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CCH® PENSION — 12/15/10

PBGC Extends Reportable Events Relief For Missed Quarterly Contributions And Certain Funding-Related Determinations

from Spencer’s Benefits Reports: The Pension Benefit Guaranty Corporation (PBGC) has provided guidance for plan years beginning in 2011 on compliance with the reportable events requirements involving (1) missed quarterly contributions and (2) funding-related determinations for purposes of waivers, extensions, and the advance reporting threshold test. ERISA Sec. 4043 and the PBGC’s regulation on Reportable Events and Certain Other Notification Requirements (ERISA Reg. Sec. 4043.1) require that the PBGC be notified of certain “reportable events.”

Technical Update 10-04 extends relief from reporting missed quarterly contributions to the PBGC to two groups of small plans for whom flat-rate premiums were payable for the 2010 plan years and that financial inability to make the contribution(s) is not the reason for not making the contribution(s):

(1) For plans with fewer than 25 participants, the reporting requirement under ERISA Reg. Sec. 4043.25 is waived with respect to a failure to make one or more required quarterly contributions for the 2011 plan year.

(2) For plans that have 25 or more but fewer than 100 participants, the reporting requirement under ERISA Sec.4043.25 will be considered satisfied with respect to a failure to make one or more required quarterly contributions for the 2011 plan year if, by the time the first missed-quarterly reportable event report for the 2011 plan year would otherwise be due, the person(s) that would be required to make a report file(s) with PBGC a notice stating the following:

• the name of the plan and the Employer Identification Number and Plan Number most recently reported for the plan in a PBGC premium filing;
• the date the 2011 plan year began;
• that a quarterly contribution to the plan for the 2011 plan year has not been (or will not be) timely made;
• that financial inability to make the contribution is not the reason for not making the contribution;
• the last day for satisfying the minimum funding requirement for the plan for the 2011 plan year (the “final payment date”);
• that the filer understands that if the minimum funding requirement for the plan is not satisfied by the final payment date, a reportable event notice must be filed under the reportable events regulation; and
• the name, telephone number, and e-mail address of a person (who may be the filer) whom PBGC may contact for additional information.

Reports must be made either in the manner required for reportable events reports or by e-mail to post-event.report@pbgc.gov.

Funding-Related Determinations

Regarding funding-related determinations for purposes of waivers, extensions, and the advance reporting threshold test, Technical Update 10-04 provides in general that for purposes of the reportable events regulation, a plan’s unfunded vested benefits (“UVBs”) and the value of its assets and vested benefits are determined for a plan year beginning in 2011 in the same manner as for variable-rate premiums (“VRPs”) for the preceding plan year. (The waiver based on “no variable-rate premium” is unaffected by this Technical Update.)

For example, in the case of a calendar year plan with a January 1 valuation date, the VRP values determined as of Jan. 1, 2010, for purposes of the 2010 variable rate premium are also used for applying the $50 million advance-reporting threshold test for events becoming effective in 2011.

The relief from the reportable events rules is necessary because the Pension Protection Act of 2006 (PPA) modified the way the VRP is determined, and modification of the PBGC’s reportable events regulation to accommodate the changes to the VRP rules is only in proposed status. The PBGC already has implemented those modifications in its premium regulations.

For questions about Technical Update 10-4, contact Deborah Murphy of the Legislative and Regulatory Department at (202) 326-4223, ext. 3451, or murphy.deborah@pbgc.gov, or Amy Viener of the Policy, Research and Analysis Department at (202) 326-4080, ext. 3919, or viener.amy@pbgc.gov.

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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