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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
The PBGC has provided guidance, in the form of a Technical Update, on determining the present value of the PBGC maximum benefit guarantee for purposes of the benefit restrictions imposed by Code Sec. 436(d)(3)(A)(ii) and ERISA §206(g) (3)(C)(i)(II) . In conjunction with the Technical Update, the PBGC has issued a table showing the present value of the PBGC’s maximum guarantee for 2008. The Technical Update provides information on how the table was developed and how it should be used.
The Pension Protection Act of 2006 (PPA; P.L. 109-280) imposes restrictions on the payments of benefits in certain prohibited forms, such as lump-sum payments. Specifically, Code Sec. 436(d)(3) and ERISA §206(g)(3)(C) provide that if the “adjusted funding target attainment percentage” is at least 60% but less than 80%, the plan may not pay a prohibited payment to the extent the payment exceeds the lesser of: (1) 50% of the amount of the payment that would be paid if the restriction did not apply, or (2) the present value, determined under guidance provided by PBGC, of the maximum guarantee with respect to the participant under ERISA §4022 . The PBGC Technical Update provides guidance on determining the present value of the maximum benefit guarantee for purposes of the benefit restrictions of Code Sec. 436(d)(3) . Proposed IRS regulations issued in August 2007 (see CCH Pension Plan Guide ¶20,262D) provide guidance on the PPA benefit restrictions, including the definition of “prohibited payment.”
Along with the Technical Update, the PBGC has issued a table containing the present values of the PBGC maximum guarantee for purposes of the PPA benefit restriction. The table shows, for the 2008 calendar year, the applicable present value amount based on the age of the participant. The table is designed to reduce the burdens on plan administrators, who would otherwise need to do an additional calculation to determine the present value of the maximum guarantee. The methodology for creating the present value table is set out in the Technical Update.
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