By Pension and Benefits Editorial Staff
The Pension Benefit Guaranty Corporation (PBGC) has extended, to September 30, 2021, a pilot program under which an employer may request an opinion letter from the PBGC on whether a plan, in the process of being created, is likely to be covered by PBGC. Thus, requests for opinion letters under this program must be submitted by September 30, 2021.
When a PBGC-covered single-employer plan fails, the PBGC pays participants their earned benefits up to certain legal limits. When a PBGC-covered multiemployer plan becomes insolvent, PBGC provides financial assistance so that the plan can pay benefits up to certain legal limits. Covered plans must comply with PBGC’s rules and requirements, including paying PBGC premiums.
Sponsors of covered plans cannot waive coverage. With very few exceptions (i.e., church plans and certain plans based in Puerto Rico), non-covered plans cannot elect to be covered. If a plan is not covered by PBGC, paying PBGC premiums will not trigger coverage.
A plan is covered under ERISA Title IV if it is described in ERISA Sec. 4021(a) and does not meet one of the listed exemptions from coverage. The Coverage Determination Form highlights the four plan types for which coverage determinations are most frequently requested: (1) church plans; (2) plans that are established and maintained exclusively for the benefit of plan sponsors’ substantial owners; (3) plans covering, since September 2, 1974, no more than 25 active participants that are established and maintained by professional services employers; and (4) Puerto Rico-based plans within the meaning of ERISA Sec. 1022(i)(1).
Under the pilot program, employers may submit a Coverage Determination Form to ask, for a plan in the process of being created, whether the sponsoring employer is a professional service employer or whether all participants are substantial owners.
PBGC website, What’s New for Employers & Practitioners.
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