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CCH® PENSION AND BENEFITS — 12/21/07

PBGC proposes to amend regs on information disclosure in plan terminations

The Pension Benefit Guaranty Corporation (PBGC) has proposed amending its regulations under ERISA §§4041 and 4042 to implement the information disclosure obligations imposed on plan administrators and plan sponsors in plan terminations by the Pension Protection Act of 2006 (PPA; P.L. 109-280). The PPA requires plan administrators to disclose information submitted to the PBGC in connection with distress termination filings and plan administrators and plan sponsors to disclose information submitted to the PBGC in connection with PBGC-initiated terminations. Comments on the proposed regulation must be submitted to the PBGC on or before February 4, 2008.

A plan administrator may initiate a distress termination by sending a notice of intent to terminate to all affected parties pursuant to ERISA §4041(a)(2) . Under ERISA §4042 , the PBGC may itself initiate proceedings to terminate a pension plan if it determines that certain conditions are present. Section 506 of the PPA added disclosure provisions to both ERISA §4041 and ERISA §4042. These provisions allow an affected party to request information related to a plan termination from the plan administrator, in the case of a distress termination under ERISA §4041 , and from the plan administrator, plan sponsor, and PBGC in the case of a termination under ERISA §4042 . The PBGC has authority to prescribe the form and manner of the disclosure.

Distress terminations

In the case of a distress termination under ERISA §4041, the plan administrator must provide a notice of intent to terminate (Form 600) to each affected party. The proposed regulations would require disclosure of the Form 600, plus any additional information submitted to the PBGC, within 15 business days after receipt of a request from an affected party, or provision of new information to the PBGC after a previous request. If a plan administrator fails to provide the required information, the PBGC may assess penalties under ERISA §4071.

PBGC-initiated terminations

In the case of a termination initiated by the PBGC, ERISA §4042(c) imposes disclosure requirements on the plan administrator, plan sponsor and PBGC. An affected party may request termination information only after the plan administrator has received a Notice of Determination from the PBGC. The proposed regulations adopt an assumed receipt date of three business days after the PBGC issues the Notice of Determination, so that a request for information may be made on or after the third business day after the Notice of Determination is issued. After the request is received, or after new information relating to a previous request is received by the PBGC, the information must be provided to the affected party within 15 business days. If a plan administrator or plan sponsor fails to provide the required information, the PBGC may assess penalties under ERISA §4071.

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