ARA Comments on PBGC Missing Participant Program
On Nov. 21, 2016, the American Retirement Association Government Affairs Committee filed a comment letter
with the Pension Benefit Guaranty Corporation (PBGC). The letter is in response to a proposal to amend and expand the PBGC program to hold retirement benefits for missing participants and beneficiaries.
As authorized by the Pension Protection Act of 2006, the PBGC is currently considering changes to, and a proposed expansion of, the program for missing participants and beneficiaries. Subpart B of the proposed rule outlines how the proposed expansion would include certain defined contribution plans.
The ARA acknowledges the PBGC’s skill at locating lost participants and is generally supportive of the proposed rule but recommends certain changes to the proposal. In particular, the ARA recommends lengthening the 90-day filing deadline and the $250 fee exemption threshold.
Following are 11 suggestions set forth in the letter.
1. Voluntary participation in the missing participant program for non-title IV plans
The ARA supports the decision to make participation in the program voluntary for non-title IV and multi-employer plans.
2. Diligent search requirement
The ARA supports the decision to harmonize the diligent search requirements under ERISA Section 404 with the diligent search requirements for terminated DC plans under the proposed rule.
3. 90-day filing deadline
The ARA recommends that for defined contribution plans, the 90-day deadline for filing with PBGC be extended to 180 days.
4. Proposed user fee and fee exemption
The ARA recommends that the minimum missing distributee account balance to which a user fee would apply be increased from the proposed $250 threshold to $500.
5. No interest adjustment to benefit transfer amount
The ARA recommends that final regulations provide a 30-day grace period for which no adjustment to the benefit transfer amount for a defined benefit plan is required, or continue to permit an interest adjustment for situations in which payment to the PBGC is on a date later than the date as of which the anticipated benefit transfer amount was determined (as adjusted for grace period).
6. Benefit transfer amount spreadsheet
The proposed regulations indicate a spreadsheet will be made available to calculate the benefit transfer amount for defined benefit plans. The ARA would like the opportunity to review the spreadsheet before it becomes available for public use, either by interacting with PBGC during the development stage or by having an opportunity to comment on a proposed version of the spreadsheet.
7. Basis information
The ARA recommends that the proposed instructions for reporting basis applicable to DC plans should be extended to DB plans.
8. Lump sum payment amounts
The ARA recommends that the accumulated single sum amount for DB plan non-de minimis benefits be limited to the plan lump sum amount accumulated at the federal midterm rate.
9. Early retirement age
The ARA recommends that the program recognize all plan-based early retirement ages as the allowable commencement age for both annuity and single sum amounts for DB plans.
10. Default rollovers for plans required to use the missing participant program
The ARA recommends that final regulations clarify the PBGC’s position on a plan’s use of default rollover provisions to provide benefits to missing participants after the decision has been made to terminate the plan.
11. Forfeiture of benefits for missing participants
The ARA recommends that final regulations clarify whether a participant for whom benefits were previously forfeited due to the inability to locate the participant is to be treated as a missing participant upon plan termination.