleration amount for 2010 is
allocated to Plan B because it is not an affected plan
in 20
10.
(c) The installment acceleration amount of
$300,000 determined for the plan year beginning
Janu
ary 1, 2011, is allocated ratably between Plans A
and B based on the first-year reduction for each plan.
Accordingly, the allocated portion of the installment
acc
eleration amount for Plan A for the 2011 plan year
is $151,404, determined by multiplying the install-
ment acceleration amount of $300,000 by a fraction,
the
numerator of which is the first-year reduction for
Plan A ($107,698) and the denominator of which is
the total of such first-year reductions for Plans A and
B(
$107,698 + $105,701, or $213,399). Similarly,
the portion of the $300,000 installment acceleration
amount for the 2011 plan year that is allocated to
Pl
an B is $148,596.
QI
–8: How is the installation acceler-
at
ion amount determined if the amount is
re
quired to be allocated among plans that
ha
ve differing plan years?
AI
–8: If an alternative amortization
sc
hedule has been elected for more than
o
ne plan and the plans do not all have the
s
ame plan year, then installment accelera-
t
ion amounts are determined on a calendar
y
ear basis and the installment acceleration
a
mount so determined for a calendar year
is allocated among the plans based on the
plan years that begin within that calendar
year. See Q&A S–4 of this notice for re-
lated rules.
Q I–9: How do the installment accel-
eration rules apply if the sponsor elected
to use an alternative amortization schedule
for two election years?
A I–9: (a) Section 430(c)(7)(A) pro-
vides that the shortfall amortization install-
ment otherwise determined with respect to
an election year is increased on account of
the installment acceleration amount. Sec-
tion 430(c)(7) provides for an allocation
of the installment acceleration amount
among plans for which the sponsor elected
to use an alternative amortization schedule
(see § 430(c)(7)(F)(iii) and Q&A I–7 and
Q&A I–8 of this notice), but does not pro-
vide for the allocation of the installment
acceleration amount among individual
shortfall amortization bases within a plan.
Accordingly, subject to the adjustments in
Q&A I–4 through Q&A I–6 of this notice,
the increase on account of the excess com-
pensation amount and excess shareholder
payment amount is added separately to the
shortfall amortization installment for each
base for which an alternative amortization
schedule was elected.
(b) For example, if the plan sponsor
elected an alternative amortization sched-
ule for the plan year beginning in 2009
and elected the same alternative amorti-
zation schedule for the plan year begin-
ning in 2010, and if the installment accel-
eration amount for the 2010 plan year is
$500,000, then, subject to the annual lim-
itation in § 430(c)(7)(C)(ii), the shortfall
amortization charge for the 2010 plan year
reflects an increase of $500,000 with re-
spect to the shortfall amortization base es-
tablishedforthe2009planyearandanad-
ditional increase of $500,000 with respect
to the shortfall amortization base estab-
lished for the 2010 plan year, for a total in-
crease in the minimum required contribu-
tion for the 2010 plan year of $1,000,000.
Thus, the minimum required contribution
can be increased by $2 for every $1 of the
installment acceleration amount if an elec-
tion has been made for two plan years and
the installment acceleration amount arises
in the restriction period for both election
years (but can only be increased by $1 for
every $1 of the installment acceleration
amount if an election has been made for
only one plan year).
Q I–10: How is an installment accel-
eration amount allocated among plans
for which the sponsor has elected to use
an alternative amortization schedule for
shortfall amortization bases established
for more than oneelection year?
A I–10: (a) As discussed in Q&A I–9
of this notice, a separate installment accel-
eration amount determined for a plan year
is added to the shortfall amortization in-
stallment for that plan year for each af-
fected shortfall amortization base. Ac-
cordingly, if a plan sponsor elects to use an
alternative amortization schedule for two
shortfall amortization bases for any plan in
the controlled group, and if both of those
bases are still within the restriction pe-
riod (as described in Q&A I–2 of this no-
tice), the installment acceleration amount
is added twice. However, because no plan
can have more than two election years, the
installment acceleration amount cannot be
added more than twice, even if the elec-
tion years for various plans within the con-
2011–2 I.R.B.269January 10, 2011

trolled group fall in more than two separate
plan years. Each installment acceleration
amount is then allocated among the plans
based on the rules described in Q&A I–7
and Q&A I–8 of this notice, as described
in paragraphs (b) through (e) of this Q&A
I–10.
(b) First, all affected plans in the con-
trolled group and the affected shortfall
amortization bases are identified, as out-
lined in Q&A I–7 of this notice, disre-
garding those which are no longer in the
restriction period for the year for which the
installment acceleration amount is being
allocated. The affected shortfall amor-
tization bases are then divided into two
groups, theearlier-year shortfall amorti-
zation basesand thelater-year shortfall
amortization bases. The group of ear-
lier-year shortfall amortization bases con-
sists of the affected shortfall amortization
bases for each plan for which the election
year is not later than the election year for
any other affected shortfall amortization
base for that plan. The group of later-year
shortfall amortization bases consists of
the affected shortfall amortization bases
in the group of affected shortfall amorti-
zation bases that are not in the group of
earlier-year shortfall amortization bases.
Note that a later-year shortfall amortiza-
tion base for a plan will move to the group
of earlier-year shortfall amortization bases
when the original earlier-year shortfall
amortization base for that plan is no longer
in its restriction period.
(c) The allocated portion of the install-
ment acceleration amount for each plan
with an earlier-year shortfall amortization
base is determined by multiplying the in-
stallment acceleration amount calculated
for the current plan year by a fraction, the
numerator of which is the first-year re-
duction (as described in paragraph (b) of
Q&A I–7 of this notice) for the earlier-year
shortfall amortization base for that plan
and the denominator of which is the sum
of such first-year reductions for the ear-
lier-year shortfall amortization bases for
all plans in the controlled group.
(d) Similarly, the allocated portion of
the installment acceleration amount for
each plan with a later-year shortfall amor-
tization base is determined by multiplying
the installment acceleration amount cal-
culated for the current plan year by a
fraction, the numerator of which is the
first-year reduction for the later-year short-
fall amortization base for that plan and the
denominator of which is the sum of such
first-year reductions for all plans in the
controlled group with later-year shortfall
amortization bases.
(e) The increase in the shortfall amorti-
zation installment for each affected short-
fall amortization base is subject to the ad-
justments described in Q&A I–4 and Q&A
I–5 of this notice.
Example I–5: (a) The facts are the same as for
Example I–4, except that the plan sponsor also elects
to use the 2 plus 7-year amortization schedule for Plan
A for the shortfall amortization base established for
2011:
PlanPlan APlan APlan B
Election year200920112011
Alternative amortization schedule elected2 plus 7-year2 plus 7-year
15-year
End of restriction period20122013
2015
Shortfall amortization installments for first year
of amortization schedule:
Without alternative schedule
$167,698
503,094
$252,579
Reflecting alternative schedule60,000
172,500
146,878
First-year reduction
$107,698$330,594$105,701
An installment acceleration amount of $100,000
is determined for the plan year beginning Jan-
u
ary1,2011.
(b) Because an alternative amortization schedule
has been elected for two shortfall amortization bases
f
or Plan A, and because the 2011 plan year is in the
restriction period for each base, an installment accel-
eration amount is added to each shortfall amortiza-
t
ion installment for 2011. The installment accelera-
tion amounts are allocated between Plan A and Plan
B based on the rules in Q&A I–7 and Q&A I–8 of
this notice. The earlier-year shortfall amortization
base for Plan A is the first shortfall amortization base
for which an alternative amortization schedule was
elected for that plan (the base established for 2009).
The earlier-year shortfall amortization base for Plan
B is the only base for which an alternative amorti-
zation schedule was elected for that plan, established
for the 2011 plan year.
(c) The installment acceleration amount of
$100,000 is allocated between the plans in propor-
tion to the first-year reduction for each earlier-year
shortfall amortization base for the first year of the
amortization schedule. The allocated portion of
the installment acceleration amount for Plan A is
$50,468. This amount is calculated by multiplying
the installment acceleration amount of $100,000 by a
r
atio, the numerator of which is the first-year reduc-
tion for the earlier-year shortfall amortization base
for Plan A and the denominator of which is the sum
o
f the first-year reductions for the earlier-year short-
fall amortization bases for Plans A and B ($100,000
x $107,698 ÷ ($107,698 + $105,701) = $50,468).
Similarly, the allocated portion of the installment
acceleration amount for Plan B is $49,532.
(d) In addition, a second installment acceleration
amount of $100,000 is added to the shortfall amorti-
zation installments for the later-year shortfall amorti-
zation bases. The only later-year shortfall amortiza-
tion base for which the sponsor has elected an alterna-
tive amortization schedule is the base established for
Plan A for 2011. Therefore, the full $100,000 install-
ment acceleration amount is allocated to Plan A, and
the total installment acceleration amount allocated to
both affected shortfall amortization bases for Plan A
amounts to $150,468 for the 2011 plan year. As de-
veloped earlier in this example, an additional install-
ment acceleration amount of $49,532 is allocated to
Plan B, for a total installment acceleration amount of
$200,000 for the 2011 plan year.
Example I–6: (a) The facts are the same as in
Example I–5. An installment acceleration amount of
$
150,000 is determined for the 2013 plan year.
(b) Because the shortfall amortization base estab-
lished for Plan A for the 2009 plan year is no longer in
t
he restriction period, that base is ignored when deter-
mining the installment acceleration amounts that are
allocated to that plan for that plan year. Accordingly,
t
he shortfall amortization base established for 2011
becomes the earlier-year shortfall amortization base
for Plan A, and there are no later-year shortfall amor-
tization bases for either plan.
(c) Because neither plan has more than one
shortfall amortization base for which an alternative
amortization schedule was elected and which is still
in its restriction period, the installment accelera-
tion amount is only applied once, and the amount
is allocated between Plans A and B based on the
reduction in the first-year installments for each base.
The allocated portion of the installment accelera-
tion amount for Plan A for the 2013 plan year is
$113,660. This amount is calculated by multiplying
the installment acceleration amount for the 2013 plan
year ($150,000) by a ratio, the numerator of which is
the first-year reduction for the shortfall amortization
January 10, 20112702011–2 I.R.B.

base established for Plan A for 2011 and the denomi-
nator of which is the sum of the first-year reductions
for the shortfall amortization bases established for
Plan A and Plan B for that same year ($150,000 x
$330,594 ÷ ($330,594 + $105,701) = $113,660).
Similarly, the allocated portion of the installment
acceleration amount for the shortfall amortization
base established for Plan B for 2011 is $36,340.
Q I–11: How do the rules of this section
apply to multiple employer plans?
A I–11: (a) In the case of a multiple
employer plan to which § 413(c)(4)(A)
applies, the rules of § 430 and this section
are applied separately for each employer
under the plan as if each employer main-
tained a separate plan. Accordingly, any
installment acceleration amount is deter-
mined separately for each plan sponsor
who elects an alternative amortization
schedule, based on the excess compensa-
tion amount for employees in that spon-
sor’s controlled group in accordance with
the rules of section III.C of this notice,
and on the excess shareholder payment
amounts for that sponsor’s controlled
group determined in accordance with the
rules of section III.S of this notice. The
resulting installment acceleration amount
for a plan sponsor is added only to shortfall
amortization bases for which that sponsor
elected to use an alternative amortization
schedule, in accordance with the rules of
this section.
(b) In the case of a multiple employer
plan to which § 413(c)(4)(A) does not ap-
ply, the rules of § 430 are applied as if all
participants in the plan were employed by
a single employer. Therefore, if an elec-
tion is made to use an alternative amorti-
zation schedule, the installment accelera-
tion amount is determined based on the ex-
cess compensation amount for all employ-
ees of the controlled groups for all spon-
soring employers in accordance with sec-
tion III.C of this notice, and on the ex-
cess shareholder payment amounts for any
member of the controlled groups for all
sponsoring employers, in accordance with
section III.S of this notice.
C. EXCESS COMPENSATION
AMOUNTS
The excess employee compensation
amount that is included in the install-
ment acceleration amount is defined at
§ 430(c)(7)(D). In general, the excess
employee compensation amount is, with
respect to any employee for any plan
year, the excess (if any) over $1,000,000,
of the aggregate amount includible in
income for remuneration during the cal-
endar year in which the plan year begins
for services performed by the employee
for the plan sponsor (whether or not per-
formed during the calendar year). Under
§ 430(c)(7)(D)(vi), the term “employee”
includes a self-employed individual who
is treated as an employee under § 401(c),
and the term “compensation” includes
earned income of such individual with re-
spect to such self-employment. Pursuant
to § 430(c)(7)(D)(viii), the $1,000,000
amount is indexed under § 1(f)(3) for cal-
endar years after 2010, rounded to the next
lowest multiple of $1,000.
Under § 430(c)(7)(D)(ii), if during any
calendar year, assets are set aside or re-
served (directly or indirectly) in a trust (or
other arrangement as determined by the
Secretary), or transferred to such a trust or
other arrangement, by a plan sponsor for
purposes of paying deferred compensa-
tion of an employee under a nonqualified
deferred compensation plan (as defined in
§ 409A) of the plan sponsor, then, for pur-
poses of determining the excess employee
compensation amount with respect to an
employee, the amount of those assets is
treated as remuneration of the employee
includible in income for the calendar year,
unless that amount is taken into account
under § 430(c)(7)(D)(i) for that year. An
amount that is taken into account as re-
muneration includible in income under
§ 430(c)(7)(D)(ii) for a calendar year is not
taken into account under § 430(c)(7)(D)
for any subsequent calendar year. Sections
430(c)(7)(D)(iii) through (v) provide four
additional exceptions from the remuner-
ation taken into account for purposes of
calculating the excess employee compen-
sation amount.
Q C–1: How is the excess compensa-
tion amount that is included in the install-
ment acceleration amount determined?
A C–1: (a) The excess compensa-
tion amount for a plan year is the sum,
for all employees of the plan sponsor,
of the portion of the PRA compensation
amount for each such employee that ex-
ceeds $1,000,000 (as indexed for changes
in the cost-of-living index). For this pur-
pose, thePRA compensation amountfor
an employee for a plan year is determined
as the employee’s compensation amount,
as described in Q&A C–2 of this notice,
adjusted by adding any set-aside amount
as described in Q&A C–3 of this notice,
but disregarding any amounts excluded as
described in Q&A C–4 through Q&A C–7
of this notice.
(b) For purposes of determining the
excess compensation amount, (1) the term
“employee” includes former employees
and self-employed individuals who are
treated as employees under § 401(c), and
(2) the term “plan sponsor” includes all
members of the plan sponsor’s controlled
group (as defined in § 412(d)(3)). How-
ever, in the case of a plan established or
maintained jointly by an employer and
an employee organization, the term “plan
sponsor” includes all members of the em-
ployer’s controlled group (as defined in
§ 412(d)(3)).
Q C–2: What is the compensation
amount for an employee for a plan year?
A C–2: The compensation amount for
an employee for a plan year is equal to the
amount that is includible in the employee’s
income for the calendar year in which the
plan year begins and that constitutes remu-
neration for services performed by the em-
ployee for the plan sponsor (including re-
muneration for services performed by the
employee for the plan sponsor in earlier
years that is includible in the employee’s
income for the calendar year in which the
plan year begins, subject to the special
rules described in Q&A C–3 through Q&A
C–7 of this notice). With respect to a
self-employed individual who is treated as
an employee under § 401(c), compensa-
tion for this purpose includes the earned
income of that individual with respect to
such self-employment for the taxable year
ending during the calendar year in which
the plan year begins.
Q C–3: How is the set-aside amount de-
termined for an employee for a plan year?
A C–3: (a) The set-aside amount for an
employee for a plan year that is added to
the compensation amount under Q&A C–2
of this notice for purposes of determining
the PRA compensation amount is equal to
the fair market value of assets that are set
aside or reserved (directly or indirectly)
in a trust (or other arrangement as deter-
mined by the Secretary), or transferred to
such a trust or other arrangement, by a
plan sponsor for purposes of paying de-
ferred compensation of the employee un-
der a nonqualified deferred compensation
plan (as defined in § 409A) during the cal-
2011–2 I.R.B.271January 10, 2011

endar year in which the plan year (of the
qualified plan) begins, except to the extent
that amount is includible in income for that
year. For this purpose, any guidance under
§ 409A(b)(1) concerning assets that are set
aside or reserved (directly or indirectly) in
a trust or other arrangement (or transferred
to such a trust or other arrangement) also
applies for purposes of § 430(c)(7)(D)(ii)
(but without regard to thesitusof the trust
or other arrangement).
(b) An amount that is taken into account
as part of the set-aside amount for an em-
ployee for a plan yearis not also taken into
account in determining the employee’s
compensation amount under Q&A C–2 of
this notice for any subsequent period.
(c) The fair market value of assets
set aside, reserved, or transferred is de-
termined at the time they are set aside,
reserved, or transferred. If such assets are
permitted under the trust or arrangement
to be applied to the deferred compensation
of more than one employee, those assets
are included in the set-aside amounts of
each employee proportionately to the ag-
gregate present value of each employee’s
benefits for which assets are permitted to
be applied under the trust or arrangement.
(d) Payments made by a foreign corpo-
ration to a foreign trust (or other foreign ar-
rangement as determined by the Secretary)
on behalf of a nonresident alien are not
considered to be set-aside amounts for the
purpose of determining excess compensa-
tion under § 430(c)(7)(D)(i) to the extent
that such payments would not have been
subject to U.S. income tax as income ef-
fectively connectedwith the conduct of a
trade or business within the United States
if they had been paid to the nonresident
alien in cash.
(e) The exceptions set forth in
§§ 430(c)(7)(iii) through (v), as described
in Q&A C–4 through Q&A C–7 of this
notice, do not apply for purposes of de-
termining the set-aside amount under
§ 430(c)(7)(ii), as described in this Q&A
C–3.
Q C–4: Section 430(c)(7)(iii) provides
that remuneration taken into account under
§ 430(c)(7)(D)(i) only includes remuner-
ation to the extent attributable to services
performed by the employee for the plan
sponsor after February 28, 2010. How is
this rule applied?
A C–4: Remuneration included in an
employee’s compensation amount under
Q&A C–2 of this notice for a calendar year
that is attributable to services performed
before March 1, 2010, is subtracted from
the amount otherwise included in an em-
ployee’s remuneration in determining the
compensation amount for that calendar
year. The rules of Q&A–23 of Notice
2009–8, 2009–4 I.R.B. 347, apply for
purposes of determining whether a com-
pensation amount under Q&A C–2 of this
notice for a calendar year is attributable to
services performed before March 1, 2010
(applied by substituting periods before
March 1, 2010, for periods before Jan-
uary 1, 2009). However, for remuneration
which is not directly attributable to ser-
vices performed during specific months
within the 2010 calendar year, the re-
muneration is treated as attributablepro
ratato months during 2010. Thus, for
a $12,000 bonus payment made to an
employee for services rendered by the
employer for the plan sponsor during the
entire 2010 calendar year, $2,000 would
be attributable to services performed dur-
ing January and February of 2010, and
only the remaining $10,000 would be in-
cluded in remuneration for purposes of
§ 430(c)(7)(D)(i).
Q C–5: Section 430(c)(7)(D)(iv) pro-
vides that remuneration taken into account
under § 430(c)(7)(D)(i) does not include
any amount includible in income with re-
spect to the granting, after February 28,
2010, of service recipient stock (within the
meaning of § 409A) that, upon such grant,
is subject to a substantial risk of forfei-
ture (as defined in § 83(c)(1)) for at least
5 years from the date of that grant. How is
this rule applied?
A C–5: For purposes of determining
whether a grant of service recipient stock
made after February 28, 2010, is taken into
account under § 430(c)(7)(D)(i), except as
provided in the final sentence of this Q&A
C–5, the determination of whether a risk
of forfeiture constitutes a substantial risk
of forfeiture (as defined in § 83(c)(1)) for
at least 5 years from the date of that grant
is made as of the date of grant. Thus, pro-
vided the risk of forfeiture with respect to
such a grant is a substantial risk of forfei-
ture as of the date of grant, the grant does
not fail to meet the requirement that the
service recipient stock be subject to a sub-
stantial risk of forfeiture for at least 5 years
from the date of that grant merely because
the risk of forfeiture lapses prior to the end
of the 5-year period pursuant to the terms
of the grant. For example, if the terms of
the grant on the date of the grant impose
a substantial risk of forfeiture for at least
5 years, but the terms provide for the risk
to lapse if the grantee dies, the grant will
be treated as being subject to a substan-
tial risk of forfeiture for at least 5 years
from the date of the grant for purposes of
§ 430(c)(7)(D) even if the risk of forfei-
ture lapses within 5 years after the grant
due to the death of the grantee. However,
if any amendment is made to the terms
of the grant after February 28, 2010, that
causes the grant to cease to be subject to a
substantial risk of forfeiture (as defined in
§ 83(c)(1)) for at least 5 years from the date
of that grant, the special rule described in
this Q&A C–5 will cease to apply to the
grant.
Q C–6: Section 430(c)(7)(D)(v)(I) pro-
vides that the remuneration taken into ac-
count under § 430(c)(7)(D)(i) does not in-
clude any remuneration payable on a com-
mission basis solely on account of income
directly generated by the individual perfor-
mance of the individual to which that re-
muneration is payable. How is this rule ap-
plied?
A C–6:For purposes of
§ 430(c)(7)(D)(i)(I), remuneration is
payable on a commission basis only if
the facts and circumstances show that the
remuneration is paid solely on account
of income generated directly by the
individual performance of the individual
to whom the compensation is paid and
the income is a result of a direct sale
of a product or service to an unrelated
customer in the ordinary course of the
business of the employer. Thus, remuner-
ation is not payable on a commission basis
if the remuneration is paid on account of
broader performance standards, such as on
account of the income produced by a busi-
ness unit of the employer or on account
of the disposition of a business unit that
is not in the ordinary course of business
of the employer. However, remuneration
does not fail to be attributable directly
to the individual merely because support
services, such as secretarial or research
services, are utilized in generating the
income.
Q C–7: Section 430(c)(7)(D)(v)(II)
provides that the remuneration taken into
account under § 430(c)(7)(D)(i) does not
include any remuneration consisting of
January 10, 20112722011–2 I.R.B.

nonqualified deferred compensation, re-
stricted stock, stock options, or stock
appreciation rights payable or granted un-
der a written binding contract that was in
effect on March 1, 2010, and that was not
modified in any material respect before
that remuneration is paid. How is this rule
applied?
A C–7: (a) Remuneration consisting
of nonqualified deferred compensation,
restricted stock, stock options, or stock
appreciation rights payable or granted un-
der a written binding contract that was in
effect on March 1, 2010, and that was not
modified in any material respect before
that remuneration is paid and which is
included in an employee’s compensation
amount under Q&A C–2 of this notice for
a plan year is subtracted from the amount
otherwise included in determining the
PRA compensation amount for that plan
year. For this purpose, remuneration is not
payable or granted under a written bind-
ing contract that is in effect on March 1,
2010, if the employee does not have a
legally binding right to the remuneration
on March 1, 2010, under the rules set
forth in § 1.409A–1(b)(1). Whether a
material modification has occurred is
determined under rules similar to the
rules under § 1.409A–6(a)(4) (substituting
March 1, 2010, for October 3, 2004, or
January 1, 2005), as applied based on
the nonqualified deferred compensation,
restricted stock, stock options, or stock
appreciation rights modified.For
example, if an employee’s contract
addresses both cash compensation and
stock options, and a material modification
is made on or after March 1, 2010,
with respect to the employee’s cash
compensation, but the modification does
not affect the employee’s stock options,
then the compensation in the form of stock
options is not considered to have been
materially modified.
(b) For purposes of applying
§ 430(c)(7)(D)(v)(II), nonqualified de-
ferred compensation does not include
remuneration that is not deferred for more
than a brief period of time after the end of
the employer’s taxable year, as described
in § 1.404(b)–1T, Q&A–2. Accordingly,
compensation is not considered to consist
of nonqualified deferred compensation
for purposes of the exception described
in this Q&A C–7 to the extent that such
compensation is received on or before the
15th day of the 3rd calendar month after
the end of the employer’s taxable year in
which the related services are rendered.
S. EXCESS SHAREHOLDER
PAYMENT AMOUNTS
Section 430(c)(7)(E) defines the ex-
cess shareholder payment amount that is
included in the installment acceleration
amount. The excess shareholder payment
amount for a plan year is the excess (if
any) of the sum of dividends declared dur-
ing the plan year by the plan sponsor plus
the aggregate amount paid for the redemp-
tion of stock of the plan sponsor redeemed
during the plan year, over the greater of
two amounts. The first such amount is the
adjusted net income (within the meaning
of section 4043 of ERISA) of the plan
sponsor for the preceding plan year, de-
termined without regard to any reduction
by reason of interest, taxes, depreciation,
or amortization. The second such amount
is, in the case of a plan sponsor that deter-
mined and declared dividends in the same
manner for at least 5 consecutive years
immediately preceding such plan year, the
aggregate amount of dividends determined
and declared for such plan year using such
manner. Sections 430(c)(7)(E)(ii) through
(v) provide certain exceptions from divi-
dends and redemptions that are taken into
account in determining the excess share-
holder payment amount.
Q S–1: How is the excess shareholder
payment amount that is included in the
installment acceleration amount deter-
mined?
A S–1: (a) Except as described in this
Q&A S–1 and Q&A S–5 through Q&A
S–8 of this notice, the excess shareholder
payment amount for a plan year is the ex-
cess (if any) of (i) the sum of dividends
declared by the plan sponsor during the
plan year for which the installment accel-
eration amount is calculated (regardless of
whether the dividends are paid after the
last day of that plan year) plus the aggre-
gate amount paid for the redemption of
stock (as described in § 317(b)) of the plan
sponsor that occurs during such plan year
(regardless of whether the redemption was
announced before the first day of that plan
year), over (ii) the adjusted net income for
the prior plan year as described in Q&A
S–2 of this notice. However, in the case
of a plan sponsor that determined and de-
clared dividends in the same manner for
at least 5 consecutive years, as described
in Q&A S–3 of this notice, the amount
in clause (ii) of the preceding sentence is
not less than the aggregate amount of divi-
dends determined and declared for the plan
year that are determined in that same man-
ner.
(b) Section 430(c)(7)(E)(iii) provides
an exception for intra-group dividends, un-
der which dividends paid by one mem-
ber of a controlled group (as defined in
§412(d)(3))toanothermemberofthat
group are not taken into account.
(c) For purposes of determining the
excess shareholder payment amount, pur-
suant to § 430(c)(7)(F), the term “plan
sponsor” includes all members of the
plan sponsor’s controlled group. How-
ever, in the case of a plan established or
maintained jointly by an employer and
an employee organization, the term “plan
sponsor” includes all members of the em-
ployer’s controlled group.
Q S–2: How is the adjusted net income
forthepriorplanyeardeterminedforpur-
poses of calculating the excess shareholder
payment amount?
A S–2: (a) The adjusted net income
for the prior plan year for purposes of cal-
culating the excess shareholder payment
amount is the adjusted net income (within
the meaning of 29 CFR 4043.31(e)(1)) of
the plan sponsor for the fiscal year end-
ing with or during that prior plan year
(theapplicable fiscal year), determined
before any reduction by reason of interest,
taxes, depreciation, or amortization. Ad-
justed net income is defined in 29 CFR
4043.31(e)(1) as the net income before af-
ter-tax gain or loss on any sale of assets, as
determined in accordance with generally
accepted accounting principles and prac-
tices. Accordingly, the adjusted net in-
come for purposes of calculating the ex-
cess shareholder payment amount is the
net income as determined in accordance
with generally accepted accounting prin-
ciples and practices, but determined be-
fore any reduction by reason of interest,
taxes, depreciation, or amortization and
disregarding any gain or loss on any sale
of assets. The amount of adjusted net in-
come for this purpose is deemed to be no
less than zero.
(b) If the length of the plan year for
which the excess shareholder payment
amount is determined and the fiscal year
2011–2 I.R.B.273January 10, 2011

used to determine the adjusted net income
described in Q&A S–2 are not the same,
the adjusted net income is multiplied by
a fraction, the numerator of which is the
number of months in the plan year for
which the excess shareholder payment
amount is determined and the denomina-
tor of which is the number of months in
the fiscal year for which the adjusted net
income is determined. For example, if a
short plan year is 5 months long, and the
fiscal year is 12 months long, then the
adjusted net income for the prior plan year
as determined in this Q&A S–2 is mul-
tiplied by
5
/12to determine the adjusted
net income used in calculating the excess
shareholder payment amount.
Q S–3: What does it mean for dividends
to be determined and declared in the same
manner for at least 5 consecutive years?
A S–3: (a) The aggregate amount of
dividends declared during the plan year for
which the installment acceleration amount
is determined is deemed to be determined
in the same manner for at least 5 con-
secutive years if the dividends are deter-
mined using the same formula (including
the same specified dollar amount, deter-
mined on either a per share basis, with ap-
propriate adjustmentsfor stock splits and
similar changes in capitalization, or on an
aggregate basis) as was used for dividends
declared during the 60-month period im-
mediately preceding the first day of that
plan year. Other examples of dividends de-
termined using the same formula include
dividends that increase by a fixed amount
each year, dividends that increase by a
fixed percentage each year, and dividends
that are a fixed percentage of income, earn-
ings, or other consistently applied measure
of profitability.
(b) If, at any time during the 60 months
immediately preceding the first day of the
plan year for which the installment acceler-
ation amount is determined, a plan sponsor
omitted its periodic dividend or the spon-
sor has existed for fewer than 60 months
prior to the first day of that plan year, the
exception under § 430(c)(7)(E)(i)(II) does
not apply.
Example S–1. (a) Assume that a plan sponsor that
elected to use an alternative amortization schedule for
the shortfall amortization base established as of Jan-
uary 1, 2011, has determined dividends in the same
manner for the 60-month period immediately preced-
ing January 1, 2012. The plan sponsor continues
to determine dividends in the same manner for div-
idends declared as of March 31, 2012, June 30, 2012,
and December 31, 2012, but declares a reduced divi-
dend as of September 30, 2012. Assume the follow-
ing dividends were declared as a result:
Date dividends declaredDividend amountDividend determined in the same manner as the
60-month period ending December 31, 2011
March 31, 2012
$100,000
Yes
June 30, 2012101,000
Yes
September 30, 2012
50,000
No
December 31, 201299,000
Yes
Total dividends declared during the plan year
$350,000
N/A
(b) In accordance with Q&A S–1 of this no-
tice, the excess shareholder payment amount for the
2012 plan year reflects the total dividends declared
during the plan year, or $350,000. However, the
amount of dividends eligible for the exception under
§ 430(c)(7)(E)(i)(II) excludes the dividend declared
September 30, 2012, because that dividend was not
determined in the same manner as dividends declared
during the 60-month periodimmediately preceding
the plan year for which the installment acceleration
amount is calculated. Accordingly, the amount of
dividends taken into account for purposes of Q&A
S–1(a)(ii) of this notice is $300,000, and the excess
shareholder payment amount for the 2012 plan year
is the excess of (i) the $350,000 in dividends declared
by the plan sponsor during the 2012 plan year plus
the aggregate amount paid for the redemption of
stock during 2012, over (ii) the adjusted net income
for the plan sponsor forthe fiscal year that ends
during 2011 or $300,000 if larger.
(c) For any excess shareholder payment amount
determined for the 2013 plan year, no dividends are
eligible for the exception under § 430(c)(7)(E)(i)(II),
because the dividends were not determined in the
same manner throughout the 60-month period imme-
diately preceding January 1, 2013.
Example S–2. (a) Assume that the sponsor of Plan
A has an October 1 – September 30 fiscal year and
elects to use an alternative amortization schedule for
Plan A for its plan year beginning July 1, 2011. As-
sume further that the dividends declared during the
plan year beginning July 1, 2011, total $1,200,000,
payments made for the redemption of stock during
the plan year beginning July 1, 2011, total $500,000,
and that the adjusted net income for the fiscal year
ending September 30, 2010, was $1,000,000.
(b) If the dividends declared during the plan
year beginning July 1, 2011, were determined in the
same manner as those declared during the 60 months
preceding July 1, 2011 (that is, during the period
beginning July 1, 2006, and ending June 30, 2011),
the exception under Q&A S–1 of this notice and
§ 430(c)(7)(E)(i)(II) applies to the dividends declared
during the plan year beginning July 1, 2011. In
such a case, the excess shareholder payment amount
for the plan year beginning July 1, 2011, is equal
to the excess of (i) the sum of dividends declared
by the plan sponsor during the plan year beginning
July 1, 2011, and amounts paid by the plan sponsor
for the redemption of stock during that plan year
($1,200,000 plus $500,000, or $1,700,000) over (ii)
the greater of the plan sponsor’s adjusted net income
for the fiscal year beginning October 1, 2009, and
ending September 30, 2010, or dividends declared
during the plan year beginning July 1, 2011 (the
greater of $1,000,000 or $1,200,000, or $1,200,000).
The excess shareholder payment amount for the plan
year beginning July 1, 2011, is therefore $500,000,
which is the excess of $1,700,000 over $1,200,000.
(c) However, if none of the dividends declared
during the plan year beginning July 1, 2011, were
determined in the same manner as those declared dur-
ing the 60-month period beginning July 1, 2006, and
ending June 30, 2011 (or if the dividends declared
during the 60-month period beginning July 1, 2006,
and ending June 30, 2011, were not determined
in the same manner throughout that period), then
the exception under Q&A S–1 of this notice and
§ 430(c)(7)(E)(i)(II) does not apply to the dividends
declared during the plan year beginning July 1, 2011.
In that case, the excess shareholder payment amount
for the plan year beginning July 1, 2011, would be
equal to $700,000, which is the excess of (i) the sum
of dividends declared by the plan sponsor during
the plan year beginning July 1, 2011, and amounts
paid by the plan sponsor for the redemption of stock
redeemed during that plan year, or $1,700,000, over
(ii) the plan sponsor’s adjusted net income for the
fiscal year beginning October 1, 2009, and ending
September 30, 2010 ($1,000,000).
Q S–4: How does the calculation of ex-
cess shareholder payment amounts change
if the installment acceleration amount is
to be allocated among plans with differing
plan years?
A S–4: (a) If on any date during a cal-
endar year (theapplicable calendar year)
there are two or more plans within the con-
trolled group for which an election has
been made to use an alternative amorti-
zation schedule (for which the restriction
period has not ended) and two or more
of those plans have different plan years,
then, for all plan years that begin in the
applicable calendar year, the excess share-
holder payment is determined as if the plan
January 10, 20112742011–2 I.R.B.

year were the calendar year. Accord-
ingly, subject to the special rules in Q&A
S–5 through Q&A S–8 of this notice, the
excess shareholder payment amount for a
plan year is calculated in accordance with
Q&A S–1 through Q&A S–3 of this no-
tice, but (i) using dividends declared by
the plan sponsor and the aggregate amount
paid for the redemption of stock, as de-
fined in Q&A S–1 of this notice, during
the applicable calendar year, (ii) using ad-
justed net income, as defined in Q&A S–2
of this notice, for the fiscal year ending
with or during the calendar year preced-
ing the applicable calendar year, and (iii)
determining whether dividends have been
determined and declared in the same man-
ner for at least 60 consecutive months in
accordance with Q&A S–3 of this notice
by using the 60 months immediately pre-
ceding the first day of the applicable cal-
endar year as the relevant period. In such
a case, the installment acceleration amount
is determined based on the applicable cal-
endar year in which the plan year begins
because both the excess shareholder pay-
ment amount and the excess compensation
amount are determined based on the appli-
cable calendar year.
(b) If the special rule of paragraph (a)
applies for an applicable calendar year but
did not apply in the preceding calendar
year, then, except as provided in paragraph
(c)ofthisQ&AS–4,theexcessshare-
holder payment for any plan year that be-
gan in the preceding calendar year and
ends in the applicable calendar year is de-
termined as if the plan year were the pre-
ceding calendar year.
(c) The special rule in paragraph (b) of
this Q&A S–4 does not apply if the date in
the applicable calendar year on which the
conditions of paragraph (a) of this Q&A
S–4 are first satisfied is after the close of all
the plan years that began in the prior calen-
dar year and end in the applicable calendar
year.
Example S–3. (a) The facts are the same as
inExample S–2, except that the plan sponsor also
elects to use an alternative amortization schedule
for Plan B, which has a plan year beginning March
1. The shortfall amortization base for Plan B is still
in the restriction period for the plan year beginning
March 1, 2011, and the installment acceleration
amount will be allocated between Plans A and B.
(b) The excess shareholder payment amount is
determined based on the calendar year in which the
plan years begin. Accordingly, the excess share-
holder payment amount allocated to Plan A for the
planyearbeginningJuly1,2011,andtoPlanBfor
the plan year beginning March 1, 2011, is based on
(i) the dividends declared by the plan sponsor and
amounts paid by the plan sponsor for the redemption
of stock as defined in Q&A S–1 of this notice during
the 2011 calendar year; and (ii) the plan sponsor’s
adjusted net income as defined in Q&A S–2 of this
notice for the fiscal year beginning October 1, 2009,
and ending September 30, 2010. Dividends declared
throughout the 2006 through 2010 calendar years (the
60-month period immediately preceding January 1,
2011) must have been determined and declared in
the same manner, in order for any dividends to be
eligible for the exception under § 430(c)(7)(E)(i)(II)
andQ&AS–1ofthisnotice.
Q S–5: Section § 430(c)(7)(E)(ii) pro-
vides that only dividends declared, and re-
demptions occurring,after February 28,
2010, are taken into account. How is this
rule applied?
A S–5: Only dividends declared,
and redemptions occurring, after
February 28, 2010, are taken into account
in determining the excess shareholder
payment amount that is included in the
installment acceleration amount for any
plan year. Accordingly, any dividends
declared on or before February 28,
2010, are not reflected in the installment
acceleration amount without regard to
when they are paid. In contrast, any stock
redemptions occurring after February 28,
2010, are reflected in the installment
acceleration amount without regard to
when they were announced.
Q S–6: Under what circumstances is a
distribution of the stock of the employer
taken into account in determining the ex-
cess shareholder payment?
A S–6: Pursuant to § 305(a), a dis-
tribution by a corporation of its stock is
generally not treated as a dividend and is
therefore not generally taken into account
in determining the excess shareholder pay-
ment. However, pursuant to § 305(b), a
distribution of stock that is described in
§ 305(b)(1) through (5) (for example, a
distribution of stock that has the result of
changing the proportionate interests of the
shareholders in the earnings and profits of
the corporation) is treated as a distribu-
tion of property to which § 301 applies and
therefore is a dividend that is taken into
account in determining the excess share-
holder payment, provided that the distribu-
tion is paid out of earnings and profits as
described in § 316(a).
Q S–7: Under § 430(c)(7)(E)(iv), re-
demptions of stock that are made pursuant
to a plan maintained with respect to em-
ployees, or that are made on account of the
death, disability, or termination of employ-
ment of an employee or shareholder, are
not taken into account. How is this rule
applied?
A S–7: (a) Redemptions of shares that
are made pursuant to a plan maintained
with respect to employees (whether or not
the plan is qualified) are not taken into ac-
count when determining the amount of ex-
cess shareholder payment amounts. For
this purpose, a plan maintained with re-
spect to employees that is not a qualified
plan does not include an agreement or ar-
rangement that covers only a single indi-
vidual, but instead is limited to a plan that
covers a category of employees.
(b) Redemptions that are made on ac-
count of the death, disability, or termi-
nation of employment of an employee or
shareholder, are not taken into account in
determining the excess shareholder pay-
ment amount that is included in the install-
ment acceleration amount. For this pur-
pose, a redemption is made on account of
death, disability, or termination of employ-
ment only if, as a result of the death, dis-
ability, or termination of employment of
the employee or shareholder, either (i) the
plan sponsor or any member of the plan
sponsor’s controlled group is required to
redeem the stock held by the shareholder
(even if the shareholder is not required to
tender the stock) or (ii) the shareholder is
required to tender the stock for redemption
(even if the plan sponsor or a member of
the plan sponsor’s controlled group is not
required to redeem the stock tendered).
(c) For example, if a company’s by-
laws require that the shares in the company
be held by active employees, an employee
who terminates employment is required to
tender his/her shares in the company for re-
demption. Any amount paid by the com-
pany to redeem these shares would not
be taken into account for purposes of de-
termining an excess shareholder payment
amount. However, if the spouse of a de-
ceased shareholder in a company that does
not require shares to be held by active em-
ployees voluntarily redeems the stock held
by the shareholder (under circumstances
not otherwise described in clause (i) or (ii)
of paragraph (b) of this Q&A S–7), the
amount paid by that company to redeem
these shares would be taken into account
when determining an excess shareholder
payment amount.
2011–2 I.R.B.275January 10, 2011

Q S–8: Section 430(c)(7)(E)(v) pro-
vides an exception with respect to certain
preferred stock. How is this rule applied?
A S–8: Under this exception, dividends
with respect to applicable preferred stock
are not taken into account in determining
the excess shareholder payment amount
that is included in the installment acceler-
ation amount to the extent that dividends
accrue with respect to that stock at a spec-
ified rate in all events and without regard
to the plan sponsor’s income, and interest
accrues on any unpaid dividends with re-
spect to that stock. In addition, redemp-
tions with respect to applicable preferred
stock are not taken into account in de-
termining the excess shareholder payment
amount that is included in the installment
acceleration amount if dividends accrue
with respect to that stock at a specified
rate in all events and without regard to
the plan sponsor’s income, and interest ac-
crues on any unpaid dividends with re-
spect to that stock. For this purpose, ap-
plicable preferred stock is preferred stock
that was originally issued before March 1,
2010, or that was originally issued prior
to that date and is subsequently reissued
with otherwise identical terms. In addi-
tion, applicable preferred stock includes
preferred stock that was issued on or after
March 1, 2010, and is held by an employee
benefit plan that is subject to the provisions
of Title I of ERISA and that is maintained
for the benefit of employees and former
employees of the plan sponsor and their
beneficiaries.
M. MERGERS AND ACQUISITIONS
Section 430(c)(2)(F)(iv) provides that
the Secretary of the Treasury is to prescribe
rules for the application of installment ac-
celeration amounts in any case where there
is a merger or acquisition involving a plan
sponsor that has elected to use an alterna-
tive amortization schedule in accordance
with § 430(c)(2)(D).
Q M–1: How does a merger or acqui-
sition affect the calculation of the excess
compensationamountdescribedinsection
III.C and the excess shareholder payment
amount described in section III.S?
A M–1: (a) If a plan sponsor that
elected to use an alternative amortization
schedule for any shortfall amortization
base merges with, acquires, or is acquired
by another company that was not in its
controlled group prior to the transaction,
and that other company either did not
sponsor a single-employer defined benefit
plan or did not elect to use an alterna-
tive amortization schedule for any plan it
sponsored, any aggregate compensation
amount with respect to employees of such
other company that would otherwise be
taken into account prior to the date of the
merger or acquisition is disregarded for
the purpose of calculating the amounts in
section III.C of this notice with respect
to any installment acceleration amounts
determined for the plan sponsor. Simi-
larly, any dividends declared by such other
company and any redemptions of stock
of such other company that occur prior to
the date of the transaction are ignored for
the purpose of calculating the amounts in
section III.S of this notice.
(b) If the other company involved in the
transaction described in paragraph (a) of
this Q&A M–1 sponsors a plan for which
an election was made to use an alternative
amortization schedule, the rule in para-
graph (a) of this Q&A M–1 does not ap-
ply. Accordingly, the installment accel-
eration amount is determined by combin-
ing the compensation amounts and share-
holder payment amounts for both compa-
nies involved in the transaction as if they
had been in the same controlled group be-
fore and after the transaction. The install-
ment acceleration amount is then allocated
as described in Q&A I–7 through Q&A
I–10 of this notice.
(c) For purposes of this Q&A M–1, (i)
any election to use an alternative amortiza-
tion schedule during the plan year in which
the transaction occursis treated as an elec-
tion that occurred prior to the date of the
transaction and (ii) a shortfall amortization
base that is not in its restriction period for
the plan year of the transaction is disre-
garded when determining whether a plan
sponsor has elected to use an alternative
amortization schedule.
(d)TherulesofthisQ&AM–1apply
regardless of whether the transaction is an
asset or a stock transaction.
Example M–1. (a) Assume that Company A and
Company B are separate companies that are not in
the same controlled group, and that Company A spon-
sors a single-employer defined benefit plan for which
an election was made to use an alternative amorti-
zation schedule for the 2010 plan year. Company
B sponsors a single-employer defined benefit plan
but did not elect to use an alternative amortization
schedule. Company A acquires Company B effective
July 1, 2011. Consider the following employees:
EmployeeEmployee XEmployee Y
Company
A
B
Compensation for 2011:
Paid before July 1, 2011
$ 400,000$750,000
Paid on or after July 1, 20111,100,000
750,000
Tot
al
$1,500,000$1,500,000
(b) The installment acceleration amount for 2011
for the plan sponsored by Company A reflects the
compensation paid to Employee X for all of 2011,
because Employee X was an employee of Company
A prior to the date of the acquisition. The threshold
for determining excess compensation for 2011 is
$1,014,000. Therefore $486,000 of Employee X’s
compensation is excess compensation. However,
only the compensation paid to Employee Y after
July 1, 2011, is considered when calculating the
2011 installment acceleration amount for the plan
sponsored by Company A, because Employee Y was
not in the same controlled group as Company A prior
to the date of the acquisition. Because the compen-
sation paid to Employee Y on and after July 1, 2011,
was under $1,014,000, none of Employee Y’s com-
pensation is consideredexcess compensation.
Example M–2. (a) The facts are the same as in
Example M–1, except that Company B, not Company
A, elected to use an alternative amortization schedule
for the 2010 plan year. The installment acceleration
amount for 2011 for the plan sponsored by Company
B reflects the compensationpaidtoEmployeeYfor
all of 2011, because Employee Y was an employee
of Company B prior to the date of the acquisition.
Therefore, $486,000 of Employee Y’s compensation
is excess compensation for the purpose of determin-
ing the installment acceleration amount for the 2011
plan year.
(b)OnlythecompensationpaidtoEmployeeX
after July 1, 2011, is considered when calculating
the 2011 installment acceleration amount for the plan
sponsored by Company B, because Employee X was
January 10, 20112762011–2 I.R.B.

not in the same controlled group as Company B prior
to the date of the acquisition. As a result, $86,000 of
Employee X’s compensation is excess compensation
for the purpose of determining the installment accel-
eration amount for the 2011 plan year.
Q M–2: Are amounts paid to purchase
stock pursuant to a merger or acquisition
reflected in the excess shareholder pay-
ment amount for the plan year in which the
transaction occurs?
A M–2: Any amounts paid to redeem
or purchase stock pursuant to a merger or
acquisition are not reflected in the excess
shareholder payment amount determined
according to section III.S of this notice,
regardless of whether the actual payment
occurs during the plan year in which the
transaction occurs.
E. ELECTIONS TO USE AN
ALTERNATIVE AMORTIZATION
SCHEDULE
Section 430(c)(2)(D)(iv)(III) provides
that a plan sponsor’s election under
§ 430(c)(2)(D) is to be made at such time
and in such form and manner as is pre-
scribed by the Secretary of the Treasury.
Section 430(c)(2)(D)(iv)(III) provides fur-
ther that any such election may be revoked
only with the consent of the Secretary,
after consultation with the Pension Benefit
Guaranty Corporation (PBGC).
Q E–1: How is an election made to use
an alternative amortization schedule for a
plan year?
A E–1: An election made on or after
January 1, 2011, must be made by the plan
sponsor, by providing written notification
of such election to both the plan’s enrolled
actuary and the plan administrator. Such
electionmustbesignedanddatedbythe
plan sponsor and must include all of the
following information:
(1) The name of the plan;
(2) The plan number;
(3) The name of the plan sponsor;
(4) The plan sponsor’s mailing address;
(5) The plan sponsor’s employer identi-
fication number;
(6) Which of the two alternative amor-
tization schedulesis being elected;
(7) The plan year for which the election
is being made;
(8) Whether an alternative amortization
schedule has been elected for another year,
and, if so, a statement that the same al-
ternative amortization schedule is being
elected; and
(9) A statement that the plan spon-
sor will notify the PBGC and plan par-
ticipants and beneficiaries pursuant to
§ 430(c)(2)(D)(vi) of the Code and ERISA
section 303(c)(2)(D)(vi).
Q E–2: What is the deadline for making
the election?
A E–2: The election must be made by
the latest of: (i) the last day of the plan
year for which the election is made, (ii)
30 days after the valuation date for the
plan year for which the election is made,
or (iii) January 31, 2011. For example,
if the valuation date for a plan is the first
day of the plan year, an election for the
plan year that begins on January 1, 2009,
or January 1, 2010, must be made by Jan-
uary 31, 2011; for the plan year that begins
on January 1, 2011, the election must be
made by December 31, 2011.
Q E–3: How does the ability to elect an
alternative amortization schedule apply to
multiple employer plans?
A E–3: (a) In the case of a multiple
employer plan to which § 413(c)(4)(A)
applies, the rules of § 430 and this sec-
tion are applied separately for each em-
ployer under the plan as if each employer
maintained a separate plan. Thus, each
employer under a multiple employer plan
may elect to use an alternative amortiza-
tion schedule independent of the elections
of other employers under the plan.
(b) In the case of a multiple employer
plan to which § 413(c)(4)(A) does not ap-
ply, the rules of § 430 and this notice are
applied as if all participants in the plan
were employed by a single employer, and
any reference to the plan sponsor means
the plan administrator within the meaning
of § 414(g).
N. NOTIFICATION TO
PARTICIPANTS, BENEFICIARIES,
AND THE PBGC
Section 303(c)(2)(D)(vi)(I) of ERISA
and § 430(c)(2)(D)(vi)(I) of the Code re-
quire a plan sponsor that elects funding re-
lief to give notice of the election to partic-
ipants and beneficiaries of the plan (pen-
sion funding relief notice).
Section 303(c)(2)(D)(vi)(II) of ERISA
and § 430(c)(2)(D)(vi)(II) of the Code re-
quire the plan sponsor to inform the PBGC
of such election in such form and manner
as the Director of the PBGC may prescribe.
The PBGC has informed the Treasury De-
partment and the Service that the form and
manner for complying with this require-
ment are the rules described in Q&A N–6
and Q&A N–7 of this section III.N.
Q N–1: When must the pension fund-
ing relief notice be provided to participants
and beneficiaries?
A N–1: The pension funding relief no-
tice must be provided to participants and
beneficiaries of the plan by 120 days after
the end of the plan year for which an al-
ternative amortization schedule is elected,
or by May 2, 2011, if later. For example,
if an alternative amortization schedule is
elected for a plan year beginning June 1,
2010, then the notice must be provided to
participants and beneficiaries by Septem-
ber 28, 2011. If the election for a plan is
made simultaneously for two plan years,
the notices for both elections can be com-
bined as long as the notice identifies both
years for which the election is made.
Q N–2: Which participants and benefi-
ciaries must receive the notice?
A N–2: Except as otherwise provided
in this section III.N, a pension funding re-
lief notice is required to be provided to all
plan participants and beneficiaries. How-
ever, the pension funding relief notice does
not have to be provided to any person who
either became a plan participant or benefi-
ciary after the last day of the last plan year
ending before the notice is due or ceased
to be a participant or beneficiary prior to
the date on which the pension funding re-
lief notice is provided.
Q N–3: How does the notice require-
ment affect multiple employer plans?
A N–3: (a) In the case of a multiple
employer plan to which § 413(c)(4)(A)
applies, the rules of § 430 are applied
separately for each employer under the
plan. Accordingly, the notice in this sec-
tion III.N must be provided only to those
participants or beneficiaries as described
in Q&A N–2 of this notice who are asso-
ciated with a plan sponsor which elects to
use an alternative amortization schedule.
(b) In the case of a multiple employer
plan to which § 413(c)(4)(A) does not ap-
ply, the rules of § 430 are applied as if all
participants in the plan were employed by
a single employer. Therefore, if an election
is made to use an alternative amortization
schedule, such election applies to the en-
tire plan and the notice must be provided
to all participants and beneficiaries of the
2011–2 I.R.B.277January 10, 2011

plan as described in Q&A N–2 of this no-
tice.
Q N–4: What information is required to
be in a pension funding relief notice?
A N–4: (a) A pension funding relief no-
tice must provide (1) the name of the plan
for which the election has been made, (2)
the plan year for which the election has
been made, (3) a general description of the
effect of the election, including the fact
that the election will delay pension fund-
ingandwhichofthetwoscheduleshas
been elected, and (4) the name, address,
and telephone number of the plan adminis-
trator or other contact person from whom
more information may be obtained.
(b) A pension funding relief notice must
bewritteninamannercalculatedtobeun-
derstood by the average plan participant or
beneficiary. In addition, the notice must be
written in such a manner that the average
participant or beneficiary will understand
the significance of the required informa-
tion in the notice. While a pension funding
relief notice may include any additional in-
formation that is necessary or helpful for
recipients to understand the required in-
formation in the notice, the notice should
not have the effect of misleading or mis-
informing recipientsor of distracting re-
cipients from the required information in
the notice. A pension funding relief notice
must be a separate notice and cannot be
combined with other information. How-
ever, a pension funding relief notice can be
provided at the same time as another notice
is provided; for example, a pension fund-
ing relief notice does not fail to meet the
requirements of this Q&A N–4 merely be-
cause it is provided at the same time as a
notice under section 101(f) of ERISA.
(c) The following examples illustrate
information that satisfies the requirements
of paragraph (a) of this Q&A N–4:
(i) ALTERNATIVE 1 — pension funding relief notice reflecting an election for a plan for one plan year
N
oticeRegarding[ENTERNAMEOFPLAN]
The employer sponsoring your pension plan has made an election permitted under Federal law to delay funding for the plan. The
election applies to the plan year beginning on [ENTER DATE] and ending on [ENTER DATE].
[ALTERNATIVE IF 2 PLUS 7-YEAR SCHEDULE IS ELECTED: Without the election, Federal law generally requires that any
increase in the amount by which the plan is underfunded for a plan year be paid off over 7 years. However, the election allows the
increase in the amount by which the plan is underfunded for this plan year to be paid off over 9 years, with the payments for the
first 2 years limited to interest on that increase.]
[ALTERNATIVE IF 15-YEAR SCHEDULE IS ELECTED: Without the election, Federal law generally requires that any increase
in the amount by which the plan is underfunded for a plan year be paid off over 7 years. However, the election allows the increase
in the amount by which the plan is underfunded for this plan year to be paid off in smaller annual payments over 15 years.]
If you have any questions, contact [ENTER NAME, ADDRESS, AND TELEPHONE NUMBER FOR CONTACT INFORMATION].
(ii) ALTERNATIVE 2 — pension funding relief notice reflecting an election for a plan for two plan years
N
oticeRegarding[ENTERNAMEOFPLAN]
The employer sponsoring your pension plan has made elections permitted under Federal law to delay funding for the plan. The
elections apply to the plan year beginning on [ENTER DATE] and ending on [ENTER DATE], and to the plan year beginning on
[ENTER DATE] and ending on [ENTER DATE].
[ALTERNATIVE IF 2 PLUS 7-YEAR SCHEDULE IS ELECTED: Without the elections, Federal law generally requires that any
increase in the amount by which the plan is underfunded for a plan year be paid off over 7 years. However, for each of these
years, the election allows the increase in the amount by whichthe plan is underfunded for the plan year to be paid off over 9
years, with the payments for the first 2 years limited to interest on that increase.]
[ALTERNATIVE IF 15-YEAR SCHEDULE IS ELECTED: Without the elections, Federal law generally requires that any increase
in the amount by which the plan is underfunded for a plan year be paid off over a period of 7 years. However, the election
allows the increase in the amount by which the plan is underfunded for each of these plan years to be paid off in smaller
annual payments over 15 years.
If you have any questions, contact [ENTER NAME, ADDRESS, AND TELEPHONE NUMBER FOR CONTACT INFORMATION].
Q N–5: What are the acceptable meth-
ods of providing the pension funding relief
notice? In particular, can the notice be pro-
vided electronically?
A N–5: The pension funding relief no-
tice must be in writing and may be fur-
nished in any paper or electronic form to
the extent such form is reasonably acces-
sible to persons to whom the notice is re-
quired to be provided. Permissible elec-
tronic methods include those permitted un-
der regulations of the Department of Labor
January 10, 20112782011–2 I.R.B.

at 29 C.F.R. § 2520.104b–1(c) and those
described at § 54.4980F–1, Q&A–13(c).
Q N–6: How does a plan sponsor elect-
ing pension funding relief comply with the
requirement to notify the PBGC of such
election?
A N–6: A copy of an election made for
a plan that is covered by the PBGC must
bee-mailedtothePBGCatsingle-
employer.funding.relief.election@pbgc.gov.
The subject line of the e-mail must
contain the plan sponsor’s employer
identification number, the plan number,
and the name of the plan. See Q&A T–1
of this notice for additional information
that may be required for elections made
before January 1, 2011.
Q N–7: What is the deadline for notify-
ing the PBGC?
A N–7: PBGC notification must be
made by the later of: (i) 30 days after the
date the election is made or (ii) January 31,
2011.
CP. ELIGIBLE CHARITY PLANS
Section 202(b) of PRA 2010 provides
that delayed effective dates under section
104 of PPA ’06 are applicable to eligible
charity plans.
Q CP–1: What is an eligible charity
planforpurposesofsection202(b)ofPRA
2010?
A CP–1: (a) A plan is an eligible char-
ity plan for a plan year if it is maintained by
more than one employer, each of which is
described in § 501(c)(3), determined with-
out regard to whether the employers are
members of the same controlled group.
(b) In accordance with section 104(a) of
PPA ’06 as amended by section 202(b) of
PRA 2010, the delayedeffective dates un-
der section 104 with respect to an eligible
charity plan only apply to a plan that was
in existence as of July 26, 2005, and that
was an eligible charity plan for the plan
year that includes that date. Under section
104 of PPA ’06, the rules of §§ 430 and
436 do not apply with respect to an eligible
charity plan until theearlier of (i) the first
plan year in which the plan ceases to be an
eligible charity plan and (ii) the first plan
year beginning on or after January 1, 2017.
Therefore, the delay ineffective dates un-
der section 104 with respect to an eligible
charity plan does not apply to a plan es-
tablished after July 26, 2005, or to a plan
that was not an eligible charity plan on that
date. In addition, for plan years that begin
before January 1, 2017, §§ 430 and 436 ap-
plytoaplanthatwasaneligiblecharity
plan on July 26, 2005, beginning with the
firstplanyearduringwhichtheplanfails
to be an eligible charity plan.
R. REPORTING REQUIREMENTS
Notice 2010–55, 2010–33 I.R.B. 253,
provides that, in the case of a plan year
that ends before guidance on the special
funding rules under PRA 2010 is issued,
a plan sponsor will be permitted to elect
to use an alternative amortization schedule
under PRA 2010 without regard to whether
the Form 5500 (and Schedule SB) has been
filed for that plan year. However, Notice
2010–55 did not preclude plan sponsors
from electing to use the special funding
rules before such guidance was issued, nor
did it preclude enrolled actuaries from re-
porting shortfall amortization installment
amounts on the Schedule SB reflecting
their understanding of the calculations un-
der the alternative amortization schedules.
The Service expects that some plan
sponsors may have made an election to
use an alternative amortization schedule
prior to the issuance of this notice, and
that at least some of these elections may
not have complied with the requirements
of this notice.
In addition, the Service expects that
some plan sponsors have elected (or will
elect) to use an alternative amortization
schedule for a plan year that ended prior
to the issuance of this notice. For some
of these plans, the Schedule SB for that
plan year may reflect (1) a minimum re-
quired contribution that does not take the
alternative amortization schedule into ac-
count, or (2) a minimum required contribu-
tion that takes the alternative amortization
schedule into account but is different than
the amount determined using the rules in
this notice.
Q R–1: If, in accordance with Notice
2010–55, the plan sponsor elected to use
an alternative amortization schedule for
the2008or2009planyear,andtheelec-
tion was not reflected in the computations
on the Schedule SB filed with the Form
5500 or Form 5500–SF for the relevant
plan year, how should the reduced short-
fall amortization installments be reflected
in the reporting for the plan?
A R–1: (a) The filing of an amended
Form 5500 or Form 5500–SF for the 2008
or 2009 plan year is not required solely
because the plan sponsor elected to use an
alternative amortization schedule for that
plan year which was not reflected in the
computations on the Schedule SB. How-
ever, the Schedule SB filed with the Form
5500 or Form 5500–SF for a subsequent
plan year no later than the 2010 plan year
must accurately reflect the effect of any
election to use an alternative amortization
schedule for the 2008 or 2009 plan year on
the calculation of the minimum required
contribution, determined in accordance
with this notice. To the extent that the
amounts shown on the Schedule SB for
the subsequent plan year are different than
the amounts shown on the Schedule SB
for prior years, this difference should be
explained in attachments to the Schedule
SB for such subsequent plan year as ex-
plained in paragraphs (b), (c), (d), and (e)
of this Q&A R–1 (whichever apply).
(b) A plan sponsor’s election to use an
alternative amortization schedule for the
2008 plan year will affect the minimum re-
quired contribution and either the amount
of excess contributions or the amount of
the unpaid minimum required contribution
for the 2008 and 2009 plan years. If, in
accordance with Q&A T–2 of this notice,
the plan sponsor elects to add an additional
amount to the plan’s prefunding balance as
a result of the election for the 2008 plan
year made after the Schedule SB for the
2009 plan year is filed, the plan’s prefund-
ing balance as of the beginning of the 2009
plan year as reported on Line 13 of the
Schedule SB filed for the 2009 plan year
will be different than the actual amount of
the prefunding balance as of the beginning
of the 2009 plan year that must be reported
on Line 7 of the Schedule SB filed for the
2010 plan year. In this situation, this dif-
ference should be explained in an attach-
ment to Line 7 of the Schedule SB filed
for the 2010 plan year. Additionally, the
election for the 2008 plan year will affect
the amount of excess contributions for the
2009 plan year. Accordingly, the amount
reported on Line 11a of the Schedule SB
for the 2010 plan year will be different
than the amount reported on Line 38 of the
Schedule SB filed for the 2009 plan year.
The attachment already described in the in-
structions for Line 9 of the Schedule SB
filed for the 2010 plan year is an appropri-
2011–2 I.R.B.279January 10, 2011

ate means for providing an explanation of
this difference.
(c) A plan sponsor’s election to use
an alternative amortization schedule for
the 2008 plan year will affect the plan’s
minimum required contribution for both
the 2008 and 2009 plan years. If an unpaid
minimum required contribution was re-
ported on Line 40 of the Schedule SB filed
for the 2009 plan year before the election
to use an alternative amortization sched-
ule was made, then the amount on Line
28 of the Schedule SB for the 2010 plan
year will be different than that amount.
The attachment already described in the
instructions for Line 9 of the Schedule SB
filed for the 2010 plan year is an appropri-
ate means for providing an explanation of
this difference.
(d) If the plan sponsor’s election to use
an alternative amortization schedule for
the 2008 plan year is first reflected on the
Schedule SB for the 2009 plan year, the
amount on Line 11a of the Schedule SB
for the 2009 plan year will be different
than Line 38 of the Schedule SB for the
2008 plan year. The attachment already
described in the instructions for Line 9 of
the Schedule SB for the 2009 plan year is
an appropriate means for providing an ex-
planation of this difference.
(e) A plan sponsor’s election to use
an alternative amortization schedule for
the 2009 plan year after the Schedule SB
is filed for that plan year will affect the
minimum required contribution and either
the amount of excess contributions or the
amount of the unpaid minimum required
contribution for the 2009 plan year. Ac-
cordingly, the amount reported on Line 11a
of the Schedule SB for the 2010 plan year
will be different than the amount reported
on Line 38 of the Schedule SB filed for the
2009 plan year (or in the case of a change
in the amount of the unpaid minimum re-
quired contribution the amount reported on
Line 28 of the Schedule SB for the 2010
plan year will be different than the amount
reported on Line 40 of the Schedule SB for
the 2009 plan year). The attachment al-
ready described in the instructions for Line
9 of the Schedule SB filed for the 2010
plan year is an appropriate means for pro-
viding an explanation of this difference.
Q R–2: If the plan sponsor elected to
use an alternative amortization schedule
for the 2008 or 2009 plan year before the
Form 5500 or Form 5500–SF for those
plan years were filed, and the calcula-
tions of the plan’s alternative amortization
schedule reflected on the forms filed be-
fore this guidance is reflected are different
than the calculations required under this
notice, how should the revised calcula-
tions be reflected in the reporting for the
plan?
A R–2: (a) The minimum required con-
tribution for the affected plan year must be
calculated in accordance with the rules of
this notice, regardless of whether the min-
imum required contribution amount was
originally determined using a reasonable
interpretation of the statute.
(b) The filing of an amended Form 5500
or Form 5500–SF for the 2008 or 2009
plan year is not required solely to reflect
changes in the calculation of the minimum
required contribution as a result of apply-
ing the rules in this notice. However, the
Schedule SB filed with the Form 5500 or
Form 5500–SF for a subsequent plan year
no later than the 2010 plan year must ac-
curately reflect the effect of any election
to use an alternative amortization schedule
for the 2008 or 2009 plan year on the cal-
culation of the minimum required contri-
bution determined in accordance with this
notice. To the extent that the amounts
shown on the Schedule SB for the sub-
sequent plan year are different than the
amounts shown on the Schedule SB for
prior years, this difference should be ex-
plained in attachments to the Schedule SB
for the 2010 plan year as explained in
Q&A R–1.
Q R–3: May a plan sponsor’s election
to use an alternative amortization schedule
for the 2008 or 2009 plan year be reflected
in the filing of an amended Form 5500 or
Form 5500–SF for the 2008 or 2009 plan
year (or both, as applicable)?
A R–3: Yes. In lieu of the reporting
procedure described in Q&A R–1 and
Q&A R–2 of this notice, an amended Form
5500 or Form 5500–SF with a revised
Schedule SB showing the amounts based
on the alternative amortization schedule
and the provisions of this notice is permit-
ted to be filed.
Q R–4: How should the plan spon-
sor respond to any inquiries from the Ser-
vice regarding Form 5330 if the plan spon-
sor elected to use an alternative amortiza-
tion schedule after the Form 5500 or Form
5500–SF was filed with a Schedule SB that
did not reflect the reduced shortfall amor-
tization installments?
A R–4: (a) If a plan sponsor expects
that an unpaid minimum required contri-
bution shown on the Schedule SB will
be eliminated by an election that the plan
sponsor intends to make to use an alter-
native amortization schedule, Form 5330
should not be filed. However, when a
Schedule SB showing an unpaid mini-
mum required contribution is filed, and
the plan sponsor does not timely file a
Form 5330 to pay the associated excise
tax under § 4971(a), the Service will nor-
mally send a notice that informs the plan
sponsor that the Form 5330 and the excise
tax are due. In this case, the plan sponsor
should respond to the notice, advising the
Service that the reported unpaid minimum
required contribution will be eliminated
by an election to use an alternative amorti-
zation schedule and providing supporting
evidence thereof.
(b) If the plan sponsor expects to have
an unpaid minimum required contribu-
tion for the plan year once the alternative
amortization schedule is reflected but did
not file a Form 5330 when due, the plan
sponsor should file a Form 5330 reflecting
the corrected unpaid minimum required
contribution and pay the excise tax under
§ 4971(a) as soon as possible in order to
minimize interest and penalty charges.
Q R–5: How should the effect of the
plan sponsor’s election to use an alterna-
tive amortization schedule be reflected on
the Schedule SB?
A R–5: (a) If a plan sponsor’s election
to use an alternative amortization schedule
is reflected on the Schedule SB for a plan
year, the shortfall amortization installment
reported on Line 32a of the Schedule SB
(and the information reported in the attach-
ment to Line 32a) must reflect the calcula-
tion of the installment as determined un-
der this notice. However, any Schedule
SB filed for plan years ending before De-
cember 17, 2010, is not required to reflect
the election. See Q&A R–1 and Q&A R–2
of this notice for rules regarding reconcil-
iation of amounts affected by the election
when filing Schedule SB for the plan for a
subsequent year.
Q R–6: How are the rules of this section
III.R applied to plans for which Schedule
SB is not required to be filed, pursuant
to the instructions for Form 5500–EZ and
Form 5500–SF?
January 10, 20112802011–2 I.R.B.

A R–6: Schedule SB is not required to
be filed for plans for which Form 5500–EZ
is filed and certain plans for which Form
5500–SF is filed. For these plans, the
Schedule SB must be completed (includ-
ing being signed by the enrolled actuary)
and delivered to the plan administrator,
who must retain it. With respect to these
plans, the rules of this section III.R are ap-
plied by substituting the completion and
delivery of the Schedule SB for the filing
of the Schedule SB.
T. TRANSITION RULES
Q T–1: What are the consequences if
a plan sponsor made an election to use an
alternative amortization schedule prior to
January 1, 2011, but the election did not
include all of the information required in
Q&A E–1 of this notice?
A T–1: (a) If a plan sponsor made an
election to use an alternative amortization
schedule prior to January 1, 2011, but the
sponsor did not fulfill all the requirements
pertaining to an election to use an alterna-
tive amortization schedule in Q&A E–1 of
this notice, the fact that the sponsor did not
meet all such requirements does not inval-
idate the election, and does not permit the
sponsor to revoke that election without re-
ceiving approval from the IRS.
(b) Any sponsor that made such an elec-
tion must notify participants of that elec-
tion by the deadline set forth in Q&A N–1
of this notice regardless of whether the
election to use an alternative amortization
schedule was made before, on, or after Jan-
uary 1, 2011.
(c) Any sponsor that made such an elec-
tion for a plan that is covered by the PBGC
must include in the email notification to
the PBGC described in Q&A N–6 of this
notice any information described in Q&A
E–1 of this notice whether or not that in-
formation was included in the election.
Q T–2: If a plan sponsor’s election to
use an alternative amortization schedule
for a plan year creates or increases the ex-
cess contributions for that plan year after
the deadline for making an election to in-
crease the prefunding balance for that year,
can the plan sponsor still elect to increase
the prefunding balance by the additional
excess contributions?
A T–2: (a) The minimum required con-
tribution for a plan may decrease as a result
of an election to use an alternative amorti-
zation schedule when the provisions of this
notice are applied. This can occur either if
theplansponsormakesanelectiontouse
an alternative amortization schedule that
was not reflected in the Schedule SB orig-
inally prepared for the plan year, or if the
plan’s enrolled actuary had prepared the
Schedule SB reflecting an election to use
an alternative amortization schedule and
showing a minimum required contribution
amount that was larger than the amount re-
quired under this notice.
(b) If a plan sponsor timely made a
valid standing election in accordance with
§ 1.430(f)–1(f)(1)(ii) to add the maximum
amount to the prefunding balance, then
any adjustments made to the minimum re-
quired contribution in accordance with this
notice will automatically increase the pre-
funding balance if the minimum required
contribution is reduced. However, a plan
sponsor can make a written election to
temporarily suspend the standing election
retroactively so that all or part of the ex-
cess contributions created as a result of ap-
plying the provisions of this notice are not
added to the prefunding balance.
(c) If a plan sponsor had not made a
standing election forthe affected plan year
(or had temporarily suspended a stand-
ing election retroactively, as described in
paragraph (b) of this Q&A T–2), the plan
sponsor may make an election to increase
the prefunding balance by an amount no
greater than the amount of the increase in
excess contributionsfor the plan year re-
sulting from the election to use an alterna-
tive amortization schedule when the provi-
sions of this notice are applied.
(d) Plan sponsors that wish to increase
the prefunding balance by any increase in
excess contributions that results from an
election to use an alternative amortization
schedule in accordance with the provisions
of this notice should take into account the
effect of the increase in the prefunding bal-
ance on the adjusted funding target attain-
ment percentage (“AFTAP”) as defined in
§ 1.436–1(j)(1), and the implications of
that change on compliance with the re-
quirements of section 206(g) of ERISA
and § 436 of the Code for plan years begin-
ning with the year to which that increase
applies.
Q T–3: If a plan sponsor elected to use
the funding standard carryover balance or
the prefunding balance (funding balances)
to offset the minimum required contribu-
tion for a plan year, and the minimum re-
quired contribution is decreased as a result
of making an election to apply an alterna-
tive amortization schedule in accordance
with the provisions of this notice, can the
election to use the funding balance(s) be
revoked?
A T–3: (a) The minimum required con-
tribution for a plan may decrease when
aplansponsormakesanelectiontouse
an alternative amortization schedule in ac-
cordance with the provisions of this no-
tice. This can occur either if the plan spon-
sor makes an election to use an alterna-
tive amortization schedule that was not re-
flected in the Schedule SB originally pre-
pared for the plan year, or if the plan’s en-
rolled actuary had prepared the Schedule
SB reflecting an election to use an alter-
native amortization schedule and showing
a minimum required contribution that was
larger than the amount required under this
notice.
(b) If the plan sponsor had made a
timely, valid standing election under
§ 1.430(f)–1(f)(1)(ii) to use the funding
balances to offset the minimum required
contribution, the amount of the funding
balances used to offset the minimum re-
quired contribution will automatically
be adjusted to reflect the amount of the
revised minimum required contribution.
However, a plan sponsor can make a writ-
ten election to temporarily suspend the
standing election retroactively so that the
amount of the funding standard carry-
over balance and the prefunding balance
is unchanged as a result of applying the
provisions of this notice.
(c) Section 1.430(f)–1(f)(3) provides
in general that elections with respect to
the plan’s prefunding balance or funding
standard carryover balance are irrevoca-
ble and must be unconditional. However,
§ 1.430(f)–1(f)(3)(ii) provides that an
election to use the prefunding balance
or funding standardcarryover balance to
offset the minimum required contribution
for a plan year is permitted to be revoked
to the extent the amount the plan sponsor
elected to use to offset the minimum re-
quired contribution exceeds the minimum
required contribution for the plan year.
This election must generally be made by
the end of the plan year for which the
election was made (if the valuation date
is the first day of the plan year) or the
due date (including extensions) for filing
2011–2 I.R.B.281January 10, 2011

Schedule SB of Form 5500 (if the valu-
ation date is not the first day of the plan
year). However, a plan sponsor is permit-
tedtomakeanadditionalelectionunder
§ 1.430(f)–1(f)(3)(ii), to the extent that
making an election to use an alternative
amortization schedule in accordance with
the provisions of this notice reduced the
minimum required contribution for the
plan year.
(d) Except as provided in paragraph (c)
of this Q&A T–3, a plan sponsor is not
permitted to revoke an affirmative election
to use the funding balances to offset the
minimum required contribution regardless
of whether it was made before or after the
application of the provisions of this notice.
(e) Plan sponsors who wish to adjust
the funding standard carryover balance
or the prefunding balance under para-
graphs (b) or (c) above should take into
account the effect of that adjustment on
the AFTAP as defined in § 1.436–1(j)(1),
and the implications of that change on
compliance with the requirements of
section 206(g) of ERISA and § 436 of the
Code for plan years beginning with the
year to which that adjustment applies.
Q T–4: What is the deadline for making
the elections described in Q&A T–2 and
Q&A T–3 of this notice?
A T–4: Any of the elections described
in Q&A T–2 or Q&A T–3 of this no-
tice (relating to changes in elections with
respect to the funding standard carry-
over balance and the prefunding balance)
must be made no later than the due date
that would otherwise apply for mak-
ing the election under § 1.430(f)–1(f) or
March 31, 2011, if later.
IV. PAPERWORK REDUCTION ACT
The collections of information con-
tained in this notice have been reviewed
and approved by the Office of Manage-
ment and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C.
§ 3507) under control number 1545–2196.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
notice are in section III of this notice. The
collections of information are required to
determine the application of the special
funding rules under § 430(c)(2)(D) and to
comply with the statutory notice require-
ments related to those rules. The col-
lections of information are mandatory for
those plan sponsors making an election
to apply the special funding rules. The
likely respondents are sponsors of single
employer defined benefit plans.
For all information except for Q&A
N–6, Q&A N–7, and Q&A T–1(c) of this
notice (relating to information provided
to the Pension Benefit Guaranty Corpora-
tion (PBGC)), the estimated total number
of respondents is 34,100 plans. The es-
timated annual burden per respondent
varies from 30 minutes to 50 minutes, de-
pending on individual circumstances, with
an estimated average of 45 minutes. The
estimated total annual reporting and/or
recordkeeping burden is 25,700 hours.
The information collected in Q&A
N–6, Q&A N–7, and Q&A T–1(c) applies
only to single-employer defined benefit
plans covered by the PBGC. For this infor-
mation, the estimated total number of re-
spondents is 13,820 plans. The estimated
annual burden per respondent/record-
keeper is 15 minutes.
1
The estimated total
annual reporting and/or recordkeeping
burden is 3,455 hours.
Estimates of the annualized cost to re-
spondents for the hour burdens shown are
not available at this time.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by § 6103.
V. DRAFTING INFORMATION
The principal author of this notice is
Carolyn Zimmerman of the Employee
Plans, Tax Exempt and Government Enti-
ties Division. For further information re-
garding this notice, please contact the Em-
ployee Plans taxpayer assistance answer-
ing service at 1–877–829–5500 (a toll-free
number) or e-mail Ms. Zimmerman at
RetirementPlanQuestions@irs.gov.
Certain Changes in Method of
Accounting for Organizations
to Which Section 833 Applies
Notice 2011–4
SECTION 1. PURPOSE
This notice provides procedures for a
taxpayer to obtain automatic consent to
change its method of accounting for un-
earned premiums by reason of § 833(c)(5)
of the Internal Revenue Code (Code).
Rev. Proc. 2008–52, 2008–2 C.B. 587,
as amplified, clarified, and modified by
Rev. Proc. 2009–39, 2009–38 I.R.B. 371,
is modified; Notice 2010–79, 2010–49
I.R.B. 809, is clarified and modified.
SECTION 2. BACKGROUND
Section 833 of the Code provides spe-
cial rules for existing Blue Cross and Blue
Shield organizations within the meaning
of § 833(c)(2), and certain other organiza-
tions that are described in § 833(c)(3).
Section 9016 of the Patient Protection
and Affordable Care Act (H.R. 3590, P.L.
111–148) (the “Affordable Care Act”)
added § 833(c)(5) to the Code, effec-
tive for taxable years beginning after
December 31, 2009. Section 833(c)(5)
provides that § 833 does not apply to an
otherwise-eligible organization unless the
organization’s medical loss ratio (MLR)
during the taxable year is not less than 85
percent.
The application of § 833 in a taxable
year followed by nonapplication of that
provision in the subsequent taxable year
(orvice versa) may result in one or more
changes in accounting method. For ex-
ample, accounting for 100 percent of un-
earned premiums under § 833(a)(3) in one
year, but only 80 percent of unearned pre-
miums under § 832(b)(4) in the next year
is a change in method of accounting. Like-
wise, the loss (or recovery) of insurance
company status may implicate a number of
changes in methods of accounting because
some methods of accounting are available
only to insurance companies under Sub-
chapter L. The specialdeduction allowed
under §§ 833(a)(2) and 833(b) is not, how-
ever, a method of accounting.
1
The PBGC expects that single-employer plans will incur this burden twice, in2011 and 2012. The figures shown represent the average annual number of respondents and reporting and/or
recordkeeping burden over a 3-year period.
January 10, 20112822011–2 I.R.B.

SECTION 3. SCOPE
This notice applies to an existing Blue
Cross or Blue Shield organization within
the meaning of § 833(c)(2), or an organi-
zation described in § 833(c)(3), that is re-
quired to change its method of account-
ing for unearned premiums by reason of
failing to meet the MLR requirements of
§ 833(c)(5), or by reason of meeting the
MLR requirements of § 833(c)(5) after
failing to meet those requirements in a
prior year.
SECTION 4. CHANGES IN METHOD
OF ACCOUNTING
A taxpayer that is required to change
methods of accounting for unearned pre-
miums under a situation described in Sec-
tion 3 of this notice, must use the automatic
change in method procedures of Rev. Proc.
2008–52, or its successor, as modified by
this notice.
SECTION 5. EFFECT ON OTHER
DOCUMENTS
.01 Rev. Proc. 2008–52 is modified to
add new section 25.02 to the APPENDIX,
to read as follows:
SECTION 25.02.Certain Changes in
Method of Accounting for Organizations
to which Section 833 Applies
(1)Description of change. This change
applies to an existing Blue Cross or Blue
Shield organization within the meaning of
§ 833(c)(2), or an organization described
in § 833(c)(3), that is required to change
its method of accounting for unearned pre-
miums by reason of failing to meet the
MLR requirements of § 833(c)(5), or by
reason of meeting the MLR requirements
of § 833(c)(5) after failing to meet those
requirements in a prior year.
(2)Scope limitations inapplicable.The
scope limitations of section 4.02 of this
revenue procedure do not apply to this
change.
(3)Accelerated § 481(a) adjustment pe-
riod in certain situations. In addition to the
circumstances set forth in section 5.04(3)
of this revenue procedure, the § 481 adjust-
ment period provided in section 5.04(1)
will be accelerated in the event a taxpayer
with a remaining balance of a § 481(a) ad-
justment that arose by reason of a change
in method of accounting described in this
section is required to effect another change
in method of accounting described in this
section. Thus, for example, a taxpayer
that fails to satisfy the requirements of
§ 833(c)(5) and as a result has a positive
§ 481(a) adjustment is required to acceler-
ate the remaining balance, if any, of that
adjustment in a subsequent taxable year in
which the taxpayer meets the requirements
of § 833(c)(5).
(4)Designated automatic accounting
method change number. The designated
automatic accounting method change
number for a change under section 25 of
this APPENDIX is “25.02.” See section
6.02(4) of this revenue procedure.
(5)Contact information.Forfur-
ther information regarding this section,
please contact Rebecca L. Baxter at (202)
622–7117 (not a toll-free call).
.02 Section 3.09 of Notice 2010–79
is clarified and modified to provide that
changes in method of accounting for un-
earned premiums that are required as
a result of the operation of § 833(c)(5)
must be implemented under the automatic
method change procedures of Rev. Proc.
2008–52, or its successor.
SECTION 6. EFFECTIVE DATE
This notice is effective December 27,
2010.
DRAFTING INFORMATION
The principal author of this notice is
Rebecca L. Baxter of the Office of As-
sociate Chief Counsel (Financial Institu-
tions & Products (CC:FIP:B04)). For fur-
ther information regarding this notice, con-
tact Ms. Baxter at (202) 622–7117 (not a
toll-free call).
26 CFR 601.201: Rulings and determination letters.
Rev. Proc. 2011–9
TABLE OF CONTENTS
SECTION 1. WHAT IS THE PURPOSE OF THIS REVENUE PROCEDURE?
.............................................. 285
.01Descriptionoftermsusedinthisrevenueprocedure.............................................................. 285
.02Updatedannually............................................................................................ 285
SECTION 2. NATURE OF CHANGES AND RELATED REVENUE PROCEDURES......................................... 286
.01Rev.Proc.2010–9issupersededandtheprocessingofapplicationsisnowcentralized............................... 286
.02Relatedrevenueprocedures................................................................................... 286
SECTION 3. WHAT ARE THE PROCEDURES FOR REQUESTING RECOGNITION OF EXEMPT
STATUS?
............................................................................................. 286
.01Ingeneral................................................................................................... 286
.02Userfee.................................................................................................... 286
.03Form1023application....................................................................................... 286
.04Form1024application....................................................................................... 286
.05Letterapplication............................................................................................ 286
2011–2 I.R.B.283January 10, 2011

.06Form1028application....................................................................................... 286
.07Form8871noticeforpoliticalorganizations.................................................................... 286
.08Requirementsforasubstantiallycompletedapplication .......................................................... 287
.09Terroristorganizationsnoteligibletoapplyforrecognitionofexemption........................................... 287
SECTION 4. WHAT ARE THE STANDARDS FOR ISSUING A DETERMINATION LETTER OR RULING
ON EXEMPT STATUS?
................................................................................. 287
.01Exemptstatusmustbeestablishedinapplicationandsupportingdocuments ........................................ 287
.02Determinationletterorrulingbasedsolelyonadministrativerecord................................................ 287
.03Exemptstatusmayberecognizedinadvanceofactualoperations ................................................. 288
.04NoletterifexemptstatusissueinlitigationorunderconsiderationwithintheService ............................... 288
.05Incompleteapplication....................................................................................... 288
.06Evenifapplicationiscomplete,additionalinformationmayberequired............................................ 288
.07Expeditedhandling.......................................................................................... 288
SECTION 5
. WHAT OFFICES ISSUE AN EXEMPT STATUS DETERMINATION LETTER OR RULING?
..
.................. 289
.01 EO Det
erminationsissuesadeterminationletterinmostcases ..................................
.................. 289
.02 Certa
inapplicationsreferredtoEOTechnical.................................................
.................. 289
.03 Tech
nicaladvicemayberequestedincertaincases ............................................
.................. 289
.04 Tech
nicaladvicemustberequestedincertaincases............................................
.................. 289
SECTION 6. WITHDRAWAL OF AN APPLICATION................................................................... 289
.01Applicationmaybewithdrawnpriortoissuanceofadeterminationletterorruling .................................. 289
.02§7428implicationsofwithdrawalofapplicationunder§501(c)(3)................................................ 289
SECTION 7. WHAT ARE THE PROCEDURES WHEN EXEMPT STATUS IS DENIED?..................................... 289
.01Proposedadversedeterminationletterorruling ................................................................. 289
.02AppealofaproposedadversedeterminationletterissuedbyEODeterminations .................................... 290
.03ProtestofaproposedadverserulingissuedbyEOTechnical...................................................... 290
.04Finaladversedeterminationletterorrulingwherenoappealorprotestissubmitted ................................. 290
.05HowEODeterminationshandlesanappealofaproposedadversedeterminationletter .............................. 290
.06ConsiderationbytheAppealsOffice........................................................................... 290
.07IfaprotestofaproposedadverserulingissubmittedtoEOTechnical ............................................. 290
.08Anappealorprotestmaybewithdrawn ........................................................................ 290
.09Appealorprotestandconferencerightsnotapplicableincertainsituations ......................................... 290
SECTION 8. DISCLOSURE OF APPLICATIONS AND DETERMINATION LETTERS AND RULINGS....................... 291
.01Disclosureofapplications,supportingdocuments,andfavorabledeterminationlettersorrulings...................... 291
.02Disclosureofadversedeterminationlettersorrulings............................................................ 291
.03DisclosuretoStateofficialswhentheServicerefusestorecognizeexemptionunder§501(c)(3)....................... 291
.04DisclosuretoStateofficialsofinformationabout§501(c)(3)applicants............................................ 291
SECTION 9. REVIEW OF DETERMINATION LETTERS BY EO TECHNICAL........................................... 291
.01DeterminationlettersmaybereviewedbyEOTechnicaltoassureuniformity....................................... 291
.02ProceduresforcaseswhereEOTechnicaltakesexceptiontoadeterminationletter .................................. 292
SECTION 10. DECLARATORY JUDGMENT PROVISIONS OF § 7428................................................... 292
.01Actualcontroversyinvolvingcertainissues..................................................................... 292
.02Exhaustionofadministrativeremedies......................................................................... 292
.03Notearlierthan270daysafterseekingdetermination............................................................ 292
.04Servicemusthavereasonabletimetoactonanappealorprotest .................................................. 292
.05Finaldeterminationtowhich§7428applies.................................................................... 292
SECTION 11. EFFECT OF DETERMINATIONLETTER OR RULING RECOGNIZING EXEMPTION....................... 293
.01Effectivedateofexemption................................................................................... 293
.02Relianceondeterminationletterorruling....................................................................... 293
SECTION 12. REVOCATION OR MODIFICATION OF DETERMINATION LETTER OR RULING
RECOGNIZING EXEMPTION
.......................................................................... 293
.01Revocationormodificationofadeterminationletterorrulingmayberetroactive.................................... 293
January 10, 20112842011–2 I.R.B.

.02Appealandconferenceproceduresinthecaseofrevocationormodificationofexemptstatusletter.................... 293
SECTION 13. EFFECT ON OTHER REVENUE PROCEDURES......................................................... 294
SECTION 14. EFECTIVE DATE..................................................................................... 294
SECTION 15. PAPERWORK REDUCTION ACT....................................................................... 294
DRAFTING INFORMATION........................................................................................ 294
SECTION 1. WHAT IS THE
PURPOSE OF THIS REVENUE
PROCEDURE?
This revenue procedure sets forth proceduresfor issuing determination letters and rulings
on the exempt status of organizations under §§ 501 and 521 of the Internal Revenue Code other
than those subject to Rev. Proc. 2011–6, 2011–1 I.R.B. 195 (relating to pension, profit-shar-
ing, stock bonus, annuity, and employee stock ownership plans). Generally, the Service issues
these determination letters and rulings in response to applications for recognition of exemption
from Federal income tax. These procedures alsoapply to revocation or modification of deter-
mination letters or rulings. This revenue procedure also provides guidance on the exhaustion
of administrative remedies for purposes of declaratory judgment under § 7428 of the Code.
Description of terms used in this
revenue procedure
.01For purposes of this revenue procedure —
(1) the term “Service” means the Internal Revenue Service.
(2) the term “application” means the appropriate form or letter that an organization must
file or submit to the Service for recognition ofexemption from Federal income tax under the
applicable section of the Internal Revenue Code.Seesection 3 for information on specific
forms.
(3) the term “EO Determinations” means the office of the Service that is primarily respon-
sible for processing initial applications for tax-exempt status. It includes the main EO Deter-
minations office located in Cincinnati, Ohio, and other field offices thatare under the direction
and control of the Manager, EO Determinations.
(4) the term “EO Technical” means the office of the Service that is primarily responsible for
issuing letter rulings to taxpayers on exempt organization matters, and for providing technical
advice or technical assistance to other officesof the Service on exempt organization matters.
The EO Technical office is located in Washington, DC.
(5) the term “Appeals Office” means any office under the direction and control of the Chief,
Appeals. The purpose of the Appeals Office is to resolve tax controversies, without litigation,
on a fair and impartial basis. The Appeals Office is independent of EO Determinations and EO
Technical.
(6) the term “determination letter” means a written statement issued by EO Determinations
or an Appeals Office in response to an application for recognition of exemption from Federal
income tax under §§ 501 and 521. This includes a written statement issued by EO Determina-
tions or an Appeals Office on the basis of advice secured from EO Technical pursuant to the
procedures prescribed herein and in Rev. Proc. 2011–5, 2011–1 I.R.B. 167.
(7) the term “ruling” means a written statement issued by EO Technical in response to an
application for recognition of exemption from Federal income tax under §§ 501 and 521.
Updated annually.02This revenue procedure is updated annually, but may be modified or amplified during
the year.
2011–2 I.R.B.285January 10, 2011

SECTION 2. NATURE OF
CHANGES AND RELATED
REVENUE PROCEDURES
Rev. Proc. 2010–9 is superseded
and the processing of applications
is now centralized
.01This revenue procedure updates Rev. Proc. 2010–9, 2010–2 I.R.B. 258, which is hereby
superseded.
(1) The responsibility for processing applications is now centralized in the EO Determina-
tions office in Cincinnati, Ohio. Key district offices no longer exist.
(2) Although applications are generally processed in the Cincinnati office, some
applica-
tions may be processed in other EO Determinations offices or referred to EO Technic
al.
Related revenue procedures.02This revenue procedure supplements Rev. Proc. 2011–10, this Bulletin, with respect to
the effects of § 7428 of the Code on the classification of organizations under §§ 509(a) and
4942(j)(3). Rev. Proc. 80–27, 1980–1 C.B. 677, sets forth procedures under which exemption
may be recognized on a group basis for subordinate organizations affiliated with and under the
general supervision and control of a central organization. Rev. Proc. 72–5, 1972–1 C.B. 709,
provides information for religious and apostolic organizations seeking recognition of exemp-
tion under § 501(d). General procedures for requests for a determination letter or ruling are
provided in Rev. Proc. 2011–4, 2011–1 I.R.B. 123. User fees for requests for a determination
letter or ruling are set forth in Rev. Proc. 2011–8, 2011–1 I.R.B. 237.
SECTION 3. WHAT ARE
THE PROCEDURES FOR
REQUESTING RECOGNITION
OF EXEMPT STATUS?
In general.01An organization seeking recognition of exempt status under § 501 or § 521 is required
to submit the appropriate application. In the case of a numbered application form, the current
version of the form must be submitted. A central organization that has previously received
recognition of its own exemption can request a group exemption letter by submitting a letter
application with Form 8718,User Fee for Exempt Organization Determination Letter Request.
SeeRev. Proc. 80–27.
User fee.02An application must be submitted with the correct user fee, as set forth in Rev. Proc.
2011–8.
Form 1023 application.03An organization seeking recognition of exemption under § 501(c)(3) and §§ 501(e), (f),
(k), (n) or (q) must submit a completed Form 1023. In the case of an organization that provides
credit counseling services, see § 501(q) of the Code.
Form 1024 application.04An organization seeking recognition of exemption under §§ 501(c)(2), (4), (5), (6), (7),
(8), (9), (10), (12), (13), (15), (17), (19) or (25) must submit a completed Form 1024 with
Form 8718. In the case of an organization that provides credit counseling services and seeks
recognition of exemption under § 501(c)(4), see § 501(q) of the Code.
Letter application.05An organization seeking recognition of exemption under §§ 501(c)(11), (14), (16), (18),
(21), (22), (23), (26), (27) or (28) or under § 501(d) must submit a letter application with Form
8718.
Form 1028 application.06An organization seeking recognition of exemption under § 521 must submit a completed
Form 1028 with Form 8718.
Form 8871 notice for political
organizations
.07A political party, a campaign committee for acandidate for federal, state or local office,
and a political action committee are all political organizations subject to tax under § 527. To be
tax-exempt, a political organization may be required to notify the Service that it is to be treated
as a § 527 organization by electronically filing Form 8871,Political Organization Notice of
Section 527 Status. For details, go to the IRS website atwww.irs.gov/polorgs.
January 10, 20112862011–2 I.R.B.

Requirements for a substantially
completed application
.08A substantially completed application, including a letter application, is one that:
(1)issignedbyanauthorizedin
dividual.
(2) includes an Employer Identification Number (EIN).
(3) includes a statement of receipts and expenditures and a balance sheet for the current
year and the three preceding years (or the years the organization was in existence, if less than
four years). If the organization has not yet commenced operations, or has not completed one
accounting period, a substantially completed application generally includes a proposed budget
for two full accounting periods and a current statement of assets and liabilities.
(4) includes a detailed narrative statement of proposed activities, including each of the
fundraising activities of a § 501(c)(3) organization, and a narrative description of anticipated
receipts and contemplated expenditures.
(5) includes a copy of the organizing or enabling document that is signed by a principal
officer or is accompanied by a written declaration signed by an authorized individual certify-
ing that the document is a complete and accuratecopy of the original or otherwise meets the
requirements of a “conformed copy” as outlined in Rev. Proc. 68–14, 1968–1 C.B. 768.
(6) if the organizing or enabling document is in the form of articles of incorporation, includes
evidence that it was filed with and approved by an appropriate state official (e.g.,stamped
“Filed” and dated by the Secretary of State). Alternatively, a copy of the articles of incor-
poration may be submitted if accompanied by awritten declaration signed by an authorized
individual that the copy is a complete and accurate copy of the original copy that was filed
with and approved by the state. If a copy is submitted, the written declaration must include the
date the articles were filed with the state.
(7) if the organization has adopted by-laws, includes a current copy. The by-laws need
not be signed if submitted as an attachment to the application for recognition of exemption.
Otherwise, the by-laws must be verifiedas current by an authorized individual.
(8) is accompanied by the correct userfee and Form 8718, when applicable.
Terrorist organizations not
eligible to apply for recognition of
exemption
.09An organization that is identified or designated as a terrorist organization within the
meaning of § 501(p)(2) of the Code is not eligible to apply for recognition of exemption.
SECTION 4. WHAT ARE THE
STANDARDS FOR ISSUING A
DETERMINATION LETTER OR
RULING ON EXEMPT STATUS?
Exempt status must be established
in application and supporting
documents
.01A favorable determination letter or ruling will be issued to an organization only if its
application and supporting documents establishthat it meets the particular requirements of the
section under which exemption from Federal income tax is claimed.
Determination letter or ruling
basedsolelyonadministrative
record
.02A determination letter or ruling on exempt status is issued based solely upon the facts
and representationscontained in the administrative record.
(1) The applicant is responsible for the accuracy of any factual representations contained in
the application.
(2) Any oral representation of additional facts or modification of facts as represented or
alleged in the application must be reduced to writing over the signature of an officer or director
of the taxpayer under a penalties of perjury statement.
(3) The failure to disclose a material fact or misrepresentation of a material fact on the ap-
plication may adversely affect the reliance that would otherwise be obtained through issuance
by the Service of a favorable determination letter or ruling.
2011–2 I.R.B.287January 10, 2011

Exempt status may be recognized
in advance of actual operations
.03Exempt status may be recognized in advance of the organization’s operations if the pro-
posed activities are described in sufficient detail to permit a conclusion that the organization
will clearly meet the particular requirements for exemption pursuant to the section of the In-
ternal Revenue Code under which exemption is claimed.
(1) A mere restatement of exempt purposes or astatement that proposed activities will be
in furtherance of such purposes will not satisfy this requirement.
(2) The organization must fully describe all of the activities in which it expects to engage,
including the standards, criteria, proceduresor other means adopted or planned for carrying out
the activities, the anticipatedsources of receipts, and the natureof contemplated expenditures.
(3) Where the organization cannot demonstrate to the satisfaction of the Service that it quali-
fies for exemption pursuant to the section of theInternal Revenue Code under which exemption
is claimed, the Service will generally issue a proposed adverse determination letter or ruling.
See alsosection 7 of this revenue procedure.
No letter if exempt status issue in
litigation or under consideration
within the Service
.04A determination letter or ruling on exempt status will not ordinarily be issued if an issue
involving the organization’s exempt status under § 501 or § 521 is pending in litigation, is under
consideration within the Service, or if issuanceof a determination letter or ruling is not in the
interest of sound tax administration. If the Service declines to issue a determination or ruling
to an organization seeking exempt status under§ 501(c)(3), the organization may be able to
pursue a declaratory judgment under § 7428 provided that it has exhausted its administrative
remedies.
Incomplete application.05If an application does not contain all of theitems set out in section 3.08, the Service may
return it to the applicant for completion.
(1) In lieu of returning an incomplete app
lication, the Service may retain the application and
request additional information needed
for a substantially completed application.
(2) In the case of an application under § 501(c)(3) that is returned incomplete, the 270-day
period referred to in § 7428(b)(2) will not be considered as starting untilthe date a substantially
completed Form 1023 is refiled with or remailed to the Service. If the application is mailed
to the Service and a postmark is not evident, the 270-day period will start to run on the date
the Service actually receives the substantially completed Form 1023. The same rules apply for
purposes of the notice requirement of § 508.
(3) Generally, the user fee will not be refunded if an incomplete application is filed.See
Rev. Proc. 2011–8, section 10.
Even if application is complete,
additional information may be
required
.06Even though an application is substantially complete, the Service may request additional
information before issuing a determination letter or ruling.
(1) If the application involves an issue where contrary authorities exist,an applicant’s failure
to disclose and distinguish contrary authorities may result in requests for additional informa-
tion, which could delay final action on the application.
(2) In the case of an application under § 501(c)(3), the period of time beginning on the date
the Service requests additional information until the date the information is submitted to the
Service will not be counted for purposes of the 270-day period referred to in § 7428(b)(2).
Expedited handling.07Applications are normally processed in the order of receipt by the Service. However,
expedited handling of an application may be approved where a request is made in writing and
contains a compelling reason for processing the application ahead of others. Upon approval
of a request for expedited handling an application will be considered out of its normal order.
This does not mean the application will be immediately approved or denied. Circumstances
generally warranting expedited processing include:
(1) A grant to the applicant is pending and thefailure to secure the grant may have an adverse
impact on the organization’s ability to continue to operate.
January 10, 20112882011–2 I.R.B.

(2) The purpose of the newly created organization is to provide disaster relief to victims of
emergencies such as flood and hurricane.
(3) There have been undue delays in issuing a determination letter or ruling caused by a
Service error.
SECTION 5. WHAT OFFICES
ISSUEANEXEMPTSTATUS
DETERMINATION LETTER
OR RULING?
EO Determinations issues a
determination letter in most cases
.01Under the general procedures outlined in Rev. Proc. 2011–4, EO Determinations is
authorized to issue determination letters on applications for exempt status under §§ 501 and
521.
Certain applications referred to
EO Technical
.02EO Determinations will refer to EO Technical those applications that present issues
which are not specifically covered by statute or regulations, or by a ruling, opinion, or court
decision published in the Internal Revenue Bulletin. In addition, EO Determinations will refer
those applications that have been specifically reserved by revenue procedure or by other official
Service instructions for handling by EO Technical for purposes of establishing uniformity or
centralized control of designated categories of cases. EO Technical will notify the applicant
organization upon receipt of a referred application, and will consider each such application and
issue a ruling directly to the organization.
Technical advice may be requested
in certain cases
.03IfatanytimeduringthecourseofconsiderationofanexemptionapplicationbyEO
Determinations the organization believes that its case involves an issue on which there is no
published precedent, or there has been non-uniformity in the Service’s handling of similar
cases, the organization may request that EO Determinations either refer the application to EO
Technical or seek technical advice from EO Technical.SeeRev. Proc. 2011–5, section 4.04.
Technical advice must be
requested in certain cases
.04If EO Determinations proposes to r
ecognize the exemption of an organization to which
EO Technical had issued a previous con
trary ruling or technical advice, EO Determinations
must seek technical advice from EO Tec
hnical before issuing a determination letter. This does
not apply where EO Technical issued an
adverse ruling and the organization subsequently made
changes to its purposes, activities,
or operations to remove the basis for which exempt status
was denied.
SECTION 6. WITHDRAWAL OF
AN APPLICATION
Application may be withdrawn
prior to issuance of a
determination letter or ruling
.01An application may be withdrawn upon the written request of an authorized individual
atanytimepriortotheissuanceofadetermination letter or ruling. Therefore, an application
may not be withdrawn after the issuance of a proposed adverse determination letter or ruling.
(1) When an application is withdrawn, the Service will retain the application and all sup-
porting documents. The Service may consider the information submitted in connection with
the withdrawn request in a subsequent examination of the organization.
(2) Generally, the user fee will not be refunded if an application is withdrawn.SeeRev.
Proc. 2011–8, section 10.
§ 7428 implications of withdrawal
of application under § 501(c)(3)
.02The Service will not consider the withdrawal of an application under § 501(c)(3) as
either a failure to make a determination withinthe meaning of § 7428(a)(2) or as an exhaustion
of administrative remedies within the meaning of § 7428(b)(2).
SECTION 7. WHAT ARE
THE PROCEDURES WHEN
EXEMPT STATUS IS DENIED?
Proposed adverse determination
letter or ruling
.01If EO Determinations or EO Technical reachesthe conclusion that the organization does
not satisfy the requirements for exempt statuspursuant to the section of the Internal Revenue
2011–2 I.R.B.289January 10, 2011

Code under which exemption is claimed, the Service will generally issue a proposed adverse
determination letter or ruling, which will:
(1) Include a detailed discussion of the Service’s rationale for the denial of tax-exempt sta-
tus.
(2) Advise the organization of its opportunity to appeal or protest the decision and request
a conference.
Appeal of a proposed adverse
determination letter issued by EO
Determinations
.02A proposed adverse determination letter issued by EO Determinations will advise the
organization of its opportunity to appeal the determination by requesting Appeals Office con-
sideration. To do this, the organization must submit a statement of the facts, law and arguments
in support of its position within 30 days from the date of the adverse determination letter. The
organization must also state whether it wishes an Appeals Office conference. Any determina-
tion letter issued on the basis of technical advice from EO Technical may not be appealed to
the Appeals Office on issues that were the subject of the technical advice.
Protest of a proposed adverse
ruling issued by EO Technical
.03A proposed adverse ruling issued by EO Technical will advise the organization of its
opportunity to file a protest statement within30 days and to request a conference. If a confer-
ence is requested, the conference proceduresoutlined in Rev. Proc. 2011–4, section 12, are
applicable.
Final adverse determination letter
or ruling where no appeal or
protest is submitted
.04If an organization does not submit a timely appeal of a proposed adverse determination
letter issued by EO Determinations, or a timely protest of a proposed adverse ruling issued by
EO Technical, a final adverse determination letter or ruling will be issued to the organization.
The final adverse letter or ruling will provideinformation about the filing of tax returns and
the disclosure of the proposed and final adverse letters or rulings.
How EO Determinations handles
an appeal of a proposed adverse
determination letter
.05If an organization submits an appeal of the proposed adverse determination letter, EO
Determinations will first review the appeal, and if it determines that the organization qualifies
for tax-exempt status issue a favorable exempt status determination letter. If EO Determina-
tions maintains its adverse position after reviewing the appeal, it will forward the appeal and
the exemption application case file to the Appeals Office.
Consideration by the Appeals
Office
.06The Appeals Office will consider the organization’s appeal. If the Appeals Office agrees
with the proposed adverse determination, it will either issue a final adverse determination or,
if a conference was requested, contact the organization to schedule aconference. At the end
of the conference process, which may involve the submission of additional information, the
Appeals Office will either issue a final adversedetermination letter or a favorable determina-
tion letter. If the Appeals Office believes that an exemption or private foundation status issue
is not covered by published precedent or that there is non-uniformity, the Appeals Office must
request technical advice from EO Technical inaccordance with Rev. Proc. 2011–5, section
4.04.
If a protest of a proposed
adverse ruling is submitted to EO
Technical
.07If an organization submits a protest of a proposed adverse exempt status ruling, EO
Technical will review the protest statement.If the protest convinces EO Technical that the
organization qualifies for tax-exempt status, afavorable ruling will be issued. If EO Technical
maintains its adverse position after reviewing the protest, it will either issue a final adverse
ruling or, if a conference was requested, contact the organization to schedule a conference. At
the end of the conference process, which may involve the submission of additional information,
EO Technical will either issue a final adverse ruling or a favorable exempt status ruling.
An appeal or protest may be
withdrawn
.08An organization may withdraw its appeal orprotest before the Service issues a final
adverse determination letter or ruling. Upon receipt of the withdrawal request, the Service will
complete the processing of the case in the same manner as if no appeal or protest was received.
Appeal or protest and conference
rights not applicable in certain
situations
.09The opportunity to appeal or protest a proposed adverse determination letter or ruling
and the conference rights described above are not applicable to matters where delay would be
prejudicial to the interests of the Service (such as in cases involving fraud, jeopardy, the immi-
January 10, 20112902011–2 I.R.B.

nence of the expiration of the statute of limitations, or where immediate action is necessary to
protect the interestsof the Government).
SECTION 8. DISCLOSURE
OF APPLICATIONS AND
DETERMINATION LETTERS
AND RULINGS
Sections 6104 and 6110 of the Code provide rules for the disclosure of applications, includ-
ing supporting documents, and determination letters and rulings.
Disclosure of applications,
supporting documents, and
favorable determination letters or
rulings
.01The applications, any supporting documents, and the favorable determination letter or
ruling issued are available for public inspection under § 6104(a)(1) of the Code. However,
there are certain limited disclosure exceptions for a trade secret, patent, process, style of work,
or apparatus if the Service determines that the disclosure of the information would adversely
affect the organization.
(1) The Service is required to make the applications, supporting documents, and favorable
determination letters or rulings available upon request. The public can request this information
by submitting Form 4506–A,Request for Public Inspection or Copy of Exempt or Political Or-
ganization IRS Form.Organizations should ensure that applications and supporting documents
do not include unnecessary personal identifying information, suchas bank account numbers
or social security numbers, that could result in identity theft or other adverse consequences if
publicly disclosed.
(2) The exempt organization is required to make its exemption application, supporting doc-
uments, and determination letter or ruling available for public inspection without charge. For
more information about the exempt organization’s disclosure obligations,seePublication 557,
Tax-Exempt Status for Your Organization.
Disclosure of adverse
determination letters or rulings
.02The Service is required to make adverse determination letters and rulings available for
public inspection under § 6110 of the Code. Uponissuance of the final adverse determination
letter or ruling to an organization, both the proposed adverse determination letter or ruling and
the final adverse determination letter or ruling will be released under § 6110.
(1) These documents are made available to the public after the deletion of names, addresses,
and any other information that might identify the taxpayer.See§ 6110(c) for other specific
disclosure exemptions.
(2) The final adverse determination letter or ruling will enclose Notice 437,Notice of Inten-
tion to Disclose,and redacted copies of the final and proposed adverse determination letters
or rulings. Notice 437 provides instructions ifthe organization disagrees with the deletions
proposed by the Service.
Disclosure to State officials when
the Service refuses to recognize
exemption under § 501(c)(3)
.03The Service may notify the appropriate State officials of a refusal to recognize an or-
ganization as tax-exempt under § 501(c)(3).See§ 6104(c) of the Code. The notice to the State
officials may include a copy of a proposed or final adverse determination letter or ruling the
Service issued to the organization. In addition, upon request by the appropriate State official,
the Service may make available for inspection and copying the exemption application and other
information relating to the Service’s determination on exempt status.
Disclosure to State officials of
information about § 501(c)(3)
applicants
.04The Service may disclose to State officials the name, address, and identification number
of any organization that has applied for recognition of exemption under § 501(c)(3).
SECTION 9. REVIEW OF
DETERMINATION LETTERS
BY EO TECHNICAL
Determination letters may be
reviewed by EO Technical to
assure uniformity
.01Determination letters issued by EO Determinations may be reviewed by EO Technical,
ortheOfficeoftheAssociateChiefCounsel(Passthroughs and Special Industries) (for cases
under § 521), to assure uniform application of the statutes or regulations, or rulings, court
opinions, or decisions published in the Internal Revenue Bulletin.
2011–2 I.R.B.291January 10, 2011

Procedures for cases where EO
Technical takes exception to a
determination letter
.02If EO Technical takes exception to a determination letter issued by EO Determinations,
the manager of EO Determinations will be advised. If EO Determinations notifies the organ-
ization of the exception taken, and the organization disagrees with the exception, the file will
be returned to EO Technical. The referral to EOTechnical will be treated as a request for tech-
nical advice and the procedures in Rev. Proc. 2011–5 will be followed.
SECTION 10. DECLARATORY
JUDGMENT PROVISIONS OF
§7428
Actual controversy involving
certain issues
.01Generally, a declaratory judgment proceeding under § 7428 of the Code can be filed in
the United States Tax Court, the United States Court of Federal Claims, or the district court of
the United States for the District of Columbia with respect to an actual controversy involving
a determination by the Service or a failure of theService to make a determination with respect
to the initial or continuing qualification or classification of an organization under § 501(c)(3)
(charitable, educational, etc.); § 170(c)(2) (deductibility of contributions); § 509(a) (private
foundation status); § 4942(j)(3) (operating foundation status); or § 521 (farmers cooperatives).
Exhaustion of administrative
remedies
.02Before filing a declaratory judgment action, an organization must exhaust its adminis-
trative remedies by taking, in a timely manner,all reasonable steps to secure a determination
from the Service. These include:
(1) the filing of a substantially completed application Form 1023 or group exemption re-
quest under § 501(c)(3) pursuant to section 3.08 of this revenue procedure or the request for
a determination of foundation status pursuant to Rev. Proc. 2011–10, this Bulletin, or its suc-
cessor;
(2) in appropriate cases, requesting relief pursuant to Treas. Reg. 301.9100–1 of the Pro-
cedure and Administration Regulations regarding the extension of time for making an election
or application for relief from tax (seeRev. Proc. 92–85, 1992–2 C.B. 490);
(3) the timely submission of all additional information requested by the Service to perfect
an exemption application or request for determination of private foundation status; and
(4) exhaustion of all administrative appeals available within the Service pursuant to section
7 of this revenue procedure.
Not earlier than 270 days after
seeking determination
.03An organization will in no event be deemed to have exhausted its administrative reme-
dies prior to the earlier of:
(1) the completion of the steps in section 10.02, and the sending by the Service by certified
or registered mail of a final determination letter or ruling; or
(2) the expiration of the 270-day period described in § 7428(b)(2) in a case where the Service
has not issued a final determination letter or ruling and the organization has taken, in a timely
manner, all reasonable steps to secure a determination letter or ruling.
Service must have reasonable time
toactonanappealorprotest
.04The steps described in section 10.02 will not be considered completed until the Service
has had a reasonable time to act upon an appeal or protest as the case may be.
Final determination to which
§7428applies
.05A final determination to which § 7428 of the Code applies is a determination letter or
ruling, sent by certified or registered mail, which holds that the organization is not described in
§ 501(c)(3) or § 170(c)(2), is a public charity described in a part of § 509 or § 170(b)(1)(A) other
than the part under which the organization requested classification, is not a private foundation
as defined in § 4942(j)(3), or is a private foundation and not a public charity described in a part
of § 509 or § 170(b)(1)(A).
January 10, 20112922011–2 I.R.B.

SECTION 11. EFFECT OF
DETERMINATION LETTER
OR RULING RECOGNIZING
EXEMPTION
Effective date of exemption.01A determination letter or ruling recognizing exemption is usually
effective as of the date
of formation of an organization if its purposes and activities prior to
the date of the determi-
nation letter or ruling were consistent with the requirements for exem
ption. However, special
rules under § 508(a) of the Code may apply to an organization applying fo
r exemption under
§ 501(c)(3), and special rules under§505(c)mayapplytoanorganiza
tion applying for ex-
emption under §§ 501(c)(9), (17), or (20).
(1) If the Service requires the organization to alter its activities or make substantive amend-
ments to its enabling instrument, the exemption will be effective as of the date specified in a
determination letter or ruling.
(2) If the Service requires the organization to make a nonsubstantive amendment, exemp-
tion will ordinarily be recognized as of the date of formation. Examples of nonsubstantive
amendments include correction of a clerical error in the enabling instrument or the addition of
a dissolution clause where the activities of the organization prior to the determination letter or
ruling are consistent with the requirements for exemption.
Reliance on determination letter
or ruling
.02A determination letter or ruling recognizing exemption may not be relied upon if there is
a material change, inconsistent with exemption, in the character, the purpose, or the method of
operation of the organization, or change in the applicable law. Also, a determination letter or
ruling may not be relied upon if it was based on any inaccurate material factual representations.
Seesection 12.01.
SECTION 12. REVOCATION
OR MODIFICATION OF
DETERMINATION LETTER
OR RULING RECOGNIZING
EXEMPTION
A determination letter or ruling recognizing exemption may be revoked or modified by (1)
a notice to the taxpayer to whom the determination letter or ruling was issued, (2) enactment of
legislation or ratification of a tax treaty, (3) a decision of the United States Supreme Court, (4)
the issuance of temporary or final regulations, or (5) the issuance of a revenue ruling, revenue
procedure, or other statement published in the Internal Revenue Bulletin.
Revocation or modifica
tion of a
determination letter o
rrulingmay
be retroactive
.01The revocation or mo
dification of a determination letter or ruling recognizing exemption
may be retroactive if th
ere has been a change in the applicable law, the organization omitted
or misstated a material
fact, operated in a manner materially different from that originally rep-
resented, or, in the ca
se of organizations to which § 503 of the Code applies, engaged in a
prohibited transacti
on with the purpose of diverting corpus or income of the organization from
its exempt purpose and
such transaction involved a substantial part of the corpus or income of
such organization. In
certain cases an organization may seek relief from retroactive revocation
or modification of a de
termination letter or ruling under § 7805(b). Requests for § 7805(b)
relief are subject to
the procedures set forth in Rev. Proc. 2011–4.
(1) Where there is a material change, inconsistent with exemption, in the character, the pur-
pose, or the method of operation of an organization, revocation or modification will ordinarily
take effect as of the date of such material change.
(2) In the case where a determination letter or ruling is issued in error or is no longer in
accord with the Service’s positionand § 7805(b) relief is granted (seesections 13 and 14 of
Rev. Proc. 2011–4), ordinarily, the revocation or modification will be effective not earlier than
the date when the Service modifies or revokesthe original determination letter or ruling.
Appeal and conference procedures
in the case of revocation or
modification of exempt status
letter
.02In the case of a revocation or modification of adetermination letter or ruling, the appeal
and conference procedures are generally the same as set out in section 7 of this revenue proce-
dure, including the right of the organization to request that EO Determinations or the Appeals
Office seek technical advice from EO Technical. However, appeal and conference rights are
not applicable to matters where delay would be prejudicial to the interests of the Service (such
as in cases involving fraud, jeopardy, the imminence of the expiration of the statute of limita-
tions, or where immediate action is necessaryto protect the interests of the Government).
2011–2 I.R.B.293January 10, 2011

(1) If the case involves an exempt status issue on which EO Technical had issued a previous
contrary ruling or technical advice, EO Determinations generally must seek technical advice
from EO Technical.
(2) EO Determinations does not have to seek technical advice if the prior ruling or technical
advice has been revoked by subsequent contrary published precedent or if the proposed revo-
cation involves a subordinate unit of an organization that holds a group exemption letter issued
by EO Technical, the EO Technical ruling or technical advice was issued under the Internal
Revenue Code of 1939 or prior revenue acts, or if the ruling was issued in response to Form
4653,Notification Concerning Foundation Status.
SECTION 13. EFFECT
ON OTHER REVENUE
PROCEDURES
Rev. Proc. 2010–9 is superseded.
SECTION 14. EFECTIVE DATEThis revenue procedure is effective January 10, 2011.
SECTION 15. PAPERWORK
REDUCTION ACT
The collection of information for a letter application under section 3.05 of this revenue pro-
cedure has been reviewed and approved by the Office of Management and Budget (OMB)
in accordance with the Paperwork Reduction Act (44 U.S.C. § 3507) under control number
1545–2080. All other collections of information under this revenue procedure have been ap-
proved under separate OMB control numbers.
An agency may not conduct or sponsor, and a person is not required to respond to, a collec-
tion of information unless the collection of information displays a valid OMB control number.
The collection of this information is required if an organization wants to be recognized as
tax-exempt by the Service. We need the information to determine whether the organization
meets the legal requirements for tax-exempt status. In addition, this information will be used
to help the Service delete certain information from the text of an adverse determination letter
or ruling before it is made available for public inspection, as required by § 6110.
The time needed to complete and file a letter application will vary depending on individual
circumstances. The estimated average time is 10 hours.
Books and records relating to the collection of information must be retained as long as their
contents may become material in the administration of any internal revenue law. The rules
governing the confidentiality of letter applications are covered in § 6104.
DRAFTING INFORMATIONThe principal author of this revenue procedure is Matthew Giuliano of the Exempt Orga-
nizations, Tax Exempt and Government Entities Division. For further information regarding
this revenue procedure, please contact the TE/GE Customer Service office at (877) 829–5500
(a toll-free call).
Rev. Proc. 2011–10
S
ECTION 1. PURPOSE AND SCOPE
.01 The purpose of this revenue proce-
dure is to set forth updated procedures of
the Internal Revenue Service with respect
to issuing rulings and determination letters
on private foundation status under § 509(a)
of the Internal Revenue Code, operat-
ing foundation status under § 4942(j)(3),
and exempt operating foundation sta-
tus under § 4940(d)(2), of organizations
exempt from Federal income tax under
§ 501(c)(3). This revenue procedure also
applies to the issuance of determination
letters on the foundation status under
§ 509(a)(3) of nonexempt charitable trusts
described in § 4947(a)(1).
SECTION 2. BACKGROUND
.01 All § 501(c)(3) organizations are
classified as private foundations under
§ 509(a) unless they qualify as a pub-
lic charity under § 509(a)(1) (which
cross-references § 170(b)(1)(A)(i)-(vi)),
509(a)(2), 509(a)(3), or 509(a)(4). See
Treas. Reg. §§ 1.170A–9T, 1.509(a)–1
through 1.509(a)–7. The IRS determines
an organization’s private foundation or
public charity status when it files Form
1023. This status will be included in the
organization’s determination letter.
.02 In its Form 990 information re-
turn, a public charity indicates the para-
graph of § 509(a), and subparagraph of
§ 170(b)(1)(A), if applicable, under which
it qualifies as a publiccharity. Because of
changes in its activities or operations, this
may differ from the public charity status
listed in its original determination letter.
While an organization is not required to
obtain a determination letter to qualify for
January 10, 20112942011–2 I.R.B.

the new public charity status, in order for
IRS records to recognize any change in
public charity status, an organization must
obtain a new determination of foundation
status pursuant to this revenue procedure.
.03 If a public charity no longer quali-
fies as a public charity under §§ 509(a)(1)-
(4), then it becomes a private foundation
and must file Form 990–PF annual infor-
mation returns. It is not necessary for
the organization to obtain a determination
letter on its new private foundation sta-
tus (although it is permitted to do so pur-
suant to this revenue procedure). The or-
ganization indicates this change in founda-
tion status by filing its Form 990–PF re-
turn and following any procedures speci-
fied in the form, instructions or other pub-
lished guidance. Thereafter, the organi-
zation may terminateits private founda-
tion status, such as by giving notice and
qualifying as a public charity again under
§§ 509(a)(1)-(3) during a 60-month termi-
nation period in accordance with the pro-
cedures under § 507(b)(1)(B) and Treas.
Reg. § 1.507–2T(b).
.04 This revenue procedure applies to
organizations that may have erroneously
determined that the organization was a
private foundation and wish to correct the
error. For example, an organization may
have erroneously classified an item or
items in its calculation of public support,
causing the organization to classify itself
as a private foundation and to file Forms
990–PF. Pursuant to this revenue proce-
dure, the organization can request to be
classified as a public charity by showing
that it continuously met the public support
tests during the relevant periods. See sec-
tion 6.02(4) below.
.05 A private foundation may qualify as
an operating foundationunder§4942(j)(3)
without an IRS determination letter, but
the IRS will not recognize such status in
IRS records without an IRS determina-
tion letter. An organization claiming to
be an exempt operating foundation under
§ 4940(d)(2) must obtain an IRS determi-
nation letter recognizing such status to be
exempt from the § 4940 tax on net invest-
ment income.
SECTION 3. DETERMINATIONS OF
FOUNDATION STATUS
.01 EO Determinations will issue deter-
mination letters on foundation status, in-
cluding whether an organization is:
(1) a private foundation;
(2) a public charity described in
§§ 509(a)(1) and 170(b)(1)(A) (other than
clauses (v), (vii) and (viii));
(3) a public charity described in
§ 509(a)(2) or (4);
(4) a public charity described in
§ 509(a)(3), whether such organization
is described in § 509(a)(3)(B)(i), (ii), or
(iii) (“supporting organization type”), and
whether or not a Type III supporting or-
ganization is functionally integrated;
(5) a private operating foundation de-
scribed in § 4942(j)(3); or
(6) an exempt operating foundation de-
scribed in § 4940(d)(2).
.02 EO Determinations will also is-
sue determination letters on whether a
nonexempt charitable trust described in
§ 4947(a)(1) is described in § 509(a)(3).
.03 EO Determinations will issue such
determinations in response to applications
for recognition of exempt status under
§501(c)(3),submittedbyorganizations
pursuant to § 508(b). EO Determinations
will also issue such determinations in
response to separate requests for determi-
nation of foundation status.
SECTION 4. APPLICABILITY OF
ANNUAL REVENUE PROCEDURES
.01 Rev. Proc. 2011–9 (updated an-
nually) provides procedures of the IRS in
processing applications for recognition of
exemption from Federal income tax under
§ 501(c)(3). Rev. Proc. 2011–4 (updated
annually) governs requests for rulings and
determination letters. Rev. Proc. 2011–8
(updated annually) prescribes user fees for
applications, rulings and other determina-
tions. Except as specifically noted herein,
those procedures and their annual succes-
sors also apply to requests for determina-
tions of foundation status.
.02 The provisions of Rev. Proc.
2011–9 and any successor revenue proce-
dure regarding § 7428, protest, conference,
and appeal rights also apply to all deter-
minations of foundation status described
in section 3.01 (except 3.01(6) relating to
exempt operating foundation status) and
3.02, whether or not the request for deter-
mination is made in connection with an
application for recognition of tax-exempt
status.
.03 Where the issue of exemption un-
der § 501(c)(3) is referred to EO Technical
for decision under the procedures of Rev.
Proc. 2011–9, the foundation status issue
will be referred along with it.
SECTION 5. GENERALLY NO NEW
DETERMINATION LETTER IF SAME
STATUS IS SOUGHT
The IRS will not generally issue a new
determination letter to a taxpayer that
seeks a determination of private founda-
tion status that is identical to its current
foundation status as determined by the
IRS. For example, an organization that
is already recognized as described in
§ §509(a)(1) and 170(b)(1)(A)(ii) as a
school generally will not receive a new
determination letter that it is still described
in §§ 509(a)(1) and 170(b)(1)(A)(ii) under
the currently extant facts. The organiza-
tion in such case could request a letter
ruling, pursuant to Rev. Proc. 2011–4, that
a given change of facts and circumstances
will not adversely affect its status under
§§ 509(a)(1) and 170(b)(1)(A)(ii).
SECTION 6. FORMAT OF REQUEST
.01 Organizations that are seeking to
change their foundation status from one
public charity classification to another
public charity classification, or seeking a
determination as to supporting organiza-
tion type or functionally integrated status,
or seeking operating foundation or exempt
operating foundation status, should submit
a written request for a determination as
to foundation status pursuant to Revenue
Procedure 2011–4 or its successor revenue
procedure.
.02 The request must include the fol-
lowing:
(1) A subject line or other indicator on
the first page of the request in bold, under-
lined, or all-capitals font indicating “RE-
QUEST FOR DETERMINATION AS TO
FOUNDATION STATUS.”
(2) A statement requesting reclassifi-
cation from one specific foundation clas-
sification to anotherspecific foundation
classification, for example, § 509(a)(3) to
§ 509(a)(2).
2011–2 I.R.B.295January 10, 2011

(3) A statement describing the adverse
tax impact on the organization (if any) if
the organization does not receive the re-
quested status.
(4) For requests for reclassification as
an organization described in § 509(a)(1),
and § 170(b)(1)(A)(vi) or 509(a)(2), either:
a. A copy of the organization’s signed
Form 990, Parts I through XI, or Form
990–EZ, Parts I through VI, with the com-
pleted Schedule A,Public Charity Status
and Public Support, as filed with the Inter-
nal Revenue Service for the taxable year
immediately preceding the taxable year in
which the request is made; or
b. The organization’s support informa-
tion for the past five completed tax years,
using the organization’s overall method of
accounting used to complete the Form 990
or Form 990–EZ for such years.
This information may be provided to
the Internal Revenue Service on a com-
pleted Schedule A,Public Charity Status
and Public Support, to the Form 990 or
Form 990–EZ (2008 or later year, as ap-
propriate).
c. For requests for reclassification as an
organization described in § 509(a)(1) and
§ 170(b)(1)(A)(vi), a list showing the name
of and amount contributed by each person
(other than a governmental unit or an or-
ganization described in § 170(b)(1)(A)(vi),
including a public charity that actually
qualifies under § 170(b)(1)(A)(vi) but
claims or is recognized under a different
public charity status, such as a church
or a hospital) whose total gifts for the
past five completed tax years exceeded
2% of the organization’s total support for
this period, as described in Treas. Reg.
§ 1.170A–9T(f)(6) and (7). A “person”
includes an organization as well as an indi-
vidual. Also state the sum of these excess
amounts (this amount is reported on Form
990, Schedule A, Part II, Section A, line
6).
d. For requests for reclassification as
an organization described in § 509(a)(2),
both:
(i) A list showing the name of each
disqualifiedperson(asdefinedin§4946)
that provided any support described in
§ 509(a)(2)(A), and the total amount of
such support (without regard to the $5,000
and 1% limitations) received in each tax
year from each such person. Also state
the sum of such amounts for each tax year
(these amounts are reported on Form 990,
Schedule A, Part III, Section A, line 7a).
(ii) A list showing the name of each
person other than a disqualified person
(and showing the name of each bureau
or similar agency of a governmental
unit) that provided support described in
§ 509(a)(2)(A)(ii) in any of the organi-
zation’s last five completed tax years in
excess of the greater of (1) 1% of the or-
ganization’s support in such year or (2)
$5,000, and showing the amount of such
excess for each tax year. Also state the
sum of such excess amounts for each tax
year (these amounts are reported on Form
990, Schedule A, Part III, Section A, line
7b).
(5) If the organization is a private foun-
dation, evidence that it meets the govern-
ing instrument requirements of § 508(e).
See Rev. Rul. 75–38, 1975–1 C.B. 161.
(6) Such other information as is neces-
sary to support the reclassification request
and as required by Rev. Proc. 2011–4 or
its successor.
SECTION 7. REQUESTS BY
NONEXEMPT CHARITABLE TRUSTS
.01 A nonexempt charitable trust de-
scribed in § 4947(a)(1) seeking a determi-
nation that it is described in § 509(a)(3)
should submit a written request for a deter-
mination pursuant to Revenue Procedure
2011–4 or its successor revenue procedure.
.02 The request for determination must
include the following information items,
from the date that the organization became
described in § 4947(a)(1) (but not before
October 9, 1969) to the present:
(1) A subject line or other indicator
on the first page of the request in bold,
underlined, or all capitals font indicating
“NONEXEMPT CHARITABLE TRUST
REQUEST FOR DETERMINATION
THAT IT IS DESCRIBED IN § 509(a)(3)”
(2) The name, address, and Employer
Identification Number of the beneficiary
organizations, together with a statement
whether each such beneficiary organiza-
tion is described in § 509(a)(1) or (2);
(3) A list of all of the trustees that have
served, together with a statement stating
whether such trustees were disqualified
persons within the meaning of § 4946(a)
(other than as foundation managers);
(4) A copy of the original trust instru-
ment and all amendments adopted there-
after; and
(5) Sufficient information to otherwise
establish that the trust has met the require-
ments of § 509(a)(3) as provided for in
Treas. Reg. § 1.509(a)–4 (other than
§ 1.509(a)–4(i)(4)). If the trust did not
qualify under § 509(a)(3) in one or more
prior years after October 9, 1969 in which
it was described in § 4947(a)(1), then it
cannot be issued a § 509(a)(3) determina-
tion letter except inaccordance with the
procedures for termination of private foun-
dation status under § 507(b)(1)(B).
(6) Such other information as is re-
quired for a determination under Rev.
Proc. 2011–4 or its successor revenue
procedure.
SECTION 8. DETERMINATIONS
OPEN TO PUBLIC INSPECTION
Determinations and rulings as to foun-
dation status are open to public inspection
pursuant to § 6104(a).
SECTION 9. NOT APPLICABLE
TO PRIVATE FOUNDATION
TERMINATIONS UNDER § 507 OR
CHANGES OF STATUS PURSUANT
TO EXAMINATION
These procedures do not apply to a pri-
vate foundation seeking to terminate its
status under § 507. These procedures also
do not apply to the examination of an or-
ganization that results in changes to its
foundation status.
SECTION 10. EFFECT ON OTHER
DOCUMENTS.
Rev. Proc. 72–50, 1972–2 C.B. 830,
and Rev. Proc. 76–34, 1976–2 C.B.
656, are hereby modified and superseded.
Announcements 85–88 and 2009–62 are
hereby obsoleted.
SECTION 11. EFFECTIVE DATE
This revenue procedure is effective Jan-
uary 10, 2011.
SECTION 12. PAPERWORK
REDUCTION ACT
The collections of information con-
tained in this revenue procedure have
January 10, 20112962011–2 I.R.B.

been reviewed and approved by the Office
of Management and Budget in accor-
dance with the Paperwork Reduction Act
(44 U.S.C. § 3507) under control number
1545–1520.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
revenue procedure are in sections 6.02 and
7.02. This information is required to eval-
uate and process the request for a letter
ruling or determination letter. The collec-
tions of information are required to obtain
a letter ruling or determination letter. The
likely respondents are tax-exempt organi-
zations.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Ward Thomas of the Exempt
Organizations, Tax Exempt and Gov-
ernment Entities Division. For further
information about this revenue proce-
dure, contact Customer Account Ser-
vices at 877–829–5500 (a toll-free num-
ber). Ward Thomas can be emailed at
tege.eo.ra@irs.gov. Please put “Question
about Rev. Proc. 2011–10” in the subject
line.
26 CFR 601.602: Tax forms and instructions.
(Also: Part I, §§ 1, 24, 25A, 32, 63, 132, 151, 221.)
Rev. Proc. 2011–12
TABLE OF CONTENTS
SECTION 1. PURPOSE
SECTION 2. 2011 ADJUSTED ITEMS
C
odeSection
.01TaxRateTables.......................................................................... 1(a)–(e)
.02ChildTaxCredit......................................................................... 24
.03HopeScholarshipandLifetimeLearningCredits.............................................
25A
.04EarnedIncomeCredit..................................................................... 32
.05StandardDeduction ...................................................................... 63
.06QualifiedTransportationFringe............................................................ 132(f)
.07PersonalExemption......................................................................
151
.08InterestonEducationLoans............................................................... 221
SECTION 3. EFFECTIVE DATE
SECTION 4. DRAFTING INFORMATION
SECTION 1. PURPOSE
This revenue procedure sets forth infla-
tion adjusted items for 2011. Other infla-
tion adjusted items for 2011 are in Rev.
Proc. 2010–40, 2010–46 I.R.B. 663 (dated
November 15, 2010).
SECTION 2. 2011 ADJUSTED ITEMS
.01Tax Rate Tables. For taxable years
beginning in 2011, the tax rate tables under
§1areasfollows:
TABLE 1 — Section 1(a) — Married Individuals Filing Joint Returns and Surviving Spouses
If Taxable Income Is:The Tax Is:
Not over $17,000
10% of the taxable income
Over $17,000 but not over $69,000$1,700 plus 15% of the excess over $17,000
Over $69,000 but not over $139,350$9,500 plus 25% of the excess over $69,000
Over $139,350 but not over $212,300$27,087.50 plus 28% of the excess over $139,350
Over $212,300 but not over $379,150$47,513.50 plus 33% of the excess over $212,300
Over $379,150$102,574 plus 35% of the excess over $379,150
2011–2 I.R.B.297January 10, 2011

TABLE 2 — Section 1(b) — Heads of Households
If Taxable Income Is:The Tax Is:
Not over $12,150
10% of the taxable income
Over $12,150 but not over $46,250$1,215 plus 15% of the excess over $12,150
Over $46,250 but not over $119,400$6,330 plus 25% of the excess over $46,250
Over $119,400 but not over $193,350$24,617.50 plus 28% of the excess over $119,400
Over $193,350 but not over $379,150$45,323.50 plus 33% of the excess over $193,350
Over $379,150$106,637.50 plus 35% of the excess over $379,150
TABLE 3 — Section 1(c) — Unmarried Individuals (other than Surviving Spouses and Heads of Households)
If Taxable Income Is:The Tax Is:
Not over $8,500
10% of the taxable income
Over $8,500 but not over $34,500$850 plus 15% of the excess over $8,500
Over $34,500 but not over $83,600$4,750 plus 25% of the excess over $34,500
Over $83,600 but not over $174,400$17,025 plus 28% of the excess over $83,600
Over $174,400 but not over $379,150$42,449 plus 33% of the excess over $174,400
Over $379,150$110,016.50 plus 35% of the excess over $379,150
TABLE 4 — Section 1(d) — Married Individuals Filing Separate Returns
If Taxable Income Is:The Tax Is:
Not over $8,500
10% of the taxable income
Over $8,500 but not over $34,500$850 plus 15% of the excess over $8,500
Over $34,500 but not over $69,675$4,750 plus 25% of the excess over $34,500
Over $69,675 but not over $106,150$13,543.75 plus 28% of the excess over $69,675
Over $106,150 but not over $189,575$23,756.75 plus 33% of the excess over $106,150
Over $189,575$51,287 plus 35% of the excess over $189,575
TABLE 5 — Section 1(e) — Estates and Trusts
If Taxable Income Is:The Tax Is:
Not over $2,300
15% of the taxable income
Over $2,300 but not over $5,450$345 plus 25% of the excess over $2,300
Over $5,450 but not over $8,300$1,132.50 plus 28% of the excess over $5,450
Over $8,300 but not over $11,350$1,930.50 plus 33% of the excess over $8,300
Over $11,350$2,937 plus 35% of the excess over $11,350
.02Child Tax Credit. For taxable
years beginning in 2011, the value used in
§ 24(d)(1)(B)(i) to determine the amount
of credit under § 24 that may be refundable
is $3,000.
.03Hope Scholarship, American Op-
portunity, and Lifetime Learning Credits.
(1) For taxable years beginning in
2011, the Hope Scholarship Credit under
§ 25A(b)(1), as increased under § 25A(i)
(the American Opportunity Tax Credit), is
an amount equal to 100 percent of qual-
ified tuition and related expenses not in
excess of $2,000 plus 25 percent of those
expenses in excess of $2,000, but not in
excess of $4,000. Accordingly, the maxi-
mum Hope Scholarship Credit allowable
January 10, 20112982011–2 I.R.B.

under § 25A(b)(1) for taxable years begin-
ning in 2011 is $2,500.
(2) For taxable years beginning in 2011,
a taxpayer’s modified adjusted gross in-
come in excess of $80,000 ($160,000 for a
joint return) is used to determine the reduc-
tion under § 25A(d)(2) in the amount of the
Hope Scholarship Credit otherwise allow-
able under § 25A(a)(1). For taxable years
beginning in 2011, a taxpayer’s modified
adjusted gross income in excess of $51,000
($102,000 for a joint return) is used to de-
termine the reduction under § 25A(d)(2) in
the amount of the Lifetime Learning Credit
otherwise allowable under § 25A(a)(2).
.04Earned Income Credit.
(1)In general. For taxable years be-
ginning in 2011, the following amounts
are used to determine the earned income
credit under § 32(b). The “earned in-
come amount” is the amount of earned
income at or above which the maximum
amount of the earned income credit is al-
lowed. The “threshold phaseout amount”
is the amount of adjusted gross income
(or, if greater, earned income) above which
the maximum amount of the credit begins
to phase out. The “completed phaseout
amount” is the amount of adjusted gross
income (or, if greater, earned income) at
or above which no credit is allowed. The
threshold phaseout amounts and the com-
pleted phaseout amounts shown in the ta-
ble below for married taxpayers filing a
joint return include the increase provided
in § 32(b)(3)(B)(i), asadjusted for infla-
tion for taxable years beginning in 2011.
Number of Qualifying Children
ItemOneTwoThree or MoreNone
Earned Income Amount
$ 9,100$12,780$12,780$ 6,070
Maximum Amount of Credit
$ 3,094$ 5,112$ 5,751$ 464
Threshold Phaseout Amount
(Single, Surviving Spouse, or
Head of Household)
$16,690$16,690$16,690$ 7,590
Completed Phaseout Amount
(Single, Surviving Spouse, or
Head of Household)
$36,052$40,964$43,998$13,660
Threshold Phaseout Amount
(Married Filing Jointly)
$21,770$21,770$21,770$12,670
Completed Phaseout Amount
(Married Filing Jointly)
$41,132$46,044$49,078$18,740
The instructions for the Form 1040 se-
ries provide tables showing the amount of
the earned income credit for each type of
taxpayer.
(2)Excessive investment income.For
taxable years beginning in 2011, the
earned income tax credit is not allowed
under § 32(i) if the aggregate amount
of certain investment income exceeds
$3,150.
.05Standard Deduction.
(1)In general. For taxable years be-
ginning in 2011, the standard deduction
amounts under § 63(c)(2) are as follows:
Filing StatusStandard Deduction
Married Individuals Filing Joint Returns and Surviving Spouses (§ 1(a))
$11,600
Heads of Households (§ 1(b))
$8,500
Unmarried Individuals (other than Surviving Spouses and Heads of
Households) (§ 1(c))
$5,800
Married Individuals Filing Separate Returns (§ 1(d))
$5,800
(2)Dependent. For taxable years be-
ginning in 2011, the standard deduction
amount under § 63(c)(5) for an individual
who may be claimed as a dependent by an-
other taxpayer cannot exceed the greater of
(1) $950, or (2) the sum of $300 and the in-
dividual’s earned income.
(3)Aged or blind. For taxable years
beginning in 2011, the additional standard
deduction amount under § 63(f) for the
aged or the blind is $1,150. These amounts
are increased to $1,450 if the individual is
also unmarried and not a surviving spouse.
.06Qualified Transportation Fringe.
For taxable years beginning in 2011, the
monthly limitation under § 132(f)(2)(A),
regarding the aggregate fringe benefit
exclusion amount for transportation in a
commuter highway vehicle and any transit
pass, and under § 132(f)(2)(B), regarding
the fringe benefit exclusion amount for
qualified parking, is $230.
2011–2 I.R.B.299January 10, 2011

.07Personal Exemption.
(1)Exemption amount. For taxable
years beginning in 2011, the personal ex-
emption amount under § 151(d) is $3,700.
.08Interest on Education Loans.For
taxable years beginning in 2011, the
$2,500 maximum deduction for inter-
est paid on qualified education loans
under § 221 begins to phase out under
§ 221(b)(2)(B) for taxpayers with mod-
ified adjusted gross income in excess of
$60,000 ($120,000 for joint returns), and
is completely phased out for taxpayers
with modified adjusted gross income of
$75,000 or more ($150,000 or more for
joint returns).
SECTION 3. EFFECTIVE DATE
This revenue procedure applies to tax-
able years beginning in 2011.
SECTION 4. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Christina M. Glendening of
the Office of Associate Chief Counsel
(Income Tax & Accounting). For further
information regarding this revenue pro-
cedure, contact Ms. Glendening at (202)
622–4920 (not a toll-free call).
January 10, 20113002011–2 I.R.B.

Part IV. Items o
fGeneralInterest
Notice of Prop
osed
Rulemaking an
dNoticeof
Public Hearin
g
User Fees Rela
ting to
Enrolled Age
nts and Enrolled
Retirement P
lan Agents
REG–124018–
10
AGENCY: Inte
rnal Revenue Service
(IRS), Treas
ury.
ACTION: Noti
ce of proposed rulemaking
and notice o
f public hearing.
SUMMARY: Thi
s document contains pro-
posed amend
ments to the regulations relat-
ingtotheim
positionofuserfeesforen-
rolled agen
ts and enrolled retirement plan
agents. The
proposed regulations separate
the enroll
ed retirement plan agent user fees
from the en
rolled agent user fees and lower
the initia
l enrollment and renewal of en-
rollment f
ees for enrolled agents and en-
rolled ret
irement plan agents. The pro-
posed reg
ulations affect individuals who
are or app
ly to become enrolled agents
or enroll
ed retirement plan agents. The
charging
of user fees is authorized by the
Independ
ent Offices Appropriations Act of
1952.
DATES: W
ritten or electronic comments
must be r
eceived by January 10, 2011.
Outline
s of topics to be discussed at the
public h
earing scheduled for January 14,
2011, at
10 a.m. must be received by Jan-
uary 5, 2
011.
ADDRESS
ES: Send submissions to:
CC:PA:
LPD:PR (REG–124018–10), room
5205, I
nternal Revenue Service, PO Box
7604, B
en Franklin Station, Washing-
ton, DC
20044. Submissions may be
hand-d
elivered Monday through Friday
betwe
en the hours of 8 a.m. and 4 p.m.
to CC:
PA:LPD:PR (REG–124018–10),
Couri
er’s Desk, Internal Revenue
Servi
ce, 1111 Constitution Avenue, NW,
Washi
ngton, DC, or sent electronically
via th
e Federal eRulemaking Portal
atht
tp://www.regulations.gov(IRS
REG–
124018–10). The public hearing
will
be held in the IRS Auditorium,
Internal Reve
nue Building, 1111
Constitution
Avenue, NW, Washington,
DC.
FOR FURTHER IN
FORMATION
CONTACT: Conc
erning the proposed
regulations,
Emily M. Lesniak at (202)
622–4570; co
ncerning cost methodol-
ogy, Eva J. Wi
lliams at (202) 435–5514;
concerning s
ubmission of comments,
the public he
aring, or to be placed on
the buildin
g access list to attend the
public hear
ing, Richard A. Hurst at
Richard.A.
Hurst@irscounsel.treas.govor
(202) 622–7
180 (not toll-free numbers).
SUPPLEMENT
ARY INFORMATION:
Background
and Explanation of
Provision
s
Section 33
0 of title 31 of the United
States Cod
e authorizes the Secretary of the
Treasury t
o regulate the practice of rep-
resentati
ves before the Treasury Depart-
ment. Purs
uant to section 330 of title
31, the Se
cretary has published regulations
governin
g practice before the IRS in 31
CFR part 1
0 and reprinted the regulations
as Treasu
ry Department Circular No. 230
(Circul
ar 230). Circular 230 is adminis-
tered by
the IRS Office of Professional Re-
sponsib
ility (OPR).
Section
10.4(a) of Circular 230 autho-
rizes th
e Director of OPR to grant status
as an enr
olled agent to applicants who
demonst
rate special competence in tax
matter
s by passing a written examination
admini
stered by, or administered under
the ove
rsight of, the Director of OPR and
who hav
e not engaged in any conduct
that wo
uld justify suspension or disbar-
ment u
nder Circular 230. Every year OPR
devel
ops and administers a Special Enroll-
ment E
xamination (SEE) that individuals
must p
ass to become an enrolled agent
throu
gh examination.
Secti
on 10.4(b) of Circular 230 au-
thori
zes the Director of OPR to grant
stat
us as an enrolled retirement plan agent
to ap
plicants who demonstrate special
comp
etence in qualified retirement plan
matt
ers by passing a written examination
admi
nistered by, or under the oversight
of, t
he Director of OPR and who have not
eng
aged in any conductthat would justify
suspension or
disbarment under Circu-
lar 230. Every
year OPR develops and
administers a
n Enrolled Retirement Plan
Agent Special
Enrollment Examination
(ERPA–SEE) th
at individuals must pass to
become an enr
olled retirement plan agent
through exam
ination.
Section 10.4
(b) also authorizes the Di-
rector of OPR
to grant full or limited en-
rollment as a
n enrolled agent or full enroll-
ment as an enr
olled retirement plan agent
to a former I
RS employee if the former
employee ha
s not engaged in any conduct
that would j
ustify the suspension or dis-
barment of a
ny practitioner under the pro-
visions of
Circular 230 and the employee
meets cert
ain other requirements. These
requireme
nts include minimum length of
employmen
t with the IRS and substantive
tax expert
ise. Application for enrollment
basedonf
ormer employment with the IRS
must be ma
de within three years from the
date of se
paration from such employment
and the ap
plicant is not required to pass
the SEE o
r the ERPA–SEE, unless a for-
mer empl
oyee who previously was granted
limited
enrollment status wants to qualify
for full
enrollment.
Once eli
gible for enrollment as an en-
rolled a
gent or enrolled retirement plan
agent, w
hether by examination or former
employ
ment with the IRS, an individual
must fi
le an application for enrollment
with th
e Director of OPR. An individual
grante
dstatusasanenrolledagentoren-
rolled
retirement plan agent as provided
in §10
.6(d) must renew enrollment every
three
years to maintain active enrollment
and be
able to practice before the IRS. In
order
to qualify for renewal, an applicant
must c
ertify the completion of the contin-
uing
education requirements set forth in
§10.
6(e) of Circular 230 and compliance
with
certain ethical standards in Circular
230 a
nd state regulatory agencies.
As pa
rt of the application to become an
enro
lled agent or enrolled retirement plan
agen
t, an individual must currently pay a
non
refundable user fee of $125. This user
fee
is authorized under §300.5. An indi-
vid
ual also must pay a $125 nonrefund-
abl
e user fee to renew enrollment, which
is a
uthorized under §300.6. An individual
mus
t renew enrollment every three years.
In
addition, a user fee of $11 per part is
2011–2 I.R.B.301January 10, 2011

currently imposed to take the SEE or the
ERPA–SEE. The user fee to take the SEE
and ERPA–SEE is currently authorized un-
der §300.4.
The proposed regulations coordinate
the user fees imposed on enrolled agents
and enrolled retirement plan agents with
the new user fee to apply for or renew a
preparer tax identification number (PTIN).
The Treasury Department and the IRS
are implementing recommendations in
Publication 4832, “Return Preparer Re-
view,” which was published on January 4,
2010. Based on these recommendations,
the Treasury Department and the IRS re-
cently published final regulations under
section 6109 (T.D. 9501, 2010–46 I.R.B.
651 [75 FR 60309], September 30, 2010)
that require tax return preparers who pre-
pare all or substantially all of a tax return
or claim for refund for compensation to
obtain a PTIN. Individuals applying for
or renewing a PTIN are required to pay a
$50 IRS user fee and a $14.25 vendor fee.
The final regulations establishing the IRS
user fee to apply for or renew a PTIN were
published on September 30, 2010 (T.D.
9503, 2010–47 I.R.B. 706 [75 FR 60316]).
The process for reviewing an enrolled
agent or an enrolled retirement plan agent
initial enrollment or renewal of enrollment
application is, in some ways, duplicative
of the new process for reviewing a PTIN
application. For example, the tax com-
pliance checks and suitability checks con-
ducted as part of a PTIN application are
the same tax compliance checks and suit-
ability checks currently performed as part
of the process for becoming an enrolled
agent or enrolled retirement plan agent.
To avoid any potential duplication and un-
necessary expense for individuals apply-
ing to become an enrolled agent or an en-
rolled retirement plan agent, the Treasury
Department and the IRS intend to require
all enrolled agents and enrolled retirement
plan agents to obtain a PTIN. The Treasury
Department and the IRS further intend to
eliminate the tax compliance checks and
suitability checks from the initial enroll-
ment and renewal of enrollment process
for enrolled agents and enrolled retirement
plan agents because these checks will be
performed as part of the requirement to ob-
tain a PTIN. Thus, the Treasury Depart-
ment and the IRS are eliminating the por-
tion of the initial enrollment and renewal
of enrollment user fees that recover the
costs to perform the tax compliance checks
and suitability checks (and any other re-
view conducted as part of the PTIN appli-
cation process).
Accordingly, the proposed regulations
separate the initial enrollment and renewal
of enrollment user fees imposed on en-
rolled agents from the initial enrollment
and renewal of enrollment user fees im-
posed on enrolled retirement plan agents,
which are all currently imposed in §§300.5
and 300.6. (The proposed regulations also
separate the user fee to take the ERPA-
SEE to become an enrolled retirement plan
agent from the user fee to take the SEE to
become an enrolled agent, which are both
currently imposed in §300.4.)
The proposed regulations also reduce
both the enrolled agent and enrolled re-
tirement plan agent initial enrollment and
renewal of enrollment user fees to reflect
that the review procedures (including tax
compliance checks and suitability checks),
previously conducted as part of the en-
rolled agent and enrolled retirement plan
agent initial enrollment and renewal of en-
rollment processes, will now be conducted
as part of the PTIN application and re-
newal process. In particular, the proposed
regulations amend §300.5 to reduce the
enrolled agent initial enrollment user fee
to $30 and §300.6 to reduce the enrolled
agent renewal of enrollment user fee to
$30. The enrolled retirement plan agent
initial enrollment user fee is found in pro-
posed §300.10 and is $30. The enrolled re-
tirement plan agent renewal of enrollment
user fee is found in proposed §300.11 and
also is $30.
The initial enrollment and renewal of
enrollment user fees imposed on enrolled
agents and enrolled retirement plan agents
in the proposed regulations reflect only the
costs of the review processes that are not
conducted as part of the PTIN applica-
tion or renewal processes. The costs in-
clude processing the enrolled agent and en-
rolled retirement plan agent initial enroll-
ment and renewal ofenrollment applica-
tions, processing the accompanying user
fees, and conducting a search for any vio-
lations of professional rules and standards
of conduct.
Authority
The Independent Offices Appropri-
ations Act (IOAA) of 1952, which is
codified at 31 U.S.C. 9701, authorizes
agencies to prescribe regulations that es-
tablish charges for services provided by
the agency, which includes charging user
fees. The charges must be fair and must be
based on the costs to the government, the
value of the service to the recipient, the
public policy or interest served, and other
relevant facts. The IOAA provides that
regulations implementing user fees are
subject to policies prescribed by the Presi-
dent; these policies are currently set forth
in the Office of Management and Budget
Circular A-25, 58 FR 38142 (July 15,
1993) (the OMB Circular).
The OMB Circular encourages user
fees for government-provided services
that confer benefitson identifiable re-
cipients over and above those benefits
received by the general public. Under
the OMB Circular, an agency that seeks
to impose a user fee for government-pro-
vided services must calculate the full cost
of providing those services. In general, a
user fee should be set at an amount that
allows the agency to recover the full cost
of providing the special service, unless the
Office of Management and Budget grants
an exception.
Pursuant to the guidelines in the OMB
Circular, the IRS has calculated its cost
of providing services under the enrolled
agent and enrolled retirement plan agent
program and PTIN application process.
The full cost of administering these pro-
grams will be charged and the proposed
user fees will be implemented under the
authority of the IOAA and the OMB Cir-
cular.
Proposed Effective/Applicability Date
The Administrative Procedure Act pro-
vides that substantive rules will not be ef-
fective until thirty days after the final reg-
ulations are published in theFederal Reg-
ister(5 U.S.C. 553(d)). Final regulations
may be effective prior to thirty days after
publication if the publishing agency finds
that there is good cause for an earlier ef-
fective date.
The Treasury Department and the IRS
recently finalized regulations that require
all tax return preparers who prepare all or
substantially all of a tax return or claim
for refund for compensation to use a PTIN
as their identifying number (T.D. 9501).
The Treasury Department and the IRS also
January 10, 20113022011–2 I.R.B.

finalized regulations that require tax return
preparers to pay a $64.25 user fee to apply
for or renew a PTIN (T.D. 9503, 75 FR
60316, September 30, 2010). Tax return
preparers who prepare all or substantially
all of a tax return or claim for refund must
obtain or renew their PTIN for the 2011 tax
season.
Circular 230 requires that, to main-
tain active enrollment to practice before
the IRS, enrolled agents must renew en-
rollment every third year after initial
enrollment is granted. The renewal sched-
ules are staggered with approximately one
third of enrolled agents renewing every
year. Enrolled agents with social security
numbers or tax identification numbers
ending in 4, 5, or 6 are currently sched-
uled to renew their enrollment beginning
on November 1, 2010 and ending on Jan-
uary 31, 2011. To enable these enrolled
agents to renew their enrollment at the
reduced fee, the IRS issued Announce-
ment 2010–81 on October 14, 2010, which
delayed the renewal period for enrolled
agents with social security numbers or tax
identification numbers ending in 4, 5, or 6.
The renewal process cannot be reinstated
until this regulation is finalized; otherwise,
these enrolled agents will pay twice for the
IRS to perform the compliance and suit-
ability checks. To minimize the disruption
to the enrolled agent program caused by
the delay of renewal, the renewal process
must be reinstated as quickly as possible.
Thus, the Treasury Department and the
IRS find that there is good cause for these
regulations to be effective upon the pub-
lication of a Treasury decision adopting
these rules as final regulations in theFed-
eral Register.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. It is hereby certified that this
regulation will not have a significant eco-
nomic impact on a substantial number of
small entities. Accordingly, a regulatory
flexibility analysis is not required. This
certification is basedupon the information
that follows. The proposed regulation does
not place an additional filing requirement
on enrolled agents or enrolled retirement
plan agents and decreases the enrollment
costs already in effect. Thus, this regu-
lation should reduce the economic impact
imposed by the current enrolled agent and
enrolled retirement plan agent user fees.
Pursuant to section 7805(f) of the Code,
this notice of proposed rulemaking has
been submitted to the Chief Counsel for
Advocacy of the Small Business Adminis-
tration for comment on its impact on small
business.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written (a signed origi-
nal and eight (8) copies) or electronic com-
ments that are submitted timely to the IRS.
The Treasury Department and the IRS re-
quest comments on the clarity of the pro-
posed regulations and how they can be
made easier to understand. All comments
will be available for public inspection and
copying.
A public hearing has been scheduled for
January 14, 2011, beginning at 10:00 a.m.
in the IRS Auditorium, Internal Revenue
Building, 1111 Constitution Avenue,
NW, Washington, DC. Due to building
security procedures, visitors must enter
at the Constitution Avenue entrance. All
visitors must presentphoto identification
to enter the building. Because of access
restrictions, visitors will not be admitted
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
For information about having your name
placed on the building access list to attend
the hearing, see the “FOR FURTHER
INFORMATION CONTACT” section of
this preamble.
The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing. Persons who wish to
present oral comments at the hearing must
submit written or electronic comments and
an outline of the topics to be discussed and
the time to be devoted to each topic by
January 5, 2011. A period of 10 minutes
will be allocated to each person for mak-
ing comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receiving outlines has passed.
Copies of the agenda will be available free
of charge at the hearing.
Drafting Information
The principal author of these regula-
tions is Emily M. Lesniak, Office of the
Associate Chief Counsel (Procedure and
Administration).
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 300 is pro-
posed to be amended as follows:
PART 300—USER FEES
Paragraph 1
. The authority citation for
part 300 con
tinues to read in part as fol-
lows:
Authority:
31 U.S.C. 9701.
Par. 2. Sect
ion 300.0 is amended by:
1. Redesign
ating paragraph (b)(9) as
paragraph (
b)(12).
2. Adding ne
w paragraph (b)(9).
3. Adding pa
ragraphs (b)(10) and
(b)(11).
The additio
ns and revisions read as fol-
lows.
§300.0 User fees; in general.
*****
(b) * * *
(9) Taking the special enrollment exam-
ination to become an enrolled retirement
plan agent.
(10) Enrolling an enrolled retirement
plan agent.
(11) Renewing the enrollment of an en-
rolled retirement plan agent.
*****
Par. 3. Section 300.4 is amended by
revising the heading to read as follows:
§300.4 Enrolled agent special enrollment
examination fee.
*****
Par. 4. Section 300.5 is amended by
revising paragraphs (b) and (d) to read as
follows:
§300.5 Enrollment of enrolled agent fee.
*****
(b)Fee. The fee for initially enrolling
as an enrolled agent with the IRS Office of
Professional Responsibility is $30.
*****
(d)Effective/applicability date.This
section is applicable the date that final reg-
ulations are published in theFederal Reg-
ister.
2011–2 I.R.B.303January 10, 2011

Par. 5. Section 300.6 is amended by
revising paragraphs (b) and (d) to read as
follows:
§300.6 Renewal of enrollment of enrolled
agent fee.
*****
(b)Fee. The fee for renewal of enroll-
ment as an enrolled agent with the IRS Of-
fice of Professional Responsibility is $30.
*****
(d)Effective/applicability date.This
section is applicable the date that final reg-
ulations are published in theFederal Reg-
ister.
§300.9 [Redesignated as §300.12]
Par. 6. Redesignate §300.9 as §300.12.
Par. 7 Add new §300.9 to read as fol-
lows:
§300.9 Enrolled retirement plan agent
special enrollment examination fee.
(a)Applicability. This section applies
to the special enrollment examination to
become an enrolled retirement plan agent
pursuant to 31 CFR 10.4(b).
(b)Fee. The fee for taking the enrolled
retirement plan agent special enrollment
examination is $11 per part, which is the
cost to the government for overseeing the
examination and does not include any fees
charged by the administrator of the exam-
ination.
(c)Person liable for the fee. The per-
son liable for the enrolled retirement plan
agent special enrollment examination fee
is the applicant taking the examination.
(d)Effective/applicability date.This
section is applicable the date that final reg-
ulations are published in theFederal Reg-
ister.
Par. 7. Section 300.10 is added to read
as follows:
§300.10 Enrollment of enrolled retirement
plan agent fee.
(a)Applicability. This section applies
to the initial enrollment of enrolled re-
tirement plan agents with the IRS Office
of Professional Responsibility pursuant to
31 CFR 10.5(b).
(b)Fee. The fee for initially enrolling as
an enrolled retirement plan agent with the
IRS Office of Professional Responsibility
is $30.
(c)Person liable for the fee. The per-
son liable for the enrollment fee is the ap-
plicant filing for enrollment as an enrolled
retirement plan agent with the IRS Office
of Professional Responsibility.
(d)Effective/applicability date.This
section is applicable the date that final reg-
ulations are published in theFederal Reg-
ister.
Par. 8. Section 300.11 is added to read
as follows:
§300.11 Renewal of enrollment of enrolled
retirement plan agent fee.
(a)Applicability. This section applies
to the renewal of enrollment of enrolled
retirement plan agents with the IRS Office
of Professional Responsibility pursuant to
31 CFR 10.5(b).
(b)Fee. The fee for renewal of enroll-
ment as an enrolled retirement plan agent
with the IRS Office of Professional Re-
sponsibility is $30.
(c)Person liable for the fee. The person
liable for the renewal of enrollment fee
is the person renewing enrollment as an
enrolled retirement plan agent with the IRS
Office of Professional Responsibility.
(d)Effective/applicability date.This
section is applicable the date that final reg-
ulations are published in theFederal Reg-
ister.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on December 7,
2010, 4:15 p.m., and published in the issue of the Federal
Register for December 10, 2010, 75 F.R. 76940)
Update to Publication 1220,
Specification for Filing Forms
1097–BTC, 1098, 1099,
3921, 3922, 5498, 8935 and
W–2G Electronically
Announcement 2011–1
Update to Publication 1220,Speci-
fications for Filing Forms 1097–BTC,
1098, 1099, 3921, 3922, 5498, 8935 and
W–2G Electronically.This update is
due to changes in the reporting require-
ments for Form 1099–R,Distributions
from Pensions, Annuities, Retirement or
Profit-Sharing Plans, IRAs, Insurance
Contracts, etc.
The passage of the Small Business
Jobs Act, Sections 2111 and 2112 affected
Tax Year 2010 filing for Form 1099–R.
Filers should follow guidelines located in
Instructions for Forms 1099–R and 5498
for reporting requirements. Electronic
filers who have a reporting requirement
for in plan Roth rollovers, can report
the amount in the Special Data Entries
field, positions 663–722 of the Payee B
Record. Payment amounts must contain
U.S. dollars and cents. The right-most
two positions represent cents. Amounts
should be right-justified in the field with
leading blanks. If you have questions con-
cerning filing requirements or electronic
filing through the FIRE System, please
call toll-free 1–866–455–7438.
January 10, 20113042011–2 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2011–2 I.R.B.iJanuary 10, 2011

Numerical Finding List
1
Bulletin 2011–1 through 2011–2
Announcements:
2011-1, 2011-2 I.R.B.304
Notices:
2011-1, 2011-2 I.R.B.259
2011-2, 2011-2 I.R.B.260
2011-3, 2011-2 I.R.B.263
2011-4, 2011-2 I.R.B.282
Proposed Regulations:
REG-124018-10, 2011-2 I.R.B.301
Revenue Procedures:
2011-1, 2011-1 I.R.B.1
2011-2, 2011-1 I.R.B.90
2011-3, 2011-1 I.R.B.111
2011-4, 2011-1 I.R.B.123
2011-5, 2011-1 I.R.B.167
2011-6, 2011-1 I.R.B.195
2011-7, 2011-1 I.R.B.233
2011-8, 2011-1 I.R.B.237
2011-9, 2011-2 I.R.B.283
2011-10, 2011-2 I.R.B.294
2011-12, 2011-2 I.R.B.297
Revenue Rulings:
2011-1, 2011-2 I.R.B.251
2011-2, 2011-2 I.R.B.256
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2010–27 through 2010–52 is in Internal Revenue Bulletin
2010–52, dated December 27, 2010.
January 10, 2011ii2011–2 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletin 2011–1 through 2011–2
Announcements:
85-88
Obsoleted by
Rev. Proc. 2011-10, 2011-2 I.R.B.294
2009-62
Obsoleted by
Rev. Proc. 2011-10, 2011-2 I.R.B.294
Notices:
2010-79
Clarified and modified by
Notice 2011-4, 2011-2 I.R.B.282
Revenue Procedures:
72-50
Modified and superseded by
Rev. Proc. 2011-10, 2011-2 I.R.B.294
76-34
Modified and supersed by
Rev. Proc. 2011-10, 2011-2 I.R.B.294
2008-52
Modified by
Notice 2011-4, 2011-2 I.R.B.282
2010-1
Superseded by
Rev. Proc. 2011-1, 2011-1 I.R.B.1
2010-2
Superseded by
Rev. Proc. 2011-2, 2011-1 I.R.B.283
2010-3
Superseded by
Rev. Proc. 2011-3, 2011-1 I.R.B.111
2010-4
Superseded by
Rev. Proc. 2011-4, 2011-1 I.R.B.123
2010-5
Superseded by
Rev. Proc. 2011-5, 2011-1 I.R.B.167
2010-6
Superseded by
Rev. Proc. 2011-6, 2011-1 I.R.B.195
2010-7
Superseded by
Rev. Proc. 2011-7, 2011-1 I.R.B.233
2010-8
Superseded by
Rev. Proc. 2011-8, 2011-1 I.R.B.237
Revenue Procedures— Continued:
2010-9
Superseded by
Rev. Proc. 2011-9, 2011-2 I.R.B.283
Revenue Rulings:
81-100
Modified by
Rev. Rul. 2011-1, 2011-2 I.R.B.251
2004-67
Modified by
Rev. Rul. 2011-1, 2011-2 I.R.B.251
2008-40
Modified by
Rev. Rul. 2011-1, 2011-2 I.R.B.251
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2010–27 through 2010–52 is in Internal Revenue Bulletin 2010–52, dated December 27,
2010.
2011–2 I.R.B.iiiJanuary 10, 2011

January 10, 20112011–2 I.R.B.

INTERNAL REVENUE BULLETIN
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Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superin-
tendent of Documents when their subscriptions must be renewed.
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