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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 issued guidance that provides multiemployer defined benefit plans with clarifications of instructions and partial reporting relief for completing Line 14 of Schedule R (Form 5500). Under ERISA §103(f)(2)(C), as amended by the Pension Protection Act of 2006 (P.L. 109-280), multiemployer defined benefit plans must include in their annual reports, as of the end of the plan year to which the report relates, the number of plan participants for whom no contributions were made by their employer for that plan year and for each of the two preceding plan years. Beginning with the 2009 plan year, this information is reported on Lines 14a through 14c of Schedule R.
Clarifications of instructions for Line 14
In the interest of reducing plans' recordkeeping burdens, the information required for Line 14 is the number of inactive vested participants (i.e., retired or deferred vested participants) whose last contributing employer has withdrawn from the plan by the beginning of the relevant plan year. The PBGC clarifies that, for purposes of completing Line 14, a plan does not have to review the status of any employers that made contributions on behalf of a participant for covered service before the participant's last contributing employer. If the participant's last contributing employer withdrew from the plan by the beginning of the relevant plan year, the participant is counted on Line 14.
In addition, under an alternative approach, plans may count as participants on Lines 14a through 14c only those participants whose last contributing employer and all prior contributing employers had withdrawn from the plan by the beginning of the relevant plan year. The PBGC explained that, under this approach, a plan would review the list of all current contributing employers and include on Line 14 only those inactive participants who had no covered service with any of these employers. This plan would be required to indicate the use of this approach on an attachment to Schedule R.
Partial reporting relief for 2009 plan year
The PBGC requires plans to make a reasonable, good faith effort to provide all available data in accordance with the instructions for Line 14. If this data cannot be reasonably obtained because a plan's records systems need to be modified to capture the information, the plan may provide a reasonable approximation of the number of participants required to be reported on Line 14 of the 2009 Schedule R. The PBGC provides an example of a reasonable approximation, which would be based on a random sampling of the lesser of 25% of all inactive participants or 300 inactive participants. The PBGC explained that this approach would limit the review to a manageable but significant number of participants for both small and large plans. A plan using this relief must identify the data on Line 14 as a reasonable approximation of the participant count and describe the basis for the approximation on an attachment to Schedule R.
The PBGC also provides an alternative method of compliance. Under the alternative, a plan may make a partial report of the information required on Line 14 by reporting the number of employers that withdrew from the plan beginning in the 1998 plan year through the end of the plan year preceding the relevant plan year (2009, 2008, or 2007), and the number of participants for whom these employers made contributions to the plan. On an attachment to Schedule R, the plan would identify the data on Line 14 as reflecting the alternative method of compliance under this Technical Update and report the aggregate number of employers that withdrew from the plan for each relevant period under Lines 14a through 14c.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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