IRS Form 5308 Guide: Change in Plan or Trust Year Rules

Introduction: What Is IRS Form 5308?

IRS Form 5308, titled Request for Change in Plan/Trust Year, is an official application issued by the Internal Revenue Service (IRS). It is governed by the IRS Employee Plans division under Section 412 of the Internal Revenue Code (IRC) and the Employee Retirement Income Security Act (ERISA).

Employers and plan administrators use Form 5308 to request formal IRS approval to change the annual accounting period of an employee retirement plan or its associated tax-exempt trust. This includes defined contribution plans like 401(k) and profit-sharing plans, as well as defined benefit pension plans.

Because retirement plans operate on a strict 12-month accounting cycle, shifting that cycle creates a transitional “short plan year.” Form 5308 ensures that this transition does not compromise employee vesting, minimum funding standards, or federal non-discrimination rules.

Purpose of the Form

A retirement plan’s “plan year” determines critical compliance deadlines, annual contribution limits, non-discrimination testing windows, and Form 5500 annual reporting schedules. When a business changes its corporate fiscal year, undergoes a corporate merger, or seeks administrative alignment, it often needs to adjust its retirement plan year to match.

While some plan year changes qualify for automatic approval, others require direct IRS evaluation to prevent potential abuse. The IRS uses Form 5308 to review the business reasons behind the requested change and verify that plan participants are not harmed.

Filing Form 5308 secures an official IRS approval ruling, confirming that the new plan year and the transitional short plan year comply fully with federal tax qualification requirements.

Who Needs to File / Use This Form

Form 5308 is filed by employers, plan sponsors, or plan administrators who want to change their plan year or trust year and do not qualify for automatic approval under IRS Revenue Procedure 87-27. You must submit Form 5308 if:

• Non-Qualifying Plan Changes: Your proposed change fails one or more conditions required for automatic approval (such as having changed the plan year within the previous four plan years).
• Defined Benefit Funding Adjustments: You maintain a defined benefit or money purchase pension plan where the change affects minimum funding standards or requires special amortization adjustments.
• Trust Year Realignment: You are changing the accounting period of a separate employee benefit trust that does not align automatically with the plan year.

Who Is Exempt / Not Required to File

Many retirement plan sponsors can change their plan year without submitting Form 5308. You are exempt or not required to file if:

• Automatic Approval Qualifiers: Under IRS Revenue Procedure 87-27, you do not need to file Form 5308 if all statutory conditions are met, including: no prior change in the last four years, no plan year exceeding 12 months, and satisfaction of all coverage and non-discrimination rules during the short period.
• Individual Retirement Accounts: Traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs operate on a calendar year basis and do not use Form 5308.
• Corporate Tax Year Changes: Changing an entity’s general corporate tax accounting period requires Form 1128, not Form 5308.

When to File

Timing is critical when submitting Form 5308. The application is event-based and must adhere to a strict statutory deadline:

• Filing Deadline: Form 5308 must be filed on or before the last day of the short plan year (the transitional period between the end of the old plan year and the start of the new plan year).
• Example Timeline: If your plan year currently ends on December 31 and you want to switch to a plan year ending on June 30, your short plan year runs from January 1 through June 30. You must submit Form 5308 on or before June 30 of that transitional year.

Filing after the short plan year has ended will result in an automatic rejection of the request by the IRS.

Where and How to File

Form 5308 must be submitted directly to the IRS Employee Plans division in accordance with the following procedures:

• Mailing Address: Mail the completed Form 5308, along with all required attachments and justification statements, to the dedicated IRS Employee Plans address as specified in the official Form 5308 instructions.
• IRS User Fee: Sponsoring employers must pay the mandatory IRS user fee (or include proof of electronic payment via Pay.gov) as determined by the annual IRS Employee Plans Revenue Procedure.

Always maintain a complete file copy of your submitted application, certified mail tracking receipts, and user fee confirmations in your permanent plan records.

Step-by-Step Instructions to Fill Form 5308

Form 5308 is a focused two-page application covering employer identification, plan details, dates of the transition, and compliance questions.

Section / Lines	Key Focus Areas	What to Enter / Select
Lines 1a – 2d	Employer & Administrator Info	Enter the legal employer name, physical address, Employer Identification Number (EIN), primary contact person, phone number, and plan administrator details if different.
Lines 3a – 3d	Plan Identification	Provide the official plan name, 3-digit plan number (e.g., 001), date established, and select the plan type (e.g., defined benefit, profit-sharing, 401(k), money purchase).
Line 4	Dates of Proposed Change	Enter the month and day the present plan year ends, the proposed new plan year end date, and the exact beginning and ending dates of the short transitional period.
Line 5	Business Reason	Provide a clear, detailed written explanation of the substantial business reason justifying the change in plan year.
Lines 6 – 11	Statutory Compliance Checklist	Answer questions regarding trust accounting, minimum funding standards, top-heavy status, vesting rules, and past plan year changes.
Signatures	Legal Certification	The authorized employer representative or plan administrator signs and dates the document under penalties of perjury.

Documenting the Business Reason (Line 5)

The IRS requires a “substantial business reason” for approving a plan year change. Valid reasons include aligning the retirement plan with a newly adopted corporate fiscal year, coordinating plan years following a corporate merger or acquisition, or streamlining parent-subsidiary financial reporting.

Compliance Questions (Lines 6 – 11)

These questions verify that the change is not being made to reduce participant benefits or avoid minimum funding contributions. For defined benefit plans, you must detail how the short period will affect deductible limits and funding standard accounts.

Required Documents and Information Needed Before Filling

Before preparing Form 5308, assemble the following corporate and plan records:

• Plan Document & Board Resolution: The current executed plan document and the formal board amendment authorizing the change in plan year.
• Transition Dates: Exact start and end dates for the old plan year, the new plan year, and the short plan year.
• Written Justification Statement: A comprehensive narrative detailing the business necessity for the requested change.
• Actuarial Data (if applicable): Funding calculations and amortization schedules for defined benefit or money purchase plans.
• Form 2848: Power of Attorney and Declaration of Representative (if an outside attorney or CPA is submitting on your behalf).
• User Fee Proof: Confirmation of the paid IRS Employee Plans user fee.

Common Mistakes to Avoid

• Missing the Short Plan Year Deadline: Submitting Form 5308 after the last day of the short plan year is a fatal timing error that causes immediate IRS rejection.
• Filing When Eligible for Automatic Approval: Submitting Form 5308 when your plan meets all Revenue Procedure 87-27 automatic change criteria wastes time and non-refundable user fees.
• Confusing Plan Years with Tax Years: Using Form 5308 to change a company’s general tax accounting year instead of Form 1128.
• Omitting the Short-Year Form 5500: Forgetting that changing a plan year requires filing a short-period Form 5500 for the transitional months.
• Insufficient Business Justification: Providing vague reasons (such as “administrative convenience”) without explaining the underlying corporate necessity.

Penalties and Compliance Risks

Failing to follow proper procedures when changing a plan year creates substantial financial and regulatory risks:

• Plan Disqualification: Operating a retirement plan under an unapproved plan year can invalidate the plan’s tax-qualified status, causing the employer to lose tax deductions and making trust assets taxable.
• Form 5500 Late-Filing Penalties: Operating on an unauthorized plan year often leads to mismatched Form 5500 reporting, triggering IRS fines of up to $250 per day and Department of Labor (DOL) penalties exceeding $2,500 per day.
• Minimum Funding Excise Taxes: Defined benefit plans that miscalculate funding during an unapproved short period face a 10% excise tax on accumulated funding deficiencies under IRC Section 4971.

Related Forms and Schedules

When changing a retirement plan year, plan sponsors frequently work with these related IRS documents:

• Form 5500 / 5500-SF: Annual Return/Report of Employee Benefit Plan (must be filed for the transitional short plan year).
• Form 1128: Application To Adopt, Change, or Retain a Tax Year (used for corporate entity tax year changes).
• Form 5300: Application for Determination for Employee Benefit Plan.
• Form 2848: Power of Attorney and Declaration of Representative.
• Form 8717: User Fee for Employee Plan Determination Letter Request.

Frequently Asked Questions (FAQs)

1. What is a “short plan year”?

A short plan year is the transitional accounting period (less than 12 months) that occurs when shifting from your old plan year end date to your new plan year end date.

2. Can I change my plan year automatically without Form 5308?

Yes. If your plan satisfies all criteria under IRS Revenue Procedure 87-27 (such as no plan changes in the last four years and meeting coverage rules), you can adopt the change automatically without submitting Form 5308 or paying a user fee.

3. Does filing Form 5308 change our business corporate tax year?

No. Form 5308 applies solely to the retirement plan and its trust. To change your business’s corporate income tax year, you must file Form 1128.

4. Do I need to file a Form 5500 for the short plan year?

Yes. A separate Form 5500 must be filed for the transitional short plan year. The due date is the last day of the 7th month following the end of that short plan year.

5. Is there an IRS user fee to submit Form 5308?

Yes. The IRS charges a mandatory user fee for reviewing Form 5308 requests. The exact fee schedule is published annually in the first IRS Employee Plans Revenue Procedure of each calendar year.

6. What happens if the IRS denies our Form 5308 application?

If your application is denied, the plan must continue operating on its existing 12-month plan year, and any amendments attempting to establish the new plan year must be rescinded.

Conclusion

IRS Form 5308 is an essential application for employers needing to adjust their retirement plan or trust year outside of automatic approval guidelines. By obtaining formal IRS approval, plan sponsors ensure their accounting transitions remain fully compliant with federal tax and ERISA standards.

To avoid compliance issues, determine whether you qualify for automatic approval first, submit Form 5308 on or before the last day of your short plan year if required, include the proper user fee, and file a timely short-year Form 5500 to maintain your plan’s qualified tax standing.