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CCH® PENSION AND BENEFITS — 12/09/08
PBGC semiannual regulatory agenda addresses cash balance plans
The Pension Benefit Guaranty Corporation (PBGC) has released its semiannual regulatory agenda for Fall 2008, which outlines regulations that have been selected for amendment during the next year, as well as any regulations that have been recently finalized.
Proposed rule stage
Among the items in the PBGC’s proposed rule stage are:
- Amendment to its regulations that prescribe rules on valuing benefits in terminating cash balance and other hybrid plans. The proposed amendments also prescribe rules on how the PBGC determines benefits payable in terminating cash balance and other hybrid plans that it trustees;
- Amendment to its current regulation under ERISA §4043 concerning reportable events and certain other notification requirements to conform to proposed changes to the PBGC’s regulations on premium rates under ERISA §4006 . The proposed changes to ERISA §4006 implement certain provisions of the Pension Protection Act of 2006 (PPA; P.L. 109-280) that are effective beginning in 2008 and, among other things, change the way that unfunded vested benefits are determined;
- Proposed rule to implement section 410 of the PPA which allows certain terminating plans not covered by the existing Missing Participants program to participate in that program. Once final regulations are issued, the program will cover multiemployer plans, small professional service employer plans (25 or fewer active participants), and individual account plans; and
- Proposed rule to amend PBGC’s regulation under ERISA §4022 , benefits payable in terminated single-employer plans. That regulation sets forth rules on the PBGC’s guarantee of pension plan benefits, including rules on the phase-in of the guarantee. The PPA provides that the phase-in period for the guarantee of a benefit payable solely by reason of an “unpredictable contingent event,” such as a plant shutdown, starts no earlier than the date of the shutdown or other unpredictable contingent event.
Final rule stage
The items in the PBGC’s final rule stage include the following:
- The PBGC is amending its regulation on annual financial and actuarial information reporting to implement changes and clarifications necessary under PPA for reporting under ERISA §4010;
- The PBGC is proposing a rule to conform Title IV of ERISA to section 404 of the PPA. Section 404 amended ERISA to provide that when an underfunded, PBGC-covered, single-employer pension plan terminates while its contributing sponsor is in bankruptcy, ERISA §4022 and ERISA §4044(a)(3) are to be applied by treating the date the sponsor’s bankruptcy petition was filed as the termination date of the plan; and
- The PBGC has proposed a rule that would allow for changes in the methods for computing withdrawal liability and address adjustments in withdrawal liability if a plan is in critical status.
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