By Pension and Benefits Editorial Staff
The Pension Benefit Guaranty Corporation (PBGC) has provided a waiver concerning compliance with the annual financial and actuarial information required to be reported under ERISA Sec. 4010 and regulations. The PBGC is waiving the requirement to report member-specific financial information in connection with consolidated financial statements, subject to certain conditions.
ERISA Sec. 4010 requires certain underfunded plans to report identifying, financial, and actuarial information to the PBGC. Contributing sponsors, and each member of a contributing sponsor's controlled group, that maintain substantially underfunded plans must submit annual financial and actuarial reports to the PBGC. ERISA Reg. Sec. 4010.9 provides the reporting requirements with respect to financial information to be included with a 4010 filing for each member of the filer’s controlled group (excluding exempt entities). The PBGC explains that, in general, financial statements for the fiscal year ending within the information year (including balance sheets, income statements, cash flow statements, and notes to the financial statements) must be provided for each non-exempt controlled group member.
If the financial information of a non-exempt member is combined with the information of other members in consolidated financial statements, a filer may submit consolidated financial statements as an attachment to the filing instead of the above generally required financial information. However, if consolidated financial statements are provided, ERISA Reg. Sec. 4010.9(b)(2) currently requires the filer to also report revenues, operating income, and net assets separately for each non-exempt member. Filers must manually enter those three amounts into the 4010 module of the PBGC's e filing portal for every non-exempt member of the filer's controlled group.
Waiver. The PBGC notes that it issued proposed regulations in June 2019 that would eliminate the ERISA Reg. Sec. 4010.9(b)(2) requirement to report the member-specific financial information. The PBGC proposed to remove this requirement because it believes it can adequately assess risks to participants and plans without this additional detail. The PBGC has decided to waive the requirement in ERISA Reg. Sec. 4010.9(b)(2) to provide member-specific financial information for filers whose ultimate parent is not a foreign entity. For filers whose ultimate parent is a foreign entity, the requirement to report ERISA Reg. Sec. 4010.9(b)(2) information is waived if filers provide consolidated financial statements for U.S. controlled group members as an attachment to their filing (or federal tax returns if consolidated financial statements are not available), in addition to any other financial information required to be included with the filing.
For consolidated financial information filings, the e-4010 module of the PBGC's e-filing portal considers the member-specific financial information to be required and blocks submission of the filing if those fields are left blank. The PBGC is providing the following work-around for filers who choose not to report the ERISA Reg. Sec. 4010.9(b)(2) data. Instead of entering the actual revenues, operating income, and net assets in the space provided for each data item, enter $7,777.
Source: PBGC Technical Update 19-1.
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