PBGC Issues Final Regulations on Electronic Filing of Multiemployer Pension Plan Notices | Practical Law

PBGC Issues Final Regulations on Electronic Filing of Multiemployer Pension Plan Notices | Practical Law

On September 16, 2015, the Pension Benefit Guaranty Corporation (PBGC) issued final regulations requiring electronic filing of certain multiemployer pension plan notices with the PBGC. They finalize the proposed regulations without changes.

PBGC Issues Final Regulations on Electronic Filing of Multiemployer Pension Plan Notices

by Practical Law Employee Benefits & Executive Compensation
Published on 17 Sep 2015 • USA (National/Federal)
On September 16, 2015, the Pension Benefit Guaranty Corporation (PBGC) issued final regulations requiring electronic filing of certain multiemployer pension plan notices with the PBGC. They finalize the proposed regulations without changes.
On September 16, 2015, the Pension Benefit Guaranty Corporation (PBGC) issued final regulations that will require electronic filing of multiemployer pension plan notices required by ERISA when these plans are terminated or become insolvent (or may become insolvent) (80 Fed. Reg. 55742 (Sept. 17, 2015)).
The final regulations are unchanged from the proposed regulations that the PBGC released in April (for more information on the proposed regulations, see Legal Update, PBGC Issues Proposed Regulations Requiring Electronic Filing of Certain Multiemployer Plan Notices). The agency received no comments on the proposed regulations.

Multiemployer Plan Notices Affected by the Final Regulations

The final regulations require these notices to be filed electronically with the PBGC:
  • Notices of termination under 29 C.F.R. Part 4041A.
  • Notices of insolvency and insolvency benefit level under ERISA Section 4245(e) (29 U.S.C. § 1426(e)) and 29 C.F.R. Parts 4245 and 4281.
  • Applications for financial assistance under 29 C.F.R. Part 4281.
The final regulations affect only notices filed with the PBGC. They do not apply to notices to multiemployer pension plan participants or other parties.

Notice under ERISA Section 4041A

Under ERISA Section 4041A, there are two types of multiemployer plan terminations:
  • Mass withdrawal terminations, which occur when all employers withdraw or cease to be obligated to contribute to the plan.
  • Plan amendment terminations, which occur when a multiemployer plan adopts an amendment:
    • providing that participants will receive no credit for service with any employer after a specified date; or
    • that makes it no longer a covered plan.
The PBGC's regulation on Termination of Multiemployer Plans (29 C.F.R. Part 4041A) requires the plan sponsor of a terminated multiemployer plan to file a notice of termination to alert the PBGC to possible demands on the multiemployer insurance program.

Notice under ERISA Section 4245(e)

ERISA Section 4245(e) requires two types of notification:
  • Notice of insolvency, which states a plan sponsor's determination that the plan is or may become insolvent.
  • Notice of insolvency benefit level, which states the level of benefits that will be paid during an insolvency year.
The PBGC's regulation on Notice of Insolvency, 29 C.F.R. Part 4245, establishes the procedure for complying with these notice requirements. The regulation allows a single notice of insolvency to cover more than one plan year, which allows plan sponsors to file only a single notice of insolvency benefit level for any future year.

Notice under ERISA Section 4281

The PBGC's regulation on Duties of Plan Sponsor Following Mass Withdrawal (29 C.F.R. Part 4281) implements the requirements of ERISA Section 4281 (29 U.S.C. § 1441). Under this regulation, plan sponsors must:
  • Provide notices to the PBGC, participants and beneficiaries that a plan is, or will be, insolvent (29 C.F.R. §§ 4281.43 and 4281.44).
  • Provide notices of insolvency benefit level to the PBGC and to participants and beneficiaries who are in pay status or may reasonably be expected to enter pay status during the year (29 C.F.R §§ 4281.45 and 4281.46).
  • Submit an application to the PBGC for financial assistance if a plan is, or will be, unable to pay guaranteed benefits when due (29 C.F.R § 4281.47).

Final Regulations

The preamble to the final regulations notes that:
  • The amendments made by the final regulations will be applicable to filings made on or after January 1, 2016.
  • The PBGC will grant case-by-case exemptions to the electronic filing requirement in the final regulations in appropriate circumstances for filers that demonstrate good cause for exemption.
  • Electronic filing of the notices affected by the final regulations will:
    • simplify the filing process by including all required and optional fields and readily accessible guidance in the application, which is expected to reduce the need to contact the PBGC for assistance; and
    • improve the efficiency of the PBGC's operations and its ability to protect potential personally identifiable information (PII).
  • The final regulations do not require electronic filing of notices of benefit reduction and of restoration of benefits. The PBGC may require electronic filing of other multiemployer plan filings in the future.
  • The final regulations do not make conforming amendments reflecting the Multiemployer Pension Reform Act of 2014 (MPRA) (for more information on MPRA, see Legal Update, President Signs Bill Reforming Multiemployer Pension Plan Rules). The PBGC expects to address those changes in a future rulemaking.

Practical Implications

Multiemployer pension plan administrators should use the next few months to implement and test processes for electronically submitting notices to the PBGC.