Internal Revenue Bulletin 2009-22 (PDF rendition): IRS Revenue Procedures

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. 200
9-22
June 1, 2009
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.
INCOME TAX
T.D. 9449, page 1044.
REG–107271–08, page 1051.
Temporary and proposed regulations under section 163 of the
Code provide guidance on how to determine the amount of
prepaid mortgage insurance premiums that a taxpayer may
deduct each taxable year under section 163(h)(4)(F). The reg-
ulations also provide guidance on the information reporting
requirements for premiums, including prepaid premiums, for
mortgage insurance.
Rev. Proc. 2009–29, page 1050.
2010 inflation adjusted amounts for Health Savings Ac-
counts (HSAs).This procedure provides the 2010 inflation
adjusted amounts for (HSAs) under section 223 of the Code.
EMPLOYEE PLANS
REG–115699–09, page 1052.
Proposed regulations under section 401 of the Code contain
proposed amendments to the regulations relating to certain
cash or deferred arrangements and matching contributions. A
public hearing is scheduled for September 23, 2009.
Notice 2009–45, page 1047.
Weighted average interest rate update; corporate bond
indices; 30-year Treasury securities; segment rates.
This notice contains updates for the corporate bond weighted
average interest rate for plan years beginning in May 2009;
the 24-month average segment rates; the funding transitional
segment rates applicable for May 2009; and the minimum
present value transitional rates for April 2009.
ADMINISTRATIVE
T.D. 9449, page 1044.
REG–107271–08, page 1051.
Temporary and proposed regulations under section 163 of the
Code provide guidance on how to determine the amount of
prepaid mortgage insurance premiums that a taxpayer may
deduct each taxable year under section 163(h)(4)(F). The reg-
ulations also provide guidance on the information reporting
requirements for premiums, including prepaid premiums, for
mortgage insurance.
Actions Relating to Court Decisions is on the page following the Introduction.
Finding Lists begin on page ii.

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d meet their tax responsibilities and by applying
the tax law with
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.
June 1, 20092009–22 I.R.B.

Actions Relati
ng to Decisions of the Tax Court
It is the policy
of the Internal Rev-
enue Service t
o announce at an early date
whether it wil
l follow the holdings in cer-
tain cases. An
Action on Decision is the
document maki
ng such an announcement.
An Action on De
cision will be issued at
the discreti
on of the Service only on unap-
pealed issue
s decided adverse to the gov-
ernment. Gen
erally, an Action on Decision
is issued whe
re its guidance would be help-
ful to Servi
ce personnel working with the
same or simi
lar issues. Unlike a Treasury
Regulation
or a Revenue Ruling, an Action
on Decision
is not an affirmative statement
of Service
position. It is not intended to
serve as pu
blic guidance and may not be
cited as pr
ecedent.
Actions on
Decisions shall be relied
upon withi
n the Service only as conclu-
sions appl
ying the law to the facts in the
particul
ar case at the time the Action on
Decision
was issued. Caution should be
exercise
d in extending the recommenda-
tion of th
e Action on Decision to similar
cases whe
re the facts are different. More-
over, th
e recommendation in the Action on
Decisio
n may be superseded by new legis-
lation,
regulations, rulings, cases, or Ac-
tions on
Decisions.
Prior to 1991, t
he Service published
acquiescence
or nonacquiescence only in
certain regul
ar Tax Court opinions. The
Service has ex
panded its acquiescence
program to inc
lude other civil tax cases
where guidanc
e is determined to be help-
ful. Accordi
ngly, the Service now may
acquiesce or
nonacquiesce in the holdings
of memorandu
m Tax Court opinions, as
well as those
of the United States District
Courts, Cla
ims Court, and Circuit Courts
of Appeal. R
egardless of the court decid-
ing the case
, the recommendation of any
ActiononDe
cision will be published in
the Intern
al Revenue Bulletin.
The recomme
ndation in every Action
on Decisio
n will be summarized as ac-
quiescenc
e, acquiescence in result only,
or nonacqu
iescence. Both “acquiescence”
and “acqui
escence in result only” mean
that the S
ervice accepts the holding of
the court
in a case and that the Service
will foll
ow it in disposing of cases with
thesamec
ontrolling facts. However, “ac-
quiescen
ce” indicates neither approval
nor disa
pproval of the reasons assigned
by the co
urt for its conclusions; whereas,
“acquie
scence in result only” indicates
disagre
ement or concern with some or all
of those reason
s. “Nonacquiescence” sig-
nifies that, a
lthough no further review was
sought, the Se
rvice does not agree with
the holding of
the court and, generally,
will not follo
w the decision in disposing
of cases invol
ving other taxpayers. In
reference to
an opinion of a circuit court
of appeals, a
“nonacquiescence” indicates
that the Serv
ice will not follow the hold-
ingonanatio
nwide basis. However, the
Service wil
l recognize the precedential
impact of th
e opinion on cases arising
within the v
enue of the deciding circuit.
The Actions
on Decisions published in
the weekly I
nternal Revenue Bulletin are
consolidat
ed semiannually and appear in
the first B
ulletin for July and the Cumula-
tive Bulle
tin for the first half of the year. A
semiannua
l consolidation also appears in
the first B
ulletin for the following January
andinthe
Cumulative Bulletin for the last
half of th
e year.
The Commi
ssioner does NOT ACQUI-
ESCE in th
e following decision:
Cox v. Co
mmissioner,
1
514 F.3d
1119 (10th Cir. 2008),
rev’g 12
6 T.C. 237 (2006)
1
Nonacquiescence relating to the court of appeals’holding that indirect consideration of a tax liability in conjunction with evaluating collectionalternatives raised in a collection due process
hearing for an earlier tax year constitutes prohibited prior involvement under section 6330(b)(3) and disqualifies an appeals officer from conducting a subsequent CDP hearing focusing on
that liability.
2009–22 I.R.B.June 1, 2009

June 1, 20092009–22 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 163.—
Interest
26 CFR 1.163–11T: Allocation of certain prepaid
qualified mortgage insurance premiums (temporary).
T.D. 9449
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Allocation and Reporting
of Mortgage Insurance
Premiums
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Temporary regulations.
SUMMARY: This document contains tem-
porary regulations that explain how to al-
locate prepaid qualified mortgage insur-
ance premiums to determine the amount
of the prepaid premium that is treated as
qualified residence interest each taxable
year under section 163(h)(4)(F) of the In-
ternalRevenueCode(Code). Thetempo-
rary regulations also provide guidance to
reporting entities receiving premiums, in-
cluding prepaid premiums, for mortgage
insurance. The temporary regulations re-
flect changes to the law made by the Tax
Relief and Health Care Act of 2006 and
the Mortgage Forgiveness Debt Relief Act
of 2007. The text of the temporary regula-
tions also serves as the text of the proposed
regulations (REG–107271–08) set forth in
the notice of proposed rulemaking on this
subject in this issue of the Bulletin.
DATES:Effective Date:These regulations
are effective on May 7, 2009.
Applicability Dates:For dates of
applicability, see §§1.163–11T(d) and
1.6050H–3T(e).
F
OR FURTHER INFORMATION
C
ONTACT: Concerning §1.163–11T, An-
g
ela Warren, (202) 622–4950; concerning
§
1.6050H–3T, Stephen Coleman (202)
6
22–4910 (not toll-free numbers).
SUPPLEMENTAR
Y INFORMATION:
Background
Section 419 o
ftheTaxReliefand
Health Care A
ct of 2006, Public Law
109–432 (120
Stat. 2967) (2006 Act),
added secti
ons 163(h)(3)(E), (h)(4)(E),
and (h)(4)(
F) to the Code. Section 3 of
the Mortgag
e Forgiveness Debt Relief
Act of 2007,
Public Law 110–142 (121
Stat. 1803)
(2007), amended section
163(h)(3)
(E)(iv). In general, these new
provision
s treat certain qualified mortgage
insurance
premiums as qualified residence
interest.
This treatment applies only to
certain q
ualified mortgage insurance pre-
miums pai
d or accrued on or after January
1, 2007, a
nd on or before December 31,
2010, on m
ortgage insurance contracts
issued on
or after January 1, 2007.
Section 1
63(h)(3)(E)(i) provides that
premiums
paid or accrued for qualified
mortgag
e insurance in connection with
acquisi
tion indebtedness for a qualified
residen
ce are treated as qualified resi-
dence in
terest for purposes of section
163. Se
ction 163(h)(4)(E) definesquali-
fied mo
rtgage insuranceas (i) mortgage
insura
nce provided by the Veterans Ad-
minist
ration (VA), the Federal Housing
Admini
stration (FHA), or the Rural Hous-
ing Ad
ministration (Rural Housing)
1
,and
(ii) p
rivate mortgage insurance (as de-
fined
by section 2 of the Homeowners
Prote
ction Act of 1998 (12 U.S.C. 4901)
as in e
ffect on December 20, 2006). The
amou
nt treated as qualified residence in-
tere
st may be reduced or eliminated under
sect
ion 163(h)(3)(E)(ii), which provides
that
the amount allowed as a deduction
is ph
ased out ratably by 10 percent for
each
$1,000 ($500 in the case of a married
ind
ividual filing a separate return) that the
tax
payer’s adjusted gross income exceeds
$10
0,000 ($50,000 in the case of a married
ind
ividual filing a separate return).
Sec
tion 163(h)(4)(F) states that any
amo
unt paid by the taxpayer for quali-
fie
d mortgage insurance that is properly
al
locable to any mortgage the payment
of
which extends to periods that are af-
ter the close o
f the taxable year in which
the amount is p
aid shall be chargeable
to capital acc
ount and shall be treated as
paid in the pe
riods to which the amount is
allocated. N
o deduction shall be allowed
for the unamo
rtized balance of the account
if the mortga
ge is satisfied before the end
of its term.
The allocation rules in section
163(h)(4)(
F) do not apply to amounts paid
for qualifi
ed mortgage insurance provided
by the VA or R
ural Housing. Additionally,
section 163
(h)(3)(E)(iv)(II) disallows a
deduction
for amounts allocable to any
period aft
er December 31, 2010.
Section 41
9 of the 2006 Act also added
section 60
50H(h) to the Code, which
generally
provides that any person who,
in the cour
se of a trade or business, re-
ceives fr
om an individual premiums for
mortgage
insurance aggregating $600 or
more for a
ny calendar year, shall make
an inform
ationreturnintheformpre-
scribed b
y the Secretary. As defined in
section
6050H(h)(3)(B), the termmort-
gage ins
urancehas the same meaning as
qualifi
ed mortgage insurance in section
163(h)(
4)(E). See also Tax Technical Cor-
rectio
ns Act of 2007, Public Law 110–172
(121 St
at. 2473) §11(b)(2).
On Janu
ary 8, 2008, the IRS and
the Tre
asury Department published No-
tice 20
08–15, 2008–4 I.R.B. 313, (see
§601.6
01(d)(2)(ii)(b)) to provide guidance
to indi
vidual taxpayers in determining
the am
ount of prepaid qualified mort-
gage i
nsurance premiums that is treated
as qua
lified residence interest under sec-
tion 1
63(h)(3)(E) that may be deducted in
2007,
and to reporting entities receiving
prem
iums, including prepaid premiums,
for m
ortgage insurance in 2007. The no-
tice
provides that an individual taxpayer
may a
llocate the prepaid premium ratably
over
the shorter of (1) the stated term of
the m
ortgage, or (2) 84 months, beginning
wit
hthemonthinwhichtheinsurance
was
obtained. The notice also provides
tha
t reporting entities that receive mort-
gag
e insurance premiums of $600 or more
in 2
007 may report either the portion of
th
e amount received that is allocable to
20
07, the amount actually received, or the
1
References in section 163(h)(4)(E)(i) to the Veterans Administration and Rural Housing Administration are interpreted to mean their respective successors, the Department of Veterans
Affairs and Rural Housing Service.
2009–22 I.R.B.1044June 1, 2009

amount determined under an 84-month
allocation method. The notice requested
comments regarding the appropriate allo-
cation method and reporting requirements
that should apply to future years.
Summary of Comments on Notice
2008–15 and Explanation of Provisions
In response to Notice 2008–15, the
Treasury Department and the IRS received
several comments concerning the appro-
priate allocation methodology for prepaid
qualified mortgage insurance premiums
that are treated as qualified residence inter-
est under section 163(h)(3)(E). One com-
menter recommended adopting the rule
from Notice 2008–15 permitting taxpayers
to allocate a prepaid premium ratably over
the shorter of (1) the stated term of the
mortgage, or (2) 84 months. According to
this commenter, an 84-month allocation
rule closely approximates the actual du-
ration of the average mortgage insurance
contract. Another commenter suggested
adopting a three-yearallocation period to
coincide with the Department of Housing
and Urban Development’s (HUD) policy
of refunding prepaid premiums on FHA
loans. Under this policy, HUD refunds
prepaid FHA mortgage insurance premi-
ums if the borrower refinances the mort-
gage through another FHA loan within the
first three years of the original loan term.
After consideration of these com-
ments, the Treasury Department and the
IRS are adopting the rule from Notice
2008–15 concerning allocation of pre-
paid qualified mortgage insurance pre-
miums based on the understanding that
the average life of a mortgage insurance
contract on home mortgages generally is
seven years (84 months). Accordingly,
the temporary regulations add a new
provision to the regulations under section
163. Notwithstanding the general rules
for the treatment of qualified residence
interest (for example, the period over
which certain points paid to refinance
a mortgage are allocable), §1.163–11T
provides that an individual taxpayer
may allocate prepaid qualified mortgage
insurance premiums that are treated as
qualified residence interest under section
163(h)(3)(E) over the shorter of (a) the
stated term of the mortgage, or (b) a
period of 84 months. Instructions for
calculating the portion of prepaid qualified
mortgage insurance premiums that are
deductible in a particular taxable year
are in Publication 936, “Home Mortgage
Interest Deduction.”
The Treasury Department and the IRS
received several comments in response to
Notice 2008–15 concerning the appropri-
ate reporting requirement. Some com-
menters suggested that mortgage servicers
be required to report all mortgage insur-
ance premiums received during the tax-
able year, including prepayments. Others
suggested allowing mortgage servicers to
report either (1) the amount of mortgage
insurance premiums received, or (2) the
amount disbursed during the taxable year
to the issuer of the mortgage insurance pol-
icy.
After consideration of these comments,
the Treasury Department and the IRS are
adopting a rule requiring mortgage ser-
vicers to report the amount of all mortgage
insurance premiums, including prepaid
mortgage insurance premiums, received
in the calendar year. The temporary regu-
lations accordingly add a new provision to
the regulations under section 6050H. Sec-
tion 1.6050H–3T provides that a reporting
entity that receives mortgage insurance
premiums of $600 or more from an in-
dividual taxpayer during a calendar year
shall make an information return set-
ting forth the total amount received from
that individual during the calendar year
pursuant to the forms and instructions
prescribed by the Secretary (currently re-
portedinBox4ofForm1098“Mortgage
Interest Statement”).
Several commenters suggested clarify-
ing that there are separate $600 thresholds
for reporting mortgage interest under sec-
tion 6050H(a) and mortgage insurance
premiums under section 6050H(h). Sev-
eral commenters also requested inclusion
of a separate standard for penalty relief
for reporting mortgage insurance premi-
ums in compliance with section 6050H(h).
Such guidance is unnecessary, as sec-
tions 6050H(a) and 6050H(h) set forth
separate $600 reporting thresholds for
mortgage interest received and mortgage
insurance premiums received, and the
good faith standard for penalty relief in
§301.6724–1(a)(2)(i) applies to the report-
ing of mortgage insurance premiums.
Special Analyses
It has been determined that this Trea-
sury decision is not asignificant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It also has been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations. For appli-
cability of the Regulatory Flexibility Act
(5 U.S.C. chapter 5), please refer to the
Special Analyses section in the preamble
to the cross-referenced notice of proposed
rulemaking published in this issue of the
Bulletin. Pursuant to section 7805(f) of
the Code, these regulations have been sub-
mitted to the Chief Counsel for Advocacy
of the Small Business Administration for
comment on their impact on small busi-
ness.
Drafting Information
The principal authors of these regu-
lations are Angela Warren, Office of the
Associate Chief Counsel (Income Tax
and Accounting), and Stephen Coleman,
Office of the Associate Chief Counsel
(Procedure and Administration). How-
ever, other personnel from the IRS and the
Treasury Department participated in their
development.
*****
Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.163–11T is added to
read as follows:
§1.163–11T Allocation of certain prepaid
qualified mortgage insurance premiums
(temporary).
(a)Allocation—(1)In general.Aspro-
vided in section 163(h)(3)(E), premiums
paid or accrued for qualified mortgage in-
surance during the taxable year in connec-
tion with acquisition indebtedness with re-
spect to a qualified residence (as defined in
section 163(h)(4)(A)) of the taxpayer shall
be treated as qualified residence interest
June 1, 200910452009–22 I.R.B.

(as defined in section 163(h)(3)(A)). If an
individual taxpayer pays such a premium
that is properly allocable to a mortgage the
payment of which extends to periods be-
yond the close of the taxable year (prepaid
premium), the taxpayer must allocate the
premium to determine the amount treated
as qualified residence interest for each tax-
able year. The premium must be allocated
ratably over the shorter of—
(i) The stated term of the mortgage; or
(ii) A period of 84 months, beginning
with the month in which the insurance was
obtained.
(2)Limitation. If a mortgage is satis-
fied before the end of its stated term, no de-
duction as qualified residence interest shall
be allowed for any amount of the premium
that is allocable to periods after the mort-
gage is satisfied.
(b)Scope. The allocation requirement
in paragraph (a) of this section applies
only to mortgage insurance provided by
the Federal Housing Administration or pri-
vate mortgage insurance (as defined by
section 2 of the Homeowners Protection
Act of 1998 (12 U.S.C. 4901) as in effect
on December 20, 2006). It does not ap-
ply to mortgage insurance provided by the
Department of Veterans Affairs or the Ru-
ral Housing Service. Paragraph (a) of this
section applies whether the qualified mort-
gage insurance premiums are paid in cash
or are financed, without regard to source.
(c)Cross reference. For rules concern-
ing the information reporting of premiums,
including prepaid premiums, for mortgage
insurance, see §1.6050H–3T.
(d)Effective/applicability date.This
section applies to prepaid qualified mort-
gage insurance premiums described in
paragraph (a) of this section paid or ac-
crued on or after January 1, 2008, and on
or before December 31, 2010, for mort-
gage insurance provided by the Federal
Housing Administration or private mort-
gage insurers issued on or after January 1,
2007.
(e)Expiration date. The applicability
of this section expires on May 4, 2012.
Par. 3. Section 1.6050H–3T is added to
read as follows:
§1.6050H–3T Information reporting
of mortgage insurance premiums
(temporary).
(a)Information reporting requirements.
Any person who, in the course of a trade
or business receives premiums, including
prepaid premiums, for mortgage insur-
ance (as described in paragraph (b) of this
section) from any individual aggregating
$600 or more for any calendar year, shall
make an information return setting forth
the total amount received from that indi-
vidual during the calendar year pursuant
to the forms and instructions prescribed
by the Secretary.
(b)Scope. Paragraph (a) of this section
applies to mortgage insurance provided by
the Federal Housing Administration, De-
partment of Veterans Affairs, or the Ru-
ral Housing Service (or their successor or-
ganizations), or to private mortgage insur-
ance (as defined by section 2 of the Home-
owners Protection Act of 1998 (12 U.S.C.
4901) as in effect on December 20, 2006).
The rule stated in paragraph (a) of this sec-
tion applies to the receipt of all payments
of mortgage insurance premiums, by cash
or financing, without regard to source.
(c)Aggregation. Whether a person re-
ceives $600 or more of mortgage insur-
ance premiums is determined on a mort-
gage-by-mortgage basis. A recipient need
not aggregate mortgage insurance premi-
ums received on all of the mortgages of an
individual to determine whether the $600
threshold is met. Therefore, a recipient
need not report mortgage insurance premi-
ums of less than $600 received on a mort-
gage, even though it receives a total of
$600 or more of mortgage insurance pre-
miums on all of the mortgages for an indi-
vidual for a calendar year.
(d)Cross reference. For rules concern-
ing the allocation of certain prepaid qual-
ified mortgage insurance premiums, see
§1.163–11T of this chapter.
(e)Effective/applicability date.This
section applies to mortgage insurance pre-
miums received on or after January 1,
2008.
(f)Expiration date. The applicability of
this section expires on May 4, 2012.
LindaE.Stiff,
Deputy Commissioner for
Services and Enforcement.
Approved April 23, 2009.
Bernard J. Knight, Jr.,
Acting General
Counsel of the Treasury.
(Filed by the Office of the Federal Register on May 6, 2009,
8:45 a.m., and published in the issue of the Federal Register
for May 7, 2009, 74 F.R. 21296)
Section 6050H.—Returns
Relating to Mortgage
Interest Received in Trade
or Business From Individuals
Temporary and proposed regulations provide guid-
ance on the information reporting requirements for
premiums, including prepaid premiums, for mortgage
insurance. See T.D. 9449, page 1044.
Temporary and proposed regulations provide guid-
ance on the information reporting requirements for
premiums, including prepaid premiums, for mortgage
insurance. See REG-107271-08, page 1051.
2009–22 I.R.B.1046June 1, 2009

Part III. Administrative, Procedural, and Miscellaneous
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2009–45
This notice provides guidance as to the
corporate bond weighted average interest
rate and the permissible range of interest
rates specified under § 412(b)(5)(B)(ii)(II)
of the Internal Revenue Code as in ef-
fect for plan years beginning before 2008.
It also provides guidance on the corpo-
rate bond monthly yield curve (and the
corresponding spot segment rates), the
24-month average segment rates, and
the funding transitional segment rates
under § 430(h)(2). In addition, this no-
tice provides guidance as to the interest
rate on 30-year Treasury securities un-
der § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008, the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I), and the min-
imum present value segment rates under
§ 417(e)(3)(D) as in effect for plan years
beginning after 2007.
CORPORATE BOND WEIGHTED
AVERAGE INTEREST RATE
Sections412(b)(5)(B)(ii)and
412(l)(7)(C)(i), as amended by the Pen-
sion Funding Equity Act of 2004 and by
the Pension Protection Act of 2006 (PPA),
provide that the interest rates used to cal-
culate current liability and to determine
the required contribution under § 412(l)
for plan years beginning in 2004 through
2007 must be within a permissible range
based on the weighted average of the rates
of interest on amounts invested conser-
vatively in long term investment grade
corporate bonds during the 4-year period
ending on the last day before the beginning
of the plan year.
Notice 2004–34, 2004–1 C.B. 848, pro-
vides guidelines for determining the cor-
porate bond weighted average interest rate
and the resulting permissible range of in-
terest rates used to calculate current liabil-
ity. That notice establishes that the corpo-
rate bond weighted average is based on the
monthly composite corporate bond rate de-
rived from designated corporate bond in-
dices. The methodology for determining
the monthly composite corporate bond rate
as set forth in Notice 2004–34 continues to
apply in determining that rate. See Notice
2006–75, 2006–2 C.B. 366.
The composite corporate bond rate for
April 2009 is 7.05 percent. Pursuant to No-
tice 2004–34, the Service has determined
this rate as the average of the monthly
yields for the included corporate bond in-
dices for that month.
The following corporate bond weighted
average interest rate was determined for
plan years beginning in the month shown
below.
For Plan Years
Beginning inPermissible Range
MonthYear
Corporate
Bond Weighted
Average90%to100%
May20096.43
5.78
6.43
YIELD CURVE AND SEGMENT
RATES
Generally for plan years beginning
after 2007 (except for delayed effective
dates for certain plans under sections 104,
105, and 106 of PPA), § 430 of the Code
specifies the minimum funding require-
ments that apply to single employer plans
pursuant to § 412. Section 430(h)(2) spec-
ifies the interest rates that must be used
to determine a plan’s target normal cost
and funding target. Under this provision,
present value is generally determined us-
ing three 24-month average interest rates
(“segment rates”), each of which applies
to cash flows during specified periods.
However, an election may be made under
§ 430(h)(2)(D)(ii) to use the monthly yield
curve in place of the segment rates. For
plan years beginning in 2008 and 2009, a
transitional rule under § 430(h)(2)(G) pro-
vides that the segment rates are blended
with the corporate bond weighted average
as specified above. An election may be
made under § 430(h)(2)(G)(iv) to use the
segment rates without applying the transi-
tional rule.
Notice 2007–81, 2007–44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, the
24-month average corporate bond segment
rates, and the funding transitional segment
rates used to compute the target normal
cost and the funding target. Pursuant to
Notice 2007–81, the monthly corporate
bond yield curve derived from April 2009
data is in Table I at the end of this notice.
The spot first, second, and third segment
rates for the month of April 2009 are,
respectively, 5.12, 7.15, and 6.92. The
three 24-month average corporate bond
segment rates applicable for May 2009
under the election of § 430(h)(2)(G)(iv)
are as follows:
First
Segment
Second
Segment
Third
Segment
5.33
6.686.82
June 1, 200910472009–22 I.R.B.

The transitional segment rates under
§ 430(h)(2)(G) applicable for May 2009,
taking into account the corporate bond
weighted average of 6.43 stated above, are
as follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
20086.06
6.516.56
2009
5.70
6.606.69
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 417(e)(3)(A)(ii)(II) (prior to
amendment by PPA) defines the appli-
cable interest rate, which must be used
for purposes of determining the minimum
present value of a participant’s benefit
under § 417(e)(1) and (2), as the annual
rate of interest on 30-year Treasury se-
curities for the month before the date
of distribution or such other time as the
Secretary may by regulations prescribe.
Section 1.417(e)–1(d)(3) of the Income
Tax Regulations provides that the applica-
ble interest rate for a month is the annual
rate of interest on 30-year Treasury secu-
rities as specified by the Commissioner
for that month in revenue rulings, notices
or other guidance published in the Internal
Revenue Bulletin.
The rate of interest on 30-year Treasury
securities for April 2009 is 3.76 percent.
The Service has determined this rate as the
monthly average of the daily determina-
tion of yield on the 30-year Treasury bond
maturing in February 2039.
Generally for plan years beginning
after 2007, § 431 specifies the mini-
mum funding requirements that apply to
multiemployer plans pursuant to § 412.
Section 431(c)(6)(B)specifies a minimum
amount for the full-funding limitation
described in section 431(c)(6)(A), based
on the plan’s current liability. Section
431(c)(6)(E)(ii)(I) provides that the inter-
est rate used to calculate current liability
for this purpose must be no more than 5
percent above and no more than 10 percent
below the weighted average of the rates of
interest on 30-year Treasury securities dur-
ing the four-year period ending on the last
day before the beginning of the plan year.
Notice 88–73, 1988–2 C.B. 383, provides
guidelines for determining the weighted
average interest rate. The following rates
were determined for plan years beginning
in the month shown below.
For Plan Years
Beginning inPermissible Range
MonthYear
30-Year
Treasury
Weighted
Average
90%to
105%
May20094.444.004.67
MINIMUM PRESENT VALUE
SEGMENT RATES
Generally for plan years beginning af-
ter December 31, 2007, the applicable in-
terest rates under § 417(e)(3)(D) are seg-
ment rates computed without regard to a
24-month average. For plan years begin-
ning in 2008 through 2011, the applica-
ble interest rate is the monthly spot seg-
ment rate blended with the applicable rate
under § 417(e)(3)(A)(ii)(II) as in effect
for plan years beginning in 2007. No-
tice 2007–81 provides guidelines for de-
termining the minimum present value seg-
ment rates. Pursuant to that notice, the
minimum present value transitional seg-
ment rates determined for April 2009, tak-
ing into account theApril 2009 30-year
Treasury rate of 3.76 stated above, are as
follows:
For Plan Y
ears
Beginning
in
First
Segment
Second
Segment
Third
Segment
20084.034.444.39
20094.30
5.125.02
DRAFTING INFORMATION
The principal author of this notice is
Tony Montanaro of the Employee Plans,
Tax Exempt and Government Entities Di-
vision. Mr. Montanaro may be e-mailed at
RetirementPlanQuestions@irs.gov.
2009–22 I.R.B.1048June 1, 2009

Table I
Monthly Yield Curve for April 2009
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.53.5520.5
7.19
40.5
6.89
60.5
6.80
80.56.75
1.04.0321.07.1741.0
6.89
61.06.8081.0
6.75
1.54.4721.57.1641.56.8861.56.8081.56.75
2.0
4.85
22.07.1442.06.8862.06.7982.0
6.75
2.55.1722.5
7.13
42.5
6.88
62.5
6.79
82.56.75
3.0
5.43
23.07.1143.06.8763.0
6.79
83.0
6.75
3.55.6623.5
7.10
43.5
6.87
63.5
6.79
83.56.75
4.0
5.85
24.0
7.09
44.06.8764.0
6.79
84.0
6.75
4.56.0324.57.0844.56.8664.5
6.79
84.56.75
5.0
6.20
25.0
7.07
45.0
6.86
65.0
6.79
85.06.75
5.56.3525.57.0545.5
6.86
65.5
6.78
85.5
6.74
6.06.4826.07.0446.06.8666.06.7886.06.74
6.5
6.61
26.5
7.04
46.56.8566.5
6.78
86.5
6.74
7.06.7227.07.0347.0
6.85
67.06.7887.06.74
7.56.8327.57.0247.56.8567.56.7887.56.74
8.06.9228.07.0148.0
6.85
68.06.7888.06.74
8.5
7.00
28.5
7.00
48.5
6.84
68.5
6.78
88.5
6.74
9.0
7.08
29.0
7.00
49.0
6.84
69.0
6.78
89.0
6.74
9.57.1429.5
6.99
49.56.8469.56.7789.56.74
10.0
7.19
30.0
6.98
50.0
6.8470.06.77
90.0
6.74
10.57.2430.5
6.98
50.56.8370.56.7790.56.74
11.07.2831.06.97
51.0
6.8371.06.7791.06.74
11.5
7.31
31.5
6.97
51.5
6.83
71.5
6.7791.56.74
12.07.3332.0
6.96
52.0
6.8372.06.77
92.0
6.74
12.57.3532.5
6.96
52.5
6.83
72.5
6.7792.56.74
13.07.3633.06.95
53.0
6.8273.06.77
93.0
6.73
13.57.3633.56.9553.56.8273.56.7793.56.73
14.07.3634.06.94
54.0
6.8274.06.7694.06.73
14.5
7.36
34.5
6.94
54.5
6.82
74.5
6.7694.56.73
15.07.3535.0
6.93
55.0
6.82
75.0
6.7695.06.73
15.5
7.34
35.5
6.93
55.5
6.81
75.5
6.7695.56.73
16.07.3336.0
6.92
56.0
6.8176.06.76
96.0
6.73
16.57.3236.5
6.92
56.56.8176.56.7696.56.73
17.07.3037.06.91
57.0
6.8177.06.7697.06.73
17.5
7.29
37.5
6.91
57.5
6.81
77.5
6.7697.56.73
18.07.2738.0
6.91
58.0
6.8178.06.76
98.0
6.73
18.5
7.26
38.5
6.90
58.5
6.80
78.5
6.7698.56.73
19.0
7.24
39.06.90
59.06.80
79.0
6.76
99.0
6.73
19.57.2239.5
6.90
59.56.8079.56.7599.56.73
20.07.2140.06.8960.06.8080.0
6.75
100.06.73
June 1, 200910492009–22 I.R.B.

* This spot monthly yield curve repre-
sents data from April 2009 only, and under
the proposed regulations for § 430(h)(2),
this table is for use by § 430(h)(2)(D)(ii)
electing plans with valuation dates in
May 2009. Until final regulations are
effective, a reasonable interpretation of
§ 430(h)(2)(D)(ii) would permit plan
sponsors to use this table in conjunc-
tion with the applicable month rules of
§ 430(h)(2)(E). In such a case, this table
could also be used for a valuation as of
a date in April, June, July, or August of
2009.
26 CFR 601.602: Tax forms and instructions.
(Also: Part 1, §§ 1, 223.)
Rev. Proc. 2009–29
SECTION 1. PURPOSE
This revenue procedure provides the
2010 inflation adjusted amounts for Health
Savings Accounts (HSAs) as determined
under § 223 of the Internal Revenue Code.
SECTION 2. 2010 INFLATION
ADJUSTED ITEMS
Annual contribution limitation. For cal-
endar year 2010, the annual limitation on
deductions under § 223(b)(2)(A) for an in-
dividual with self-only coverage under a
high deductible health plan is $3,050. For
calendar year 2010, the annual limitation
on deductions under § 223(b)(2)(B) for an
individual with family coverage under a
high deductible health plan is $6,150.
High deductible health plan. For cal-
endar year 2010, a “high deductible health
plan” is defined under § 223(c)(2)(A) as
a health plan with an annual deductible
that is not less than $1,200 for self-only
coverage or $2,400 for family coverage,
and the annual out-of-pocket expenses
(deductibles, co-payments, and other
amounts, but not premiums) do not exceed
$5,950 for self-only coverage or $11,900
for family coverage.
SECTION 3. EFFECTIVE DATE
This revenue procedure is effective for
calendar year 2010.
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§223andHSAs,
contact Leslie Paul at (202) 622–6080
(not a toll-free call). For further infor-
mation regarding the calculation of the
inflation adjustments in this revenue pro-
cedure, contact Ms. Glendening at (202)
622–4920 (not a toll-free call).
2009–22 I.R.B.1050June 1, 2009

Part IV. Items o
fGeneralInterest
Notice of Proposed
Rulemaking by
Cross-Reference to
Temporary Regulations
Allocation and Reporting
of Mortgage Insurance
Premiums
REG–107271–08
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
by cross-reference to temporary regula-
tions.
SUMMARY: In this issue of the Bulletin,
the IRS is issuing temporary regulations
relating to prepaid qualified mortgage in-
surance premiums. The temporary reg-
ulations reflect changes to the law made
by the Tax Relief and Health Care Act of
2006 and the Mortgage Forgiveness Debt
Relief Act of 2007. The temporary reg-
ulations explain how to allocate prepaid
qualified mortgage insurance premiums to
determine the amount of the prepaid pre-
mium that is treated as qualified residence
interest each taxable year under section
163(h)(4)(F) of the Internal Revenue Code
(Code). The temporary regulations also
provide guidance to reporting entities re-
ceiving premiums, including prepaid pre-
miums, for mortgage insurance. The text
of those temporary regulations (T.D. 9449)
also serves as the text of these proposed
regulations.
DATES: Written or electronic comments
and requests for a public hearing must be
received by August 5, 2009.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–107271–08), room
5203, Internal Revenue Service, PO Box
7604, Ben Franklin Station, Washing-
ton, DC 20044. Submissions may be
hand delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to: CC:PA:LPD:PR (REG–107271–08),
Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue, NW,
Washington, DC, or sent electronically
via the Federal eRulemaking Portal
athttp://www.regulations.gov(IRS
REG–107271–08).
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed reg-
ulations, Angela Warren (202) 622–4950;
concerning submission of comments or a
request for a public hearing, Funmi Taylor
at (202) 622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background and Explanation of
Provisions
Temporary regulations in this issue of
the Bulletin amend the regulations under
26 CFR Part 1 relating to sections 163(h)
and 6050H(h). The temporary regulations
add rules relating to the proper allocation
of prepaid qualified mortgage insurance
premiums and provide guidance to report-
ing entities receiving mortgage insurance
premiums. The text of those temporary
regulations also serves as the text of these
proposed regulations. The preamble to the
temporary regulationsexplains the amend-
ments.
Special Analyses
It has been determine that this notice of
proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory as-
sessment is not required. It also has been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to these regulations.
Because the regulations do not impose a
collection of information on small entities,
the Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Pursuant to sec-
tion 7805(f) of the Code, these regulations
have been submitted to the Chief Counsel
for Advocacy of the Small Business Ad-
ministration for comment on its impact on
small business.
Comments and Requests for a 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 IRS and the Treasury Department re-
quest comments on the clarity of the pro-
posed rules and how they can be made eas-
ier to understand. All comments will be
available for public inspection and copy-
ing.
A public hearing will be scheduled if
requested in writing by any person that
timely submits comments. If a public hear-
ing is scheduled, notice of the date, time
and place for the public hearing will be
published in theFederal Register.
Drafting Information
The principal author of these regula-
tions is Angela Warren, Office of the Asso-
ciate Chief Counsel (Income Tax and Ac-
counting). However, other personnel from
the IRS and the Treasury Department par-
ticipated in their development.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.163–11 is added to
read as follows:
§1.163–11 Allocation of certain prepaid
qualified mortgage insurance premiums.
[The text of this section is the same as
the text of §1.163–11T(a) through (d) pub-
lished elsewhere in this issue of the Bul-
letin].
Par. 3. Section 1.6050H–3 is added to
read as follows:
§1.6050H–3 Information reporting of
mortgage insurance premiums.
[The text of this section is the same
as the text of §1.6050H–3T(a) through (e)
published elsewhere in this issue of the
Bulletin].
LindaE.Stiff,
Deputy Commissioner for
Services and Enforcement.
June 1, 200910512009–22 I.R.B.

(Filed by the Office of the Federal Register on May 6, 2009,
8:45 a.m., and published in the issue of the Federal Register
for May 7, 2009, 74 F.R. 21295)
Notice of Proposed
Rulemaking and Notice of
Public Hearing
Suspension or Reduction
of Safe Harbor Nonelective
Contributions
REG–115699–09
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
and notice of public hearing.
SUMMARY: This document contains pro-
posed amendments to the regulations re-
lating to certain cash or deferred arrange-
ments and matching contributions under
section 401(k) plans and section 403(b)
plans. These regulations affect adminis-
trators of, employers maintaining, partic-
ipants in, and beneficiaries of certain sec-
tion 401(k) plans and section 403(b) plans.
DATES: Written or electronic comments
must be received by August 17, 2009. Out-
lines of the topics to be discussed at the
public hearing scheduled for Wednesday,
September 23, 2009, at 10 a.m. must be
received by August 19, 2009.
ADDRESSES: Send submissions to
CC:PA:LPD:PR (REG–115699–09), room
5203, Internal Revenue Service, PO Box
7604, Ben Franklin Station, Washing-
ton D.C. 20044. Submissions may be
hand-delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–115699–09),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue, N.W.,
Washington, D.C., 20224 or sent elec-
tronically via the Federal eRulemaking
Portal athttp://www.regulations.gov(IRS
REG–115699–09).
FOR FURTHER INFORMATION
CONTACT: Concerning the regulations,
R. Lisa Mojiri-Azad, Dana Barry or
William D. Gibbs at (202) 622–6060;
concerning the submission of com-
ments or to request a public hearing,
Richard.A.Hurst@irscounsel.treas.gov,
(202) 622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained
in this notice of proposed rulemaking has
been submitted to the Office of Manage-
ment and Budget for review in accordance
with the Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d)). Comments on the
collection of information should be sent to
theOffice of Management and Budget,
Attn: Desk Officer for the Department
of the Treasury, Office of Information
and Regulatory Affairs, Washington, DC
20503, with copies to theInternal Rev-
enue Service, Attn: IRS Reports Clear-
ance Officer, SE:W:CAR:MP:T:T:SP;
Washington, DC 20224. Comments on
the collection of information should be
received by July 17, 2009. Comments are
specifically requested concerning:
Whether the proposed collection of in-
formation is necessary for the proper per-
formance of the functions of the Internal
Revenue Service, including whether the
information will have practical utility;
The accuracy of the estimated burden
associated with the proposed collection of
information;
How the quality, utility, and clarity of
the information to be collected may be en-
hanced;
How the burden of complying with the
proposed collections of information may
be minimized, including through the appli-
cation of automated collection techniques
or other forms of information technology;
and
Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of service to provide information.
The collection of information in these
proposed regulations is in §1.401(k)–3.
The collection relates to the new supple-
mental notice in the case of a reduction or
suspension of safe harbor nonelective con-
tributions. The likely recordkeepers are
businesses or other for-profit institutions,
nonprofit institutions, organizations, and
state or local governments.
Estimated total average annual record-
keeping burden: 5,000 hours.
Estimated average annual burden hours
per recordkeeper: 1 hour.
Estimated number of recordkeepers:
5,000.
An agency may not conduct or sponsor,
and a person is not required to respond to, a
collection of information unless it displays
a valid control number assigned by the Of-
fice of Management and Budget.
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 26 U.S.C. 6103.
Background
This document contains proposed
amendments to regulations under sections
401(k) and 401(m) of the Internal Revenue
Code.
Section 401(k)(1) provides that a
profit-sharing, stock bonus, pre-ERISA
money purchase, or rural cooperative plan
will not fail to qualify under section 401(a)
merely because it contains a qualified
cash or deferred arrangement. Section
1.401(k)–1(a)(2) defines a cash or deferred
arrangement (CODA) as an arrangement
under which an eligible employee may
make a cash or deferred election with re-
spect to contributions to, or accruals or
other benefits under, a plan that is intended
to satisfy the requirements of section
401(a). Contributions that are made pur-
suant to a cash or deferred election under
a qualified CODA are commonly referred
to as elective contributions.
In order for a CODA to be a quali-
fied CODA, it must satisfy a number of
requirements. For example, contribu-
tions under the CODA must satisfy either
the nondiscrimination test set forth in
section 401(k)(3), called the actual de-
ferral percentage (ADP) test, or one of
the design-based alternatives in section
401(k)(11), 401(k)(12), or 401(k)(13).
Under the ADP test, the average percent-
age of compensation deferred for eligible
highly compensated employees (HCEs)
is compared to the average percentage of
compensation deferred for eligible non-
highly compensated employees (NHCEs),
and if certain deferral percentage limits are
exceeded with respect to HCEs, corrective
action must be taken.
Section 401(k)(12) provides a de-
sign-based safe harbor method under
2009–22 I.R.B.1052June 1, 2009

which a CODA is treated as satisfying the
ADP test if the arrangement meets certain
contribution and notice requirements. A
plan satisfies this safe harbor method if
the employer makes specified qualified
matching contributions (QMACs) for all
eligible NHCEs. The employer can make
QMACs under a basic matching formula
that provides for QMACs on behalf of
each eligible NHCE equal to 100% of
the employee’s elective contributions that
do not exceed 3% of compensation and
50% of the employee’s elective contribu-
tions that exceed 3% but do not exceed
5% of compensation. Alternatively, the
employer can make QMACs under an en-
hanced matching formula that provides,
at each rate of elective contributions, for
an aggregate amount of QMACs that is at
least as generous as under the basic match-
ing formula, but only if the rate of QMACs
under the enhanced matching formula
does not increase as the employee’s rate
of elective contributions increases. In lieu
of QMACs, the plan is permitted to pro-
vide qualified nonelective contributions
(QNECs) equal to 3% of compensation
for all eligible NHCEs. In addition, notice
must be provided to each eligible em-
ployee, within a reasonable period before
the beginning of the plan year, of the em-
ployee’s rights and obligations under the
plan.
Section 401(k)(13), as added by sec-
tion902ofthePensionProtectionAct
of 2006, Public Law 109–280 (PPA ’06),
provides an alternative design-based safe
harbor for a CODA that provides for au-
tomatic contributions at a specified level
and meets certain employer contribution
and notice requirements. Similar to the
design-based safe harbor under section
401(k)(12), section 401(k)(13) provides a
choice for an employer between satisfying
a matching contribution requirement or
a nonelective contribution requirement.
Under the matching contribution require-
ment, the employer can make matching
contributions under a basic matching
formula that provides for matching contri-
butions on behalf of each eligible NHCE
equal to 100% of the employee’s elective
contributions that do not exceed 1% of
compensation and 50% of the employee’s
elective contributions that exceed 1% but
do not exceed 6% of compensation. Alter-
natively, the employer can make matching
contributions under an enhanced match-
ing formula that provides, at each rate of
elective contributions, for an aggregate
amount of matching contributions that is
at least as generous as under the basic
matching formula at such rate, but only if
the rate of matching contributions under
the enhanced matching formula does not
increase as the employee’s rate of elective
contributions increases. In addition, the
plan must satisfy a notice requirement
under section 401(k)(13) that is similar
to the notice requirement under section
401(k)(12).
Except as discussed elsewhere in this
preamble, a plan that uses one of these safe
harbor methods under section 401(k)(12)
or (13) must specify, before the beginning
of the plan year, whether the safe har-
bor contribution will be the safe harbor
nonelective contribution or the safe harbor
matching contribution and is not permitted
to provide that ADP testing will be used if
the requirements for the safe harbor are not
satisfied.
Section 401(m) sets forth a nondis-
crimination requirement that applies to a
plan providing for matching contributions
or employee contributions. Such a plan
must satisfy either the nondiscrimination
test set forth in section 401(m)(2), called
the actual contribution percentage (ACP)
test, or one of the design-based alterna-
tives in section 401(m)(10), 401(m)(11),
or 401(m)(12). The ACP test in section
401(m)(2) is comparable to the ADP test
in section 401(k)(3).
Under section 401(m)(11), a defined
contribution plan is treated as satisfying
the ACP test with respect to matching con-
tributions if the plan satisfies the ADP safe
harbor of section 401(k)(12) and certain
other requirements are satisfied. Similarly,
under section 401(m)(12), as added by sec-
tion 902 of PPA ’06, a defined contribution
plan that provides for automatic contribu-
tions at a specified level is treated as meet-
ing the ACP test with respect to matching
contributions if the plan satisfies the ADP
safe harbor of section 401(k)(13) and cer-
tain other requirements are satisfied.
Section 403(b) provides favorable tax
treatment for the purchase of annuity con-
tracts that satisfy certain requirements.
Pursuant to sections 403(b)(1)(D) and
403(b)(12)(A)(i), the purchase of an an-
nuity contract (other than a purchase by
a church) is eligible for this favorable tax
treatment only if it is part of a plan that
meets the requirements of section 401(m),
as if it were a qualified plan under section
401(a).
Final regulations under sections 401(k)
and 401(m) were published on Decem-
ber 29, 2004. Sections 1.401(k)–3 and
1.401(m)–3 set forth the requirements for a
safe harbor plan under sections 401(k)(12)
and 401(m)(11), respectively. On Feb-
ruary 24, 2009, these regulations were
amended to reflect sections 401(k)(13) and
401(m)(12) (T.D. 9447, 2009–12 I.R.B.
694 [74 FR 8200]).
Sections1.401(k)–3(e)(1)and
1.401(m)–3(f)(1) provide that subject to
certain exceptions, a safe harbor plan must
be adopted before the beginning of the
plan year and be maintained throughout a
full 12-month plan year. Accordingly, if,
at the beginning of the plan year, a plan
contains an allocation formula that in-
cludes safe harbor matching or safe harbor
nonelective contributions, then the plan
may not be amended to revert to ADP or
ACP testing for the plan year (except to
the extent permitted under §§1.401(k)–3
and 1.401(m)–3).
Sections1.401(k)–3(f)and
1.401(m)–3(g) permit a plan that provides
for the use of the current year ADP or
ACP testing method to be amended after
the first day of the plan year to adopt the
safe harbor method under §1.401(k)–3
or §1.401(m)–3 using safe harbor non-
elective contributions, effective as of
the first day of the plan year, if certain
requirements are satisfied. In particular,
the amendment must be adopted no
later than 30 days before the last day of
the plan year, and the plan must satisfy
specified contingentand follow-up notice
requirements. Under §§1.401(k)–3(f)
and 1.401(m)–3(g), a plan satisfies the
contingent notice requirement if the notice
is provided before the plan year and
specifies that the plan may be amended
during the plan year to include the safe
harbor nonelective contribution and that,
if the plan is amended, a follow-up notice
will be provided. A plan satisfies the
follow-up notice requirement if, no later
than 30 days before the last day of the
plan year, each eligible employee is given
a notice that states that the safe harbor
nonelective contributions will be made for
the plan year.
A plan that provides for safe harbor
matching contributions will not fail to sat-
June 1, 200910532009–22 I.R.B.

isfy section 401(k)(3) or section 401(m)(2)
for a plan year merely because the plan
is amended during the plan year to re-
duce or suspend safe harbor matching
contributions on future elective contribu-
tions, as long as the requirements under
§1.401(k)–3(g) or §1.401(m)–3(h) are
met. Under these regulations: a notice
must be provided to all eligible employees
regarding the reduction or suspension of
safe harbor matching contributions; the
reduction or suspension of safe harbor
matching contributions must be effective
no earlier than the later of 30 days after
eligible employees are provided the notice
and the date the amendment is adopted;
eligible employees must be given a rea-
sonable opportunity prior to the reduction
or suspension of safe harbor matching
contributions to change their cash or de-
ferred elections and, if applicable, their
employee contribution elections; the plan
must be amended to provide that the ap-
plicable nondiscrimination tests will be
satisfied for the entire plan year; and
the plan must satisfy the requirements of
§§1.401(k)–3 and 1.401(m)–3 (other than
§§1.401(k)–3(g) and 1.401(m)–3(h)) with
respect to amounts deferred through the
effective date of the amendment.
Sections1.401(k)–3(e)(4)and
1.401(m)–3(f)(4) provide that, if a plan
terminates during a plan year, the plan
will not fail to satisfy the requirements of
§§1.401(k)–3(e)(1) and 1.401(m)–3(f)(1)
merely because the final plan year is less
than 12 months, provided that the plan
satisfies the requirements of §§1.401(k)–3
and 1.401(m)–3 through the date of termi-
nation and either (1) the plan would have
satisfied the requirements applicable to
a plan amendment to reduce or suspend
safe harbor matching contributions (other
than the requirement that employees have
a reasonable opportunity to change their
cash or deferred elections and, if appli-
cable, employee contribution elections)
or (2) the termination is in connection
with a transaction described in section
410(b)(6)(C) or the employer incurs a sub-
stantial business hardship (comparable to
a substantial business hardship described
in section 412(d)
1
).
Section 416 sets forth the rules for
top-heavy plans. Section 416(g)(4)(H)
provides that a top-heavy plan will not
include a plan which consists solely of a
cash or deferred arrangement that meets
the requirements of section 401(k)(12)
or 401(k)(13) and matching contributions
with respect to which the requirements of
section 401(m)(11) or 401(m)(12) are met.
Explanation of Provisions
The proposed regulations would amend
§§1.401(k)–3 and 1.401(m)–3 to permit an
employer sponsoring a safe harbor plan de-
scribed in section 401(k)(12) or 401(k)(13)
that incurs a substantial business hardship
(comparable to a substantial business hard-
shipdescribedinsection412(c))toreduce
or suspend safe harbor nonelective contri-
butions during a plan year. These proposed
regulations would provide an employer an
alternative to the option of terminating the
employer’s safe harbor plan in such a situ-
ation.
The proposed regulations would allow
for the reduction or suspension of safe har-
bor nonelective contributions under rules
generally comparable to the provisions re-
latingtothereductionorsuspensionof
safe harbor matching contributions. Under
these rules, a plan that reduces or suspends
safe harbor nonelective contributions will
not fail to satisfy section 401(k)(3), pro-
vided that: (1) all eligible employees are
provided a supplemental notice of the re-
duction or suspension; (2) the reduction
or suspension of safe harbor nonelective
contributions is effective no earlier than
the later of 30 days after eligible employ-
ees are provided the supplemental notice
and the date the amendment is adopted;
(3) eligible employees are given a reason-
able opportunity (including a reasonable
period after receipt of the supplemental no-
tice) prior to the reduction or suspension of
the safe harbor nonelective contributions
to change their cash or deferred elections
and, if applicable, their employee contri-
bution elections; (4) the plan is amended to
providethattheADPtestwillbesatisfied
for the entire plan year in which the reduc-
tion or suspension occurs, using the cur-
rent year testing method; and (5) the plan
satisfies the safe harbor nonelective con-
tribution requirement with respect to safe
harbor compensation paid through the ef-
fective date of the amendment. The pro-
posed regulations would also provide that
the supplemental notice requirement is sat-
isfied if each eligible employee is given a
notice that explains: (1) the consequences
of the amendment reducing or suspend-
ing future safe harbor nonelective contri-
butions; (2) the procedures for changing
cash or deferred elections and, if applica-
ble, employee contribution elections; and
(3) the effective date of the amendment.
The proposed regulations would further
provide that these same rules that apply
to safe harbor plans under §1.401(k)–3
also apply to safe harbor plans under
§1.401(m)–3, except that the plan must
be amended to provide that the ACP test
will be satisfied for the entire plan year in
which the reduction or suspension occurs
using the current year testing method.
Because the reduction or suspension of
safe harbor contributions can be effective
no earlier than the later of 30 days after the
notice is provided to all eligible employees
and the date the amendment is adopted, an
employer that wants to reduce or suspend
safe harbor contributions during a year
could not implement this change by adopt-
ing the amendment at the end of the plan
year. In addition, a plan that is amended
during the plan year to reduce or suspend
safe harbor contributions (whether non-
elective contributions or matching contri-
butions) must prorate the otherwise ap-
plicable compensation limit under section
401(a)(17) in accordance with the require-
ments of §1.401(a)(17)–1(b)(3)(iii)(A).
Furthermore, a plan that is amended to re-
duce or suspend safe harbor contributions
is no longer a plan described in section
401(k)(12), 401(k)(13), 401(m)(11), or
401(m)(12) for the entire plan year. Ac-
cordingly, such a plan is not described in
section 416(g)(4)(H) and, thus, will be
subject to the top-heavy rules under sec-
tion 416.
Proposed Effective Date
These regulations are proposed to be ef-
fective for amendments adopted after May
18, 2009. Taxpayers may rely on these
proposed regulations for guidance pending
the issuance of final regulations. If, and to
the extent, the final regulations are more
restrictive than the guidance in these pro-
posed regulations, those provisions of the
1
The definition of substantial business hardship in section 412(d) was relocated to become part of section 412(c) by section 111 of the Pension Protection Act of 2006, Public Law 109–280.
2009–22 I.R.B.1054June 1, 2009

final regulations will be applied without
retroactive effect.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory as-
sessment is not required. It has been de-
termined that 5 U.S.C. 533(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to these regulations.
It is hereby certified that the collection of
information in these proposed regulations
will not have a significant economic im-
pact on a substantial number of small en-
tities. The proposed regulations impact on
small businesses is as follows. A pension
consultant or attorney must read the reg-
ulation. He must then communicate this
information to the small business owner.
The small business owner must then de-
cide if he wants to reduce nonelective con-
tributions to its safe harbor plan. Once this
decision is made, the pension consultant or
attorney must draft the notice to employees
and the small business must make sure that
the employees receive the notice.
We estimate that the cost to do these
tasks is $500-$1000. If the small busi-
ness owner can implement this program
by July 1, 2009, he will save 1.5% of his
payroll for 2009. A small business with
an annual payroll of $1,000,000 can save
$15,000 in 2009. Thus, adopting the pro-
visions in these regulation will in almost
all cases save the small business owner
money. Therefore, an analysis under the
Regulatory Flexibility Act (5 U.S.C. chap-
ter 6) is not required.
Pursuant to section 7805(f) of the Inter-
nal Revenue Code, these regulations have
been submitted to the Chief Counsel for
Advocacy of the Small Business Admin-
istration for comments on its impact on
small business.
Comments and Requests for Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written (one signed
and eight (8) copies) or electronic com-
ments that are submitted timely to the IRS.
The IRS and Treasury Department specif-
ically request comments on the clarity of
the proposed rules and how they can be
made easier to understand.
The current regulations, in describing
the requirement for safe harbor plans that
a notice be provided before the begin-
ning of the plan year, do not address the
possibility that safe harbor contributions
may be reduced or suspended during the
year. Since, under these regulations, safe
harbor nonelective contributions, as well
as safe harbor matching contributions,
can be reduced or suspended during the
plan year under certain circumstances,
the IRS and Treasury are considering
adding to the minimum content listing in
§1.401(k)–3(d)(2)(ii), a requirement that
the possibility of reduced or suspended
safe harbor contributions be described in
thenoticerequiredtobeprovidedbefore
the beginning of the plan year (except
in the case of a contingent notice de-
scribed in §1.401(k)–3(f)). If adopted,
the requirement that the notice describe
the possibility of reduced or suspended
safe harbor contributions would not apply
for plan years beginning before January
1, 2010. The IRS and Treasury specifi-
cally request comments on whether the
additional content requirement should be
added to the regulations.
A public hearing has been scheduled
for September 23, 2009, at 10 a.m. in the
IRS Auditorium, Internal Revenue Build-
ing, 1111 Constitution Avenue, N.W.,
Washington, DC. Due to building security
procedures, visitors must enter at the Con-
stitution Avenue entrance. In addition, 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
thehearing,seetheFORFURTHERIN-
FORMATION CONTACT section of this
preamble.
Persons who wish to present oral com-
ments at the hearing must submit written
or electronic comments and submit an out-
line of the topics to be discussed and the
amount of time to be devoted to each topic
(a signed original and eight (8) copies) by
August 19, 2009. A period of 10 minutes
will be allotted to each person for making
comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receivingoutlines has passed.
Copies of the agenda will be available free
of charge at the hearing.
Drafting Info
rmation
The principal authors of these regu-
lations are Dana Barry, William Gibbs,
and Lisa Mojiri-Azad, Office of Division
Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities). How-
ever, other personnel from the IRS and
Treasury Department participated in the
development of these regulations.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
Part 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.401(k)–3 is also issued under
26 U.S.C. 401(m)(9)
Par. 2. Section 1.401(k)–0 is amended
by revising the entries for §1.401(k)–3(g),
(g)(1) and (g)(2) to read as follows:
§1.4
01(k)–0 Table of Contents.
*****
§1.401(k)–3 Safe harbor requirements.
*****
(g) Permissible reduction or suspension
of safe harbor contributions.
(1) General rule.
(i) Matching contributions.
(ii) Nonelective contributions.
(2) Supplemental notice.
*****
Par. 3. Section 1.401(k)–3 is amended
by:
1. Revising paragraph (e)(4)(ii).
2. Revising paragraph (g).
The revisions read as follows:
§1.401(k)–3 Safe harbor requirements.
*****
(e) * * *
(4) * * *
(ii) The plan termination is in connec-
tion with a transaction described in section
June 1, 200910552009–22 I.R.B.

410(b)(6)(C) or the employer incurs a sub-
stantial business hardship comparable to a
substantial business hardship described in
section 412(c).
*****
(g)Permissible reduction or suspension
of safe harbor contributions—(1)General
rule—(i)Matching contributions.Aplan
that provides for safe harbor matching con-
tributions intended to satisfy the require-
mentsofparagraph(c)ofthissectionfora
plan year will not fail to satisfy the require-
ments of section 401(k)(3) merely because
the plan is amended during the plan year
to reduce or suspend safe harbor matching
contributions on future elective contribu-
tions (and, if applicable, employee contri-
butions) provided that—
(A) All eligible employees are provided
the supplemental notice in accordance
with paragraph (g)(2) of this section;
(B) The reduction or suspension of safe
harbor matching contributions is effective
no earlier than the later of 30 days after
eligible employees are provided the sup-
plemental notice described in paragraph
(g)(2) of this section and the date the
amendment is adopted;
(C) Eligible employees are given a rea-
sonable opportunity (including a reason-
able period after receipt of the supplemen-
tal notice) prior to the reduction or suspen-
sion of safe harbor matching contributions
to change their cash or deferred elections
and, if applicable, their employee contri-
bution elections;
(D) The plan is amended to provide that
the ADP test will be satisfied for the entire
plan year in which the reduction or suspen-
sion occurs using the current year testing
method described in §1.401(k)–2(a)(2)(ii);
and
(E) The plan satisfies the requirements
of this section (other than this paragraph
(g)) with respect to amounts deferred
through the effective date of the amend-
ment.
(ii)Nonelective contributions.Aplan
that provides for safe harbor nonelective
contributions intended to satisfy the re-
quirements of paragraph (b) of this sec-
tion for the plan year will not fail to sat-
isfy the requirements of section 401(k)(3)
merely because the plan is amended dur-
ing the plan year to reduce or suspend safe
harbor nonelective contributions provided
that—
(A) The employer incurs a substantial
business hardship (comparable to a sub-
stantial business hardship described in sec-
tion 412(c));
(B) The amendment is adopted after
May 18, 2009;
(C) All eligible employees are provided
the supplemental notice in accordance
with paragraph (g)(2) of this section;
(D) The reduction or suspension of
safe harbor nonelective contributions is
effective no earlier than the later of 30
days after eligible employees are provided
the supplemental notice described in para-
graph (g)(2) of this section and the date
the amendment is adopted;
(E) Eligible employees are given a rea-
sonable opportunity (including a reason-
able period after receipt of the supplemen-
tal notice) prior to the reduction or suspen-
sion of nonelective contributions to change
their cash or deferred elections and, if ap-
plicable, their employee contribution elec-
tions;
(F) The plan is amended to provide that
the ADP test will be satisfied for the entire
plan year in which the reduction or suspen-
sion occurs using thecurrent year testing
method described in §1.401(k)–2(a)(2)(ii);
and
(G) The plan satisfies the requirements
of this section (other than this paragraph
(g)) with respect to safe harbor compensa-
tion paid through the effective date of the
amendment.
(2)Supplemental notice. The supple-
mental notice requirement of this para-
graph (g)(2) is satisfied if each eligible em-
ployee is given a notice (in writing or such
other form as prescribed by the Commis-
sioner) that explains—
(i) The consequences of the amendment
which reduces or suspends future safe har-
bor contributions;
(ii) The procedures for changing their
cash or deferred elections and, if applica-
ble, their employee contribution elections;
and
(iii) The effective date of the amend-
ment.
Par. 4. Section 1.401(m)–0 is amended
by revising the entries for §1.401(m)–3(h),
(h)(1) and (h)(2) in their entirety to read as
follows:
§1.401(m)–0 Table of Contents.
*****
§1.401(m)–3 Safe Harbor Requirements.
*****
(h) Permissible reduction or suspension
of safe harbor contributions.
(1) General rule.
(i) Matching contributions.
(ii) Nonelective contributions.
(2) Supplemental notice.
*****
Par. 5. Section 1.401(m)–3 is amended
by:
1. Revising paragraph (f)(4)(ii).
2. Revising paragraph (h).
The revisions read as follows:
§1.401(m)–3 Safe harbor requirements.
*****
(f) * * *
(4) * * *
(ii) The plan termination is in connec-
tion with a transaction described in section
410(b)(6)(C) or the employer incurs a sub-
stantial business hardship, comparable to a
substantial business hardship described in
section 412(c).
*****
(h)Permissible reduction or suspension
of safe harbor contributions—(1)General
rule—(i)Matching contributions.Aplan
that provides for safe harbor matching con-
tributions intended to satisfy the require-
ments of paragraph (c) of this section for
a plan year will not fail to satisfy the re-
quirements of section 401(m)(2) merely
because the plan is amended during the
plan year to reduce or suspend safe harbor
matching contributions on future elective
deferrals and, if applicable, employee con-
tributions provided that—
(A) All eligible employees are provided
the supplementalnotice in accordance
with paragraph (h)(2) of this section;
(B) The reduction or suspension of safe
harbor matching contributions is effective
no earlier than the later of 30 days after
eligible employees are provided the sup-
plemental notice described in paragraph
(h)(2) of this section and the date the
amendment is adopted;
(C) Eligible employees are given a rea-
sonable opportunity (including a reason-
able period after receipt of the supplemen-
tal notice) prior to the reduction or suspen-
sion of safe harbor matching contributions
to change their cash or deferred elections
2009–22 I.R.B.1056June 1, 2009

and, if applicable, their employee contri-
bution elections;
(D) The plan is amended to provide
that the ACP test will be satisfied for
the entire plan year in which the re-
duction or suspension occurs using the
current year testing method described in
§1.401(m)–2(a)(2)(ii); and
(E) The plan satisfies the requirements
of this section (other than this paragraph
(h)) with respect to amounts deferred
through the effective date of the amend-
ment.
(ii)Nonelective contributions.Aplan
that provides for safe harbor nonelective
contributions intended to satisfy the re-
quirements of paragraph (b) of this section
will not fail to satisfy the requirements of
section 401(m)(2) for the plan year merely
because the plan is amended during the
plan year to reduce or suspend safe harbor
nonelective contributions provided that—
(A) The employer incurs a substantial
business hardship (comparable to a sub-
stantial business hardship described in sec-
tion 412(c));
(B) The amendment is adopted after
May 18, 2009;
(C) All eligible employees are provided
the supplemental notice in accordance
with paragraph (h)(2) of this section;
(D) The reduction or suspension of
safe harbor nonelective contributions is
effective no earlier than the later of 30
days after eligible employees are provided
the supplemental notice described in para-
graph (h)(2) of this section and the date
the amendment is adopted;
(E) Eligible employees are given a rea-
sonable opportunity (including a reason-
able period after receipt of the supplemen-
tal notice) prior to the reduction or suspen-
sion of nonelective contributions to change
their cash or deferred elections and, if ap-
plicable, their employee contribution elec-
tions;
(F) The plan is amended to provide
that the ACP test will be satisfied for
the entire plan year in which the re-
duction or suspension occurs using the
current year testing method described in
§1.401(m)–2(a)(2)(ii); and
(G) The plan satisfies the requirements
of this section (other than this paragraph
(h)) with respect to safe harbor compensa-
tion paid through the effective date of the
amendment.
(2)Supplemental notice. The supple-
mental notice requirement of this para-
graph (h)(2) is satisfied if each eligible em-
ployee is given a notice that satisfies the
requirements of §1.401(k)–3(g)(2).
LindaE.Stiff,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on May 15, 2009,
8:45 a.m., and published in the issue of the Federal Register
for May 18, 2009, 74 F.R. 23134)
June 1, 200910572009–22 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.
2009–22 I.R.B.iJune 1, 2009

Numerical Finding List
1
Bulletins 2009–1 through 2009–22
Announcements:
2009-1, 2009-1 I.R.B.242
2009-2, 2009-5 I.R.B.424
2009-3, 2009-6 I.R.B.459
2009-4, 2009-8 I.R.B.597
2009-5, 2009-8 I.R.B.569
2009-6, 2009-9 I.R.B.643
2009-7, 2009-10 I.R.B.663
2009-8, 2009-8 I.R.B.598
2009-9, 2009-9 I.R.B.643
2009-10, 2009-9 I.R.B.644
2009-11, 2009-10 I.R.B.663
2009-12, 2009-11 I.R.B.686
2009-13, 2009-11 I.R.B.686
2009-14, 2009-11 I.R.B.687
2009-15, 2009-11 I.R.B.687
2009-16, 2009-11 I.R.B.691
2009-17, 2009-12 I.R.B.714
2009-18, 2009-12 I.R.B.714
2009-19, 2009-12 I.R.B.715
2009-20, 2009-12 I.R.B.716
2009-21, 2009-13 I.R.B.730
2009-22, 2009-13 I.R.B.731
2009-23, 2009-13 I.R.B.731
2009-24, 2009-13 I.R.B.732
2009-25, 2009-14 I.R.B.755
2009-26, 2009-14 I.R.B.755
2009-27, 2009-14 I.R.B.756
2009-28, 2009-15 I.R.B.760
2009-29, 2009-14 I.R.B.757
2009-30, 2009-15 I.R.B.794
2009-31, 2009-15 I.R.B.798
2009-32, 2009-15 I.R.B.799
2009-33, 2009-15 I.R.B.799
2009-34, 2009-18 I.R.B.916
2009-35, 2009-17 I.R.B.892
2009-36, 2009-18 I.R.B.927
2009-37, 2009-19 I.R.B.940
2009-38, 2009-19 I.R.B.940
2009-39, 2009-20 I.R.B.1022
2009-40, 2009-20 I.R.B.1023
2009-41, 2009-20 I.R.B.1026
2009-42, 2009-20 I.R.B.1027
2009-45, 2009-21 I.R.B.1040
2009-46, 2009-21 I.R.B.1040
Notices:
2009-1, 2009-2 I.R.B.250
2009-2, 2009-4 I.R.B.344
2009-3, 2009-2 I.R.B.250
2009-4, 2009-2 I.R.B.251
2009-5, 2009-3 I.R.B.309
Notices— Continued:
2009-6, 2009-3 I.R.B.311
2009-7, 2009-3 I.R.B.312
2009-8, 2009-4 I.R.B.347
2009-9, 2009-5 I.R.B.419
2009-10, 2009-5 I.R.B.419
2009-11, 2009-5 I.R.B.420
2009-12, 2009-6 I.R.B.446
2009-13, 2009-6 I.R.B.447
2009-14, 2009-7 I.R.B.516
2009-15, 2009-6 I.R.B.449
2009-16, 2009-8 I.R.B.572
2009-17, 2009-8 I.R.B.575
2009-18, 2009-10 I.R.B.648
2009-19, 2009-10 I.R.B.660
2009-20, 2009-12 I.R.B.711
2009-21, 2009-13 I.R.B.724
2009-22, 2009-14 I.R.B.741
2009-23, 2009-16 I.R.B.802
2009-24, 2009-16 I.R.B.817
2009-25, 2009-15 I.R.B.758
2009-26, 2009-16 I.R.B.833
2009-27, 2009-16 I.R.B.838
2009-29, 2009-16 I.R.B.849
2009-30, 2009-16 I.R.B.852
2009-31, 2009-16 I.R.B.856
2009-32, 2009-17 I.R.B.865
2009-33, 2009-17 I.R.B.865
2009-34, 2009-17 I.R.B.876
2009-35, 2009-17 I.R.B.876
2009-36, 2009-17 I.R.B.883
2009-37, 2009-18 I.R.B.898
2009-38, 2009-18 I.R.B.901
2009-39, 2009-18 I.R.B.902
2009-40, 2009-19 I.R.B.931
2009-41, 2009-19 I.R.B.933
2009-42, 2009-20 I.R.B.1011
2009-43, 2009-21 I.R.B.1037
2009-44, 2009-21 I.R.B.1037
2009-45, 2009-22 I.R.B.1047
Proposed Regulations:
REG-144615-02, 2009-7 I.R.B.561
REG-144689-04, 2009-18 I.R.B.906
REG-148568-04, 2009-5 I.R.B.421
REG-160872-04, 2009-4 I.R.B.358
REG-158747-06, 2009-4 I.R.B.362
REG-116699-07, 2009-13 I.R.B.727
REG-138326-07, 2009-9 I.R.B.638
REG-143686-07, 2009-8 I.R.B.579
REG-150670-07, 2009-4 I.R.B.378
REG-113462-08, 2009-4 I.R.B.379
REG-147636-08, 2009-9 I.R.B.641
REG-150066-08, 2009-5 I.R.B.423
REG-107271-08, 2009-22 I.R.B.1051
REG-107845-08, 2009-20 I.R.B.1014
Proposed Regulations— Continued:
REG-119532-08, 2009-20 I.R.B.1017
REG-115699-09, 2009-22 I.R.B.1052
Revenue Procedures:
2009-1, 2009-1 I.R.B.1
2009-2, 2009-1 I.R.B.87
2009-3, 2009-1 I.R.B.107
2009-4, 2009-1 I.R.B.118
2009-5, 2009-1 I.R.B.161
2009-6, 2009-1 I.R.B.189
2009-7, 2009-1 I.R.B.226
2009-8, 2009-1 I.R.B.229
2009-9, 2009-2 I.R.B.256
2009-10, 2009-2 I.R.B.267
2009-11, 2009-3 I.R.B.313
2009-12, 2009-3 I.R.B.321
2009-13, 2009-3 I.R.B.323
2009-14, 2009-3 I.R.B.324
2009-15, 2009-4 I.R.B.356
2009-16, 2009-6 I.R.B.449
2009-17, 2009-7 I.R.B.517
2009-18, 2009-11 I.R.B.670
2009-19, 2009-14 I.R.B.747
2009-20, 2009-14 I.R.B.749
2009-21, 2009-16 I.R.B.860
2009-22, 2009-16 I.R.B.862
2009-23, 2009-17 I.R.B.884
2009-24, 2009-17 I.R.B.885
2009-26, 2009-19 I.R.B.935
2009-27, 2009-19 I.R.B.938
2009-28, 2009-20 I.R.B.1011
2009-29, 2009-22 I.R.B.1050
Revenue Rulings:
2009-1, 2009-2 I.R.B.248
2009-2, 2009-2 I.R.B.245
2009-3, 2009-5 I.R.B.382
2009-4, 2009-5 I.R.B.408
2009-5, 2009-6 I.R.B.432
2009-6, 2009-12 I.R.B.694
2009-7, 2009-13 I.R.B.717
2009-8, 2009-10 I.R.B.645
2009-9, 2009-14 I.R.B.735
2009-10, 2009-14 I.R.B.738
2009-11, 2009-18 I.R.B.896
2009-12, 2009-19 I.R.B.928
2009-13, 2009-21 I.R.B.1029
2009-14, 2009-21 I.R.B.1031
2009-15, 2009-21 I.R.B.1035
Tax Conventions:
2009-5, 2009-8 I.R.B.569
Treasury Decisions:
9434, 2009-4 I.R.B.339
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2008–27 through 2008–52 is in Internal Revenue Bulletin
2008–52, dated December 29, 2008.
June 1, 2009ii2009–22 I.R.B.

Treasury Decisions— Continued:
9435, 2009-4 I.R.B.333
9436, 2009-3 I.R.B.268
9437, 2009-4 I.R.B.341
9438, 2009-5 I.R.B.387
9439, 2009-5 I.R.B.416
9440, 2009-5 I.R.B.409
9441, 2009-7 I.R.B.460
9442, 2009-6 I.R.B.434
9443, 2009-8 I.R.B.564
9444, 2009-9 I.R.B.603
9445, 2009-9 I.R.B.635
9446, 2009-9 I.R.B.607
9447, 2009-12 I.R.B.694
9448, 2009-20 I.R.B.942
9449, 2009-22 I.R.B.1044
2009–22 I.R.B.iiiJune 1, 2009

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2009–1 through 2009–22
Notices:
99-35
Obsoleted by
Notice 2009-15, 2009-6 I.R.B.449
2001-55
Modified by
Notice 2009-1, 2009-2 I.R.B.250
2002-27
Modified by
Notice 2009-9, 2009-5 I.R.B.419
2005-74
Obsoleted by
T.D. 9446, 2009-9 I.R.B.607
2007-26
Modified by
Notice 2009-15, 2009-6 I.R.B.449
2007-52
Clarified, modified, and amplified by
Notice 2009-24, 2009-16 I.R.B.817
2007-53
Clarified, modified, and ampilfied by
Notice 2009-23, 2009-16 I.R.B.802
2007-54
Obsoleted by
T.D. 9436, 2009-3 I.R.B.268
2008-11
Obsoleted by
T.D. 9436, 2009-3 I.R.B.268
2008-12
Obsoleted by
T.D. 9436, 2009-3 I.R.B.268
Rev. Proc. 2009-11, 2009-3 I.R.B.313
2008-13
Obsoleted by
T.D. 9436, 2009-3 I.R.B.268
List of forms modified and superseded by
Rev. Proc. 2009-11, 2009-3 I.R.B.313
Modified and clarified by
Notice 2009-5, 2009-3 I.R.B.309
2008-46
Obsoleted by
T.D. 9436, 2009-3 I.R.B.268
Rev. Proc. 2009-11, 2009-3 I.R.B.313
2008-100
Amplified and superseded by
Notice 2009-14, 2009-7 I.R.B.516
Notices— Continued:
2008-110
Modified by
Notice 2009-34, 2009-17 I.R.B.876
2009-31
Modified by
Notice 2009-42, 2009-20 I.R.B.1011
Proposed Regulations:
REG-144615-02
Corrected by
Ann. 2009-19, 2009-12 I.R.B.715
REG-149519-03
Withdrawn by
Ann. 2009-4, 2009-8 I.R.B.597
REG-148326-05
Corrected by
Ann. 2009-14, 2009-11 I.R.B.687
REG-158747-06
Hearing scheduled by
Ann. 2009-29, 2009-14 I.R.B.757
REG-143686-07
Corrected by
Ann. 2009-40, 2009-20 I.R.B.1023
REG-150066-08
Corrected by
Ann. 2009-31, 2009-15 I.R.B.798
Hearing cancelled by
Ann. 2009-36, 2009-18 I.R.B.927
Revenue Procedures:
2007-17
Superseded by
Rev. Proc. 2009-14, 2009-3 I.R.B.324
2007-66
Modified and superseded by
Rev. Proc. 2009-21, 2009-16 I.R.B.860
2007-68
Superseded by
Rev. Proc. 2009-17, 2009-7 I.R.B.517
2007-71
Modified by
Notice 2009-3, 2009-2 I.R.B.250
2008-1
Superseded by
Rev. Proc. 2009-1, 2009-1 I.R.B.1
2008-2
Superseded by
Rev. Proc. 2009-2, 2009-1 I.R.B.87
2008-3
Superseded by
Rev. Proc. 2009-3, 2009-1 I.R.B.107
Revenue Procedures— Continued:
2008-4
Superseded by
Rev. Proc. 2009-4, 2009-1 I.R.B.118
2008-5
Superseded by
Rev. Proc. 2009-5, 2009-1 I.R.B.161
2008-6
Superseded by
Rev. Proc. 2009-6, 2009-1 I.R.B.189
2008-7
Superseded by
Rev. Proc. 2009-7, 2009-1 I.R.B.226
2008-8
Superseded by
Rev. Proc. 2009-8, 2009-1 I.R.B.229
2008-9
Superseded by
Rev. Proc. 2009-9, 2009-2 I.R.B.256
2008-17
Obsoleted in part by
Rev. Proc. 2009-18, 2009-11 I.R.B.670
2008-19
Obsoleted in part by
Rev. Proc. 2009-27, 2009-19 I.R.B.938
2008-61
Superseded by
Rev. Proc. 2009-3, 2009-1 I.R.B.107
2008-65
Amplified and supplemented by
Rev. Proc. 2009-16, 2009-6 I.R.B.449
2008-66
Modified and superseded by
Rev. Proc. 2009-21, 2009-16 I.R.B.860
2008-68
Amplified and superseded by
Rev. Proc. 2009-15, 2009-4 I.R.B.356
2009-19
Modified and superseded by
Rev. Proc. 2009-26, 2009-19 I.R.B.935
Revenue Rulings:
65-286
Obsoleted by
T.D. 9435, 2009-4 I.R.B.333
71-381
Obsoleted in part by
Rev. Rul. 2009-9, 2009-14 I.R.B.735
76-54
Obsoleted by
T.D. 9435, 2009-4 I.R.B.333
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2008–27 through 2008–52 is in Internal Revenue Bulletin 2008–52, dated December 29,
2008.
June 1, 2009iv2009–22 I.R.B.

Revenue Rulings— Continued:
92-19
Supplemented by
Rev. Rul. 2009-3, 2009-5 I.R.B.382
2008-19
Modified by
Rev. Rul. 2009-3, 2009-5 I.R.B.382
Treasury Decisions:
9394
Corrected by
Ann. 2009-42, 2009-20 I.R.B.1027
9436
Corrected by
Ann. 2009-15, 2009-11 I.R.B.687
9438
Corrected by
Ann. 2009-30, 2009-15 I.R.B.794
9439
Corrected by
Ann. 2009-12, 2009-11 I.R.B.686
9441
Corrected by
Ann. 2009-18, 2009-12 I.R.B.714
Ann. 2009-39, 2009-20 I.R.B.1022
9442
Corrected by
Ann. 2009-13, 2009-11 I.R.B.686
Ann. 2009-20, 2009-12 I.R.B.716
9446
Corrected by
Ann. 2009-23, 2009-13 I.R.B.731
Ann. 2009-45, 2009-21 I.R.B.1040
2009–22 I.R.B.vJune 1, 2009

June 1, 20092009–22 I.R.B.

2009–22 I.R.B.June 1, 2009

June 1, 20092009–22 I.R.B.

INTERNAL REVENUE BULLETIN
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