PBGC Proposes Amendments to Annual Financial and Actuarial Info Reporting

By ASPPA • July 29, 2015 • 0 Comments

The Pension Benefit Guaranty Corporation (PBGC) on July 27 issued a proposal to amend its regulation on annual financial and actuarial and information reporting. The proposed rule would be applicable to information years beginning after Dec. 31, 2015.

The proposal would:

  • codify the guidance provided in Technical Updates 12-2 and 14-2 regarding the impact of Moving Ahead for Progress in the 21st Century Act (MAP-21) and Highway and Transportation Funding Act of 2014 (HATFA) on 4010 reporting;

  • modify the existing reporting waiver for companies with total underfunding in all their plans of less than $15 million, a change the PBGC argues would better align the regulation with the original intent of generally limiting ERISA Section 4010 reporting relief to smaller plans; and

  • add two new reporting waivers and make other minor technical changes.

The PBGC had set the waiver threshold at $15 million in aggregate underfunding based on its experience that underfunding below that amount was not a significant risk to the PBGC. Because of the impact of MAP–21 and HATFA, the PBGC believes that further refinement of the $15 million aggregate underfunding waiver is necessary.

To preserve simplicity, better align the waiver with the plans it was originally intended to cover, and eliminate any need to do an additional calculation solely to determine if the waiver applies, the PBGC is proposing to leave the determination of the Section 4010 funding shortfall unchanged and instead limit the availability of the $15 million aggregate underfunding waiver to controlled groups where the aggregate number of participants in all defined benefit plans maintained by the controlled group is fewer than 500.

For purposes of the waiver, the number of participants in any plan could be determined either as of the end of the plan year ending within the information year or as of the valuation date for that plan year.

To reduce the burden of duplicative reporting, the proposal would add waivers from reporting for persons that must file a 4010 report solely on the basis of either a reporting trigger under Section4010.4(a)(2) for a statutory lien resulting from missed required contributions of over $1 million or under Section 4010.4(a)(3) for outstanding minimum funding waivers exceeding the same amount, provided that the missed contributions or minimum funding waivers were reported under part 4043 by the due date for the 4010 filing.

The proposed rule would delete transition rules in current Sections 4010.4(b)(3) and (4) and Section 4010.8(h) the PBGC considers to no longer be necessary and updates provisions regarding special funding rules.

The proposal also would make two technical corrections to the regulation:

1. Amending Section 4010.8(b)(1) to correct a cross reference from Section 4010.11(b) to Section 4010.10(b).
2. Amending Section 4010.8(d)(2) to provide that the form-of-payment assumption used when determining benefit liabilities for purposes of 4010 reporting is the assumption prescribed in Section 4044.51 of PBGC’s regulation on Allocation of Assets in Single-Employer Plans (part 4044).

Comments Accepted

The PBGC will accept comments on the proposed rule through Sept. 25, 2015. They can be submitted through the following means:

  • the Federal eRulemaking Portal: at http://www.regulations.gov;

  • an Email to: reg.comments@pbgc.gov;

  • by fax to (202) 326-4224;

  • by mail or hand delivery to: Office of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005–4026.

All submissions must include the Regulatory Identification Number for this rulemaking (RIN 1212–AB30).