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PBGC Issues Guidance on Funding-Related Determinations for Reportable Events and Missed Quarterly Contributions After the 2012 Plan Year
Practical Law Legal Update 4-523-9221 (Approx. 4 pages)
PBGC Issues Guidance on Funding-Related Determinations for Reportable Events and Missed Quarterly Contributions After the 2012 Plan Year
by PLC Employee Benefits & Executive Compensation
| Published on 31 Jan 2013 • USA (National/Federal) |
The Pension Benefit Guaranty Corporation (PBGC) issued Technical Update 13-1 on compliance with the reportable events requirements of Section 4043 of the Employee Retirement Income Security Act (ERISA) and related PBGC regulations. The guidance addresses funding-related determinations for waivers, extensions and the advance reporting threshold test, and missed quarterly contributions.
On January 30, 2013, the Pension Benefit Guaranty Corporation (PBGC) issued Technical Update 13-1 providing temporary guidance on compliance with the reportable events requirements of Section 4043 of ERISA and PBGC's regulation on Reportable Events and Certain Other Notification Requirements (29 C.F.R. § 4043). The guidance extends for 2013 and later plan years the reportable events guidance provided in Technical Update 11-1 (see Legal Update, PBGC Issues Guidance on Funding-related Determinations for Reportable Events and Missed Quarterly Contributions for the 2012 Plan Year).
For funding-related determinations for waivers, extensions and the advance reporting threshold test, the guidance states that for reportable events, a plan's unfunded vested benefits and the value of its assets and vested benefits (the VRP values) are determined for a plan year beginning after 2012 using the same method as for variable-rate premiums for the previous plan year. For example, for a calendar year plan with a January 1 valuation date, the VRP values determined as of January 1, 2012 for purposes of the 2012 variable-rate premium are also used for applying the $50 million advance-reporting threshold test for events becoming effective in 2013.
Regarding missed quarterly contributions for a plan year beginning after 2012, for plans with between 25 and 100 participants for which flat-rate premiums were payable for prior plan year, the reportable events reporting requirement will be satisfied if two conditions are met:
- The missed contribution is not due to financial inability to make the contribution.
- A simplified notice is filed with the PBGC by the due date of the first report of a missed-quarterly reportable event for the plan year, stating:
- the name of the plan and the Employer Identification Number and Plan Number most recently reported in a PBGC premium filing;
- the date the current plan year began;
- that a quarterly contribution for the current plan year has not been (or will not be) timely made;
- that financial inability is not the reason for the missed contribution;
- the last day for satisfying the minimum funding requirement for the current plan year (the final payment date);
- that the filer understands that if the minimum funding requirement is not satisfied by the final payment date, a reportable events notice must be filed; and
- the name, telephone number and e-mail address of a person the PBGC may contact for more information.
The notice must be filed in the manner required for reportable events reports generally or by e-mail to [email protected].
For plans that had less than 25 participants and for which flat-rate premiums were payable in the prior plan year, the reportable events reporting requirement is waived for a failure to make one or more required quarterly contributions for a plan year beginning after 2012 if the reason is not financial inability to pay.
The PGBC also announced that it plans to issue a new proposed rule to amend the reportable events regulation. This guidance is in effect until the PBGC publishes a final rule amending the reportable events regulation.