Rev. Rul. 71-27

Advice has been requested whether a profit-sharing plan may qualify under section 401(a) of the Internal Revenue Code of 1954 if it contains the provisions set forth below.

The plan provides that the trustee shall value the assets held by the trust as of the close of each plan year. In addition the trustee shall also value the trust assets at any other time it is requested to do so by the plan's administrative committee. The fair market value of the trust assets is to be used for all valuations and the accounts of all participants are to be adjusted in accordance with each new valuation. The plan further provides that the committee's discretion with respect to interim valuations is to be exercised in a uniform and non-discriminatory manner.

Section 401(a)(4) of the Internal Revenue Code of 1954 provides that a plan may qualify if, among other requirements, the contributions or benefits provided under the plan do not discriminate in favor of employees who are officers, shareholders, supervisors, or highly compensated.

A profit-sharing plan must provide for a valuation of assets held by the trust at least once a year, on a specified inventory date, in accordance with a method consistently followed and uniformly applied. See Rev. Rul. 70-125, C.B. 1970-1, 87.

The plan in this case provides for a valuation of the assets held by the trust at least once a year on a specified inventory date, and for the adjustment of each participant's account in accordance with that valuation. The possibility that the assets may be valued more than once in a given year does not prevent the plan from qualifying provided that use of the interim valuation does not result in prohibited discrimination.

Accordingly, it is held that the profit-sharing plan in this case may qualify under section 401(a) of the Code if all the other requirements of that section are met.