By Pension and Benefits Editorial Staff
The Pension Benefit Guaranty Corporation (PBGC) has released final regulations that make technical corrections, clarifications, and improvements to regulations on reportable events notifications, annual financial and actuarial information reporting, standard terminations filing, and premium rates. The PBGC states that the changes being made result from its ongoing review of the effectiveness and clarity of its rules and from input from stakeholders.
The final rule is effective on March 5, 2020, and certain provisions have different applicability dates.
The PBGC received five written comments. The commenters also made helpful observations and suggestions for further clarification that the PBGC incorporated in the final regulations, particularly with respect to the regulations on Annual Financial and Actuarial Information Reporting, and Reportable Events and Certain Other Notification Requirements. Otherwise the final rule is substantially the same as the proposed with minor editorial changes, the PBGC said.
The PBGC said that the major provisions of the final rule amend the PBGC’s regulations on:
- Reportable Events and Certain Other Notification Requirements, by eliminating possible duplicative reporting of active participant reductions, clarifying when a liquidation event occurs, and providing additional examples for active participant reduction, liquidation, and change in controlled group events.
- Annual Financial and Actuarial Information Reporting, by eliminating a requirement to submit individual financial information for each controlled group member, clarifying reporting waivers, and providing guidance on assumptions for valuing benefit liabilities for cash balance plans.
- Termination of Single-Employer Plans, by providing more time to submit a complete PBGC Form 501 in the standard termination process.
- Premium Rates, by expressly stating that a plan does not qualify for the variable-rate premium exemption for the year in which it completes a standard termination if it engages in a spinoff in the same year, clarifying the participant count date special rule for transactions (e.g., mergers and spinoffs), and modifying the circumstances under which the premium is prorated for a short plan year resulting from a plan’s termination.
Applicability dates. The PBGC also sets forth the applicability of certain amendments made by the final rule:
- The changes in PBGC Reg. §4006.5(f)(3), which deal with premium proration for short plan years where the plan’s assets are distributed in a termination, are applicable to plan years beginning in or after 2020.
- The changes in PBGC Reg. §§4010.7(a)(2), 4010.9(b)(2), and 4010.11(a)(1)(i), (which deal with identifying legal relationships of controlled group members, consolidated financial statements, and calculating the funding target for purposes of the 4010 funding shortfall waiver, respectively) are applicable to 4010 filings due or amended on or after April 15, 2020. The changes in PBGC Reg. §4010.8(d)(2) for valuing benefit liabilities in cash balance plan account conversions are applicable to plan years beginning on or after January 1, 2020.
- The changes in PBGC Reg. §4041.29 are applicable to plan terminations for which, as of March 5, 2020, the statutory deadline for certifying that plan assets have been distributed as required, has not passed.
- The changes in PBGC Reg. §§4043.23, 4043.27(d)(3), 4043.29, 4043.30, 4043.31(c)(6), 4043.32(c)(4), and 4043.35(b)(3) (which deal with active participant reductions, changes in contributing sponsor or controlled group, liquidation, insolvency or similar settlement, and the public company waiver) are applicable to post-event reports for those reportable events occurring on or after March 5, 2020.
The PBGC states that it expects that revised forms, instructions, and e-filing portal reflecting the changes will be available for use by the effective date of the final regulations.
Source: 85 FR 6046.
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