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CCH® PENSION AND BENEFITS — 9/13/06

PBGC issues guidance for DB plan participant notice requirements

The PBGC has issued a revised Model Participant Notice for underfunded plans, along with guidance regarding how to determine whether a 2006 Participant Notice is required, in light of changes made by the Pension Protection Act of 2006 (PPA, P.L. 109-280). The guidance includes information regarding what must be disclosed in any required 2006 Participant Notice, as well as a work sheet for plan administrators.

Pursuant to ERISA §4011, plan administrators of certain underfunded plans that are subject to an additional premium under ERISA §4006(a)(3)(E) are required to provide notice to plan participants and beneficiaries of the plan's funding status, and the limits on the PBGC's guarantee should the plan terminate while underfunded. The PBGC expects to make information regarding the maximum guaranteed benefit available on its website in early November 2006.

Although ERISA §4011 applies for the 2006 plan year, the PBGC points out in its latest guidance that, under the PPA, ERISA §4011 is repealed for plan years beginning after December 31, 2006. Beginning in 2007, new disclosure requirements under ERISA §101(f) will apply.

The PBGC cautions plan administrators that it may be difficult to determine whether or not a Participant Notice is required for 2006, and encourages them to use the 2006 Participant Notice Worksheet, included with its latest guidance, to make that determination. A 2006 Participant Notice is generally required unless:

Plan administrators are also reminded that a 2006 Participant Notice is due two months after the due date (including extensions) for the 2005 Form 5500.

For more information on this and related topics, consult the CCH Pension Plan Guide.

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