By Pension and Benefits Editorial Staff
The Pension Benefit Guaranty Corporation (PBGC) has issued guidance for cooperative and small-employer charity (CSEC) plans (as defined in ERISA Sec. 210(f)(1)) on filing PBGC premiums for 2019 and 2020 plan years that reflect the premium changes provided by Division O, the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), enacted as part of the Further Consolidated Appropriations Act, 2020 (P.L. 116-94). This guidance supersedes any inconsistent information with respect to CSEC plans in PBGC’s premium filing instructions. The PBGC states that it will amend its premium rates regulation (29 CFR part 4006) later in a rulemaking to incorporate the SECURE Act premium changes.
SECURE Act premium changes. Starting with plan years beginning in 2019, premiums for CSEC plans are determined differently than for other single-employer plans. Specifically:
- The flat-rate premium is $19 per participant.
- The variable-rate premium is $9 per $1,000 of unfunded vested benefits (UVBs).
- The liability underlying the UVB calculation (i.e., the present value of vested benefits) is determined using the plan’s funding assumptions (e.g., the plan’s selected discount rate and mortality table). See ERISA Sec. 306(j)(5)(C).
- Premium rates are not indexed after 2019.
Unchanged premium provisions. The PBGC explains that, except for the SECURE Act changes, the provisions in the PBGC’s premium regulations (29 CFR parts 4006 and 4007) and premium filing instructions continue to apply to CSEC plans. This includes, but is not limited to:
- When premiums are due.
- How to count participants.
- The per-participant cap on the variable-rate premium.
- Assets underlying the UVB calculation, including whether and how to include contributions for the prior plan year made during the 8½ month period after the plan year ends.
2019 and 2020 CSEC premium filings. The PBGC notes that some CSEC plans have already paid their 2019 premiums. CSEC plans that have already paid 2019 premiums based on prior law are eligible for a refund of the excess of what they paid over what they owe pursuant to the revised rules. To get a refund, plans should amend their 2019 filing to report the premium owed pursuant to the new rules and provide the PBGC certain data items used to determine that amount.
According to the PBGC, My PAA, the PBGC’s premium payment system, does not yet reflect the SECURE Act changes. Thus, My PAA does not have the capability of allowing a CSEC plan to override the regular single-employer plan flat-rate (e.g., $80 for 2019) with the new CSEC flat-rate of $19.
Similarly, if private-sector software is used to create and upload an XML file containing the required data, the PBGC’s system will flag a 2019 filing as “incorrect” if the data in the XML file indicate a flat-rate other than $80 was used to determine the flat-rate premium (or, in the case of a multiemployer plan, $29).
The PBGC anticipates that the My PAA system software will be updated for 2021 filings. In the meantime, CSEC plans should prepare 2019 and 2020 premium filings, including amended filings, by “marking up” a copy of the illustrative form included in the Comprehensive Premium Filing instructions (i.e., by modifying the form to reflect the changes). The guidance provides a table showing the necessary “mark ups” to the form.
The PBGC believes that the simplest way to prepare an amended 2019 filing is to generate a hard copy of the previously submitted 2019 filing, in “form” format (i.e., the “filing receipt”) and mark it up. The PBGC further instructs filers to check the “Amended filing” box at the top of the form. Also, be sure to complete item 12 (treatment of overpayment), so PBGC will know whether to refund the overpayment or keep it in the plan’s account to be used as a credit against future premiums. If the refund option is selected, additional information must be reported.
Submitting 2019 and 2020 CSEC premium filings. Once the required information has been entered on a marked-up form, the form must be manually signed by the plan administrator and enrolled actuary, and then scanned and saved as a pdf. The pdf version of the signed form should then be submitted to the PBGC via My PAA, using the “Submit a Request” Quick Link feature (available from the Plan Page). To do so, simply select “Submit CSEC Filing” from the drop-down menu that will appear when “Other Requests & Correspondence” is clicked. When the form has been successfully submitted, all My PAA filing team members for the plan will receive a confirmation email, including a service request tracking number.
The PBGC cautions that until My PAA is modified for the new CSEC plan rules, payment for premiums owed cannot be made within My PAA. However, payment may be submitted electronically via pay.gov or by paper check.
Source: PBGC Technical Update 20-1.
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