Final Rule on Treating Bankruptcy Filing Date as Plan Termination Date. On June 14, 2011, PBGC published in the Federal Register a final rule that implements a Pension Protection Act of 2006 change to the benefits PBGC pays. Under PPA, when an underfunded pension plan terminates during the bankruptcy of the plan sponsor, the date that the sponsor’s bankruptcy petition was filed is treated as the plan’s termination date for purposes of determining (1) the amount of benefits PBGC guarantees, and (2) the amount of benefits in priority category 3 in the asset allocation. The statutory change applies if the bankruptcy petition was filed on or after September 16, 2006. The final rule will be effective July 14, 2011. (06/14/11)
Single-Employer Plans – Funding Relief Notification to PBGC: On December 17, 2010, IRS issued Notice 2011-3 providing single-employer plan guidance on funding relief under the Pension Relief Act of 2010. Included in this Notice is guidance on how to satisfy the IRC 430(c)(2)(D)(vi) provision requiring sponsors of single-employer plans to inform PBGC if they are electing funding relief. See Q&As N-6 and N-7. The deadline is the later of 30 days after the date the election is made, or January 31, 2011. (12/20/10)
Reportable Events; Guidance for 2011 Plan Years: On December 3, 2010, PBGC issued Technical Update 10-4, which extends for 2011 plan years the reportable events guidance provided in Technical Update 09-4. PBGC expects to issue a final rule amending its reportable events regulation in 2011. (12/03/10)
Multiemployer Plans – Funding Relief Notification to PBGC: On November 26, 2010, IRS issued Notice 2010-83 providing multiemployer plan guidance on funding relief under the Pension Relief Act of 2010. Included in this Notice is guidance on how to satisfy the IRC 431(b)(8)(E) provision requiring sponsors of multiemployer plans to inform PBGC if they are applying funding relief. See Q&As N-5 and N-6. These Q&As describe the content of the notice to PBGC and provide the addresses for hard and electronic copies. The deadline is the later of 30 days after the date the plan sponsor makes a formal decision to apply the rules, or January 18, 2011. (12/01/10)
Benefit Restrictions – Updated Present Value of PBGC Maximum Guarantee: Although PBGC’s maximum guarantee is not increasing for plans terminating in 2011, the present value of the maximum guarantee for purposes of section 436(d)(3)(A)(ii) of the Internal Revenue Code (IRC) and section 206(g)(3)(C)(i)(II) of ERISA is changing for 2011. The assumptions used to determine the present value vary each year. Technical Update 07-04 describes the methodology used to determine the present value and explains that a table will be posted for each calendar year. On October 26, 2010 PBGC posted the 2011 table. (10/26/10).
4062(e) proposed rule comment period extension. On October 20, 2010, PBGC published a Federal Register document extending until November 12, 2010, the period for submitting comments on its proposed rule on ERISA section 4062(e). (10/20/10)
4062(e) proposed rule. On August 10, 2010, PBGC published a proposed rule on ERISA section 4062(e), which provides for reporting of and liability for certain substantial cessations of operations by employers that maintain single-employer plans. The proposed rule would provide guidance on whether and when a “section 4062(e) event” occurs, describe the liability that arises and how the liability is satisfied, prescribe recordkeeping requirements, and provide for waivers in appropriate circumstances. PBGC also submitted draft information requirements under the proposed rule to the Office of Management and Budget. Comments on the proposed rule and information requirements are due by October 12, 2010. (08/10/10)