Instructions for Part III - Alternative Premium Funding Target Election/Revocation

This Part applies only to Single-employer Plans. Multiemployer Plans should skip to Part IV.

To be valid, an election must be made in accordance with these instructions and must be filed with PBGC on or before the deadline.

6 Alternative Premium Funding Target Election / Revocation

Election - Check this box to make an election to use the Alternative Premium Funding Target first effective for this Premium Payment Year.
Revocation - Check this box to revoke a prior election to use the Alternative Premium Funding Target that was in effect for the plan year immediately preceding the Premium Payment Year.

You may elect to use the Alternative Premium Funding Target to determine unfunded vested benefits instead of the Standard Premium Funding Target. Once an election is made, it remains in effect for all subsequent plan years unless and until it is subsequently revoked. You may revoke a prior election only if the Premium Payment Year begins at least five years after the beginning of the plan year for which the election was first applicable. For example, if your plan is a calendar-year plan and you first elected to use the Alternative Premium Funding Target:

for 2008 or 2009, you may revoke the election first effective for this 2014 filing. If you revoke the election for 2014, you cannot make another election to use the Alternative Premium Funding Target until 2019.
for a plan year beginning 2010 - 2013, the election is still in effect; you must use it for 2014.
for this plan year, 2014, you must also use it for 2015 - 2018. You may first revoke the election for 2019.

Similarly, if you revoke an election, you may not make a new election to use the Alternative Premium Funding Target until five years have passed.

If you are not sure if an election is in effect or when an election first took effect, you find it by viewing your account history in My PAA.

See "How to Determine Unfunded Vested Benefits" section for more information on elections and revocations.

7 Variable-rate Premium

This item relates to Variable-rate Premium information and applies only to Single-employer Plans.

In general, the Variable-rate Premium is $14 per $1,000, or fraction thereof, of unfunded vested benefits as of the UVB Valuation Date, but no more than $412 times the number of participants (i.e., the MAP-21 Cap). For certain plans of small employers, the Variable-rate Premium may be capped at an amount lower than the MAP‑21 CAP (see item 7b).

Some Single-employer Plans are exempt from the Variable-rate Premium; others may have a Variable-rate Premium of $0. In either case, this section must be completed in accordance with the following instructions.

Exemptions – A Single-employer Plan may claim an exemption from the Variable-rate Premium if it meets the requirements for any of the exemptions described below:
- New or Newly Covered Small Plans other than Continuation Plans – Your plan qualifies for this exemption if it is a New or Newly Covered Plan and a Small Plan, but not a Continuation Plan. See Definitions section for more information about these terms.
- Standard termination — closing out in current year – Your plan qualifies for this exemption if it makes a final distribution of assets in a standard termination during the Premium Payment Year.
  You may claim this exception in anticipation of a full distribution by plan year-end even if that hasn’t happened by the time you submit the filing. However, if you fail to complete the final distribution by the end of the year, the exemption will not apply. In that case, you will need to amend the filing accordingly and late payment charges will be assessed on any Variable-rate Premium owed and paid after the applicable due date.
- Standard termination — proposed termination date in a prior year — Your plan qualifies for this exemption if notices of intent to terminate in a standard termination were issued in accordance with ERISA section 4041(a)(2), setting forth a proposed termination date before the beginning of the Premium Payment Year.
  To qualify for this exemption, it is not necessary that the plan make a final distribution of assets during the Premium Payment Year. However, this exemption is conditioned on the plan’s ultimately making a final distribution of assets in full satisfaction of its obligations under the standard termination. If that doesn’t happen, the premium that would otherwise have been required will be due retroactive to the applicable due date.
- Plans with no vested participants – Your plan qualifies for this exemption if the plan has no participants with vested benefits as of the UVB Valuation Date.
- Section 412(e)(3) plans (formerly called 412(i) plans) – Your plan qualifies for this exemption if the plan is described in section 412(e)(3) of the Code and regulations thereunder on the UVB Valuation Date.
If an exemption applies, check the applicable box to indicate which exemption applies and skip to item 8. If more than one exemption applies, check all applicable boxes.

Small-Employer Cap qualification – If the plan qualifies as a small-employer plan, the Variable-rate Premium may be capped at an amount lower than the MAP‑21 Cap.
Determining whether a plan qualifies for the Small-Employer Cap – For this purpose:
- a plan is a small-employer plan if the aggregate number of employees of all contributing sponsors of the plan and all members of the contributing sponsors’ controlled groups, as of the first day of the Premium Payment Year, is 25 or fewer,
- the aggregate number of employees is determined in the same manner as under section 410(b)(1) of the Code, taking into account the provisions of section 414(m) and (n) of the Code, but without regard to section 410(b)(3), (4), and (5) of the Code, and
- employees are counted as of the first day of the Premium Payment Year, not as of the Participant Count Date or the UVB Valuation Date.
Note that a plan with 25 or fewer participants does not necessarily qualify for the Small-Employer Cap because the eligibility criterion is based on employees, not the Participant Count. For example, if a plan has 15 participants, but there are more than 25 employees (taking into account all employees of all contributing sponsors of the plan and all members of their controlled groups), the plan does not qualify for the cap.

Also note that a plan with more than 25 participants might qualify for the cap. For example, consider a contributing sponsor with 20 employees, all of whom are participants in a plan. If the plan also covers 15 former employees who are either terminated vested or retired, there are 35 participants in total. This plan would qualify for the cap (assuming there are no other contributing sponsors and no controlled group members).

Reporting requirements – If your plan qualifies for this cap, check the box to report that fact.

If your plan qualifies for this cap, instead of calculating and reporting both the uncapped Variable-rate Premium and the maximum Variable-rate Premium and then paying the lesser of the two amounts, you may report and pay only the maximum Variable-rate Premium.

If you choose to not report the uncapped Variable-rate Premium, omit all items 7c through 7g and go directly to item 7h. Note that if you choose to pay the maximum Variable-rate Premium without determining whether it is less than the uncapped Variable-rate Premium, you may pay a larger Variable-rate Premium than required.

Assumptions and methods used to determine Premium Funding Target
1. Premium Funding Target method – Report whether you are using the Standard Premium Funding Target or the Alternative Premium Funding Target to determine unfunded vested benefits by checking the applicable box (i.e., "Standard" or "Alternative"). Note that:
  - The standard method must be used unless an election to use the alternative method is in effect.
  - If an election to use the alternative method is in effect, you must use the alternative method. This is the case only if a valid election:
    - is made as part of a timely filing for the Premium Payment Year by checking the election box in item 6 of Part III, or
    
    - that was made in a prior year has not yet been revoked.
  - Filers are encouraged to review prior filings or to review the Account History on My PAA to confirm whether an election to use the alternative method is in effect.
  - Checking the alternative box in item 7(c)(1) does not constitute an election. See item 6 instructions.
  - For additional information on Premium Funding Target methods, see "How to Determine Unfunded Vested Benefits" section.
2. Discount rates – Report the discount rates used to determine the Premium Funding Target. For information on which rates to use, see "How to Determine Unfunded Vested Benefits" section.
3. UVB Valuation Date – Report the UVB Valuation Date for the Premium Payment Year. In the case of a Small Plan using the Lookback Rule, this date must be the valuation date for the Lookback Year. For any other plan this date must be the valuation date for the Premium Payment Year. Note for Small Plans - For information about whether you should be using the Lookback Rule, see "How to Determine Unfunded Vested Benefits" section.
Premium Funding Target as of UVB Valuation Date
Report the Premium Funding Target (dollars only) calculated as described in the Premium Funding Target part of the "How to Determine Unfunded Vested Benefits" section. Report the amount separately for (1) active participants, (2) terminated vested participants, (3) retirees and beneficiaries receiving payment, and (4) the total premium funding target ((1)+(2)+(3)).

Estimated Premium Funding Targets – If the Premium Funding Target (and thus, the Variable-rate Premium) being reported in this filing is an estimate, check the box to report that fact. If you file on an estimated basis, you must ultimately make a reconciliation filing using the actual Premium Funding Target (by amending this filing). In the reconciliation filing, in addition to reporting the actual Premium Funding Target data, be sure to indicate that the reported amount is no longer an estimate by making sure the "estimate" box is no longer checked. See "Correcting Errors, Credit Balances, Reconciling Estimates" section for more information. See also the "Late Payment Charges" section for information on the automatic late payment penalty relief that may be available to plans paying estimated Variable-rate Premiums by the due date and later reconciling.
Market value of assets – Report the fair market value of plan assets (dollars only) as of the UVB Valuation Date adjusted to reflect contribution receipts as described in the "How to Determine Unfunded Vested Benefits" section.
Unfunded vested benefits – Report the excess (rounded up to the next $1,000), if any, of the Premium Funding Target over the fair market value of assets.

Uncapped Variable-rate Premium – Report the product of 0.014 and the amount of unfunded vested benefits.
Maximum Variable-rate Premium
1. MAP-21 Cap – Report the product of the Participant Count and $412.
2. Small Employer Cap – Report the product of $5 and the Participant Count squared. If the plan does not qualify for the Small Employer Cap, this item must be left blank.
3. Maximum Variable-rate Premium – If the plan qualifies for the Small Employer Cap, report the lesser of the Small Employer Cap and the MAP-21 Cap. Otherwise, report the MAP-21 Cap.
Variable-rate Premium – Report the lesser of the maximum Variable-rate Premium and the uncapped Variable-rate Premium. If the plan qualifies for the Small Employer Cap and chooses not to report uncapped Variable-rate premium data, report the maximum Variable-rate Premium.
If this is a short plan year of coverage, the required Variable-rate Premium may be a prorated portion of this amount; however, the full year’s premium amount must be reported in this item.