What's New for Practitioners Archive

Simplified Methods for Computing Withdrawal Liability: On January 8, 2021, PBGC is publishing a final rule that implements statutory changes under the Multiemployer Pension Reform Act of 2014 affecting the determination of a withdrawing employer’s liability under a multiemployer plan and annual withdrawal liability payment amount. The final rule provides simplified methods for determining withdrawal liability and annual payments that a plan sponsor may adopt to satisfy the statutory requirements that certain amounts associated with funding improvement/rehabilitation plans and benefit suspensions be disregarded. The rule is effective February 8, 2021, and applies to employer withdrawals from multiemployer plans that occur in plan years beginning on or after February 8, 2021.

Expected Retirement Age Annual Update: On December 7, 2020, PBGC published a final rule amending its valuation regulation (29 CFR 4044) by substituting a new table for selecting the “retirement rate category.” The new table is used to determine the applicable expected retirement age (“XRA”) for participants in single-employer plans with 2020 valuation dates. XRA is one of the assumptions used to determine liabilities under ERISA section 4044 (per 29 CFR 4044). A copy of the table is available on PBGC’s ERISA Section 4044 Retirement Assumptions web page.

2020 Form 5500:  On December 2, 2020, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), the Internal Revenue Service (IRS), and PBGC released advance informational copies of the 2020 Form 5500 Annual Return/Report and related instructions. See EBSA’s News Release for more information, including a summary of key changes.

Modified CARES Act Guidance: PBGC has revised its guidance related to the CARES Act extended contribution due date to incorporate IRS’s treatment of prior year contributions made by January 4, 2021 as provided in IRS Notice 2020-82. See Practitioner FAQs providing guidance related to missed contribution reporting requirements and Technical Update 20-2, providing variable-rate premium relief with respect to prior year contributions made after the premium filing date. The revised Technical Update also clarifies how such contributions are discounted.

Mortality Tables: PBGC has updated the ERISA section 4044 mortality table for 2021 valuations. This table is used to determine liabilities when a single-employer plan terminates in an involuntary or distress termination (per 29 CFR 4044). It is also used when a multiemployer plan incurs a mass withdrawal (per 29 CFR 4281). HTML and Excel versions of the 2021 mortality tables are available on PBGC’s ERISA section 4044/4050 mortality table webpage. A unisex version of the table is also available on that webpage. The unisex version is used in specified situations to determine the benefit transfer amount under the Missing Participants Program (per 29 CFR 4050).

Benefit Restrictions – Present Value of PBGC Maximum Guarantee: On October 26, 2020, PBGC posted a table showing the applicable present values for 2021 plan years. A two-column spreadsheet version of the table is also available. For more information see Technical Update 07-04.

New PBGC Data and Analysis: Multiemployer Plan Benefit Provisions Study and Single-Employer Partial Pension Risk Transfer Study/Data Tables:  

On October 19, 2020, PBGC released the following new studies:

• Benefit Provisions in Multiemployer Defined Benefit Pension Plans – This study is a supplement to PBGC’s data tables and provides a detailed review of plan provisions available to active workers participating in multiemployer defined benefit pension plans.
• Analysis of Single-Employer Partial Pension Risk Transfers – This study reviews partial risk transfer data reported by single-employer pension plans to PBGC on premium filings for 2015 - 2018. The study analyzes partial risk transfer activities and summarizes this information by year, plan size, industry, and whether or not the plan is frozen for benefit accruals or participation.
• Single-Employer Partial Pension Risk Transfer Data Tables – As a companion to the Analysis of Single-Employer Partial Pension Risk Transfers, additional data tables related to partial pension risk transfer activity are posted along with the 2018 Data Tables.

Guarantee Limit: As a result of the indexing rules provided by law, the guarantee limits for single-employer plans that fail in 2021 will be 3.81% higher than the limits that applied for 2020. A table showing the 2021 guarantee limits for various ages and payment forms is available on PBGC's website. The guarantee limits for multiemployer plans are not indexed and therefore have not changed.

2021 Premium Rates: PBGC has determined the premium rates applicable for 2021 plan years in accordance with the indexing rules provided in section 4006 of ERISA. The Premium Rates web page has been updated accordingly.

PBGC FOIA Proposed Rule: PBGC is proposing to amend its regulation on the disclosure and public inspection of PBGC records under the Freedom of Information Act. The FOIA proposed rule would modify the regulation to reflect statutory changes and current PBGC procedures and update the fee charged for search and review time. The proposed rule will be published in the Federal Register on October 13, 2020, with a 60-day public comment period.

Pilot Program re: Coverage Opinion Letters Extended:  PBGC’s pilot program — under which employers may request, in certain circumstances, an Opinion Letter about whether a plan in the process of being created is likely to be covered by PBGC — has been extended to September 30, 2021. For more information, see PBGC’s coverage webpage.

2018 Pension Insurance Data Tables: The third installment of the 2018 Data Tables for PBGC's Single-Employer and Multiemployer Programs and the private defined benefit pension system is now available. This installment includes various breakdowns of the number of plans, number of plan participants, hybrid plans, frozen plans, premium revenue and plan funding. Some of the breakdowns are by industry, location, and plan funded status.

VRP Contributions Receivable COVID-19 Relief: On September 21, 2020, PBGC issued a press release announcing relief that will generally enable plan sponsors to take advantage of the CARES Act contribution due date extension while still ultimately paying the same variable-rate premium they would have owed had all prior year contributions been made by the regular contribution due date. Today, PBGC issued Technical Update 20-2 providing detailed information about the relief (e.g., which plans qualify for the relief, how to obtain the relief, due date for amended filings).

PBGC Lump Sum Assumptions: On September 9, 2020, PBGC will publish a final rule modernizing the assumptions it uses to determine de minimis lump sum benefits in PBGC-trusteed single-employer plans.

The only notable change from the proposed rule relates to PBGC’s proposal to provide a fixed set of “immediate and deferred” interest rates for use by the relatively few private-sector plans that use the PBGC legacy lump sum interest rates. To address concerns expressed by commenters about fixed rates, the final rule provides a table that will enable plans to determine immediate and deferred interest rates in accordance with PBGC’s historical methodology, which vary as the interest rate environment changes.

The changes are effective January 1, 2021.

New Guidance Documents Rule: PBGC is issuing its final rule on procedures for PBGC guidance documents in accordance with Executive Order 13891, issued by President Donald J. Trump on October 9, 2019. The final rule will be published in the Federal Register and effective August 26, 2020.

CARES Act Practitioner FAQs:  On July 20, 2020, PBGC posted answers to frequently asked questions about how the CARES Act affects missed contribution reporting requirements and premium filings for single-employer plans. The questions, posted on PBGC’s COVID-19 Resources web page, also provide general information about the pandemic’s impact on PBGC’s Single-Employer Insurance Program operations.

2018 Pension Insurance Data Tables: PBGC has published its 2018 Data Tables. These tables provide researchers, journalists, and the public with statistics on PBGC’s Single-Employer and Multiemployer Insurance Programs and the private defined benefit pension system. In this first installment, you will find summaries and breakdowns of the following:

• Claims activity
• Financial position
• Premium revenue
• Guaranteed benefit payments
• Administrative expenses

COVID-19 Pandemic Disaster Relief: PBGC premium, ERISA 4010, and most other filings that would otherwise have been due on or after April 1, 2020, and before July 15, 2020, are now due July 15, 2020. PBGC’s disaster relief policy provides that when the Form 5500 due date is extended in response to a disaster, the due date for most PBGC filings is extended to the same date. On April 9, 2020, IRS issued Notice 2020-23 providing disaster relief in response to the COVID-19 pandemic. That notice extends the filing due date for any Form 5500 that would otherwise be due on or after April 1, 2020, and before July 15, 2020, to July 15, 2020.

PBGC’s extended due dates do not apply to particularly important or time-sensitive filings with PBGC that may indicate a high risk of harm to pension plan participants or the insurance program (e.g., 4043 filings to report a loan default or liquidation), but such filers may request individual extensions. For additional details, including the limited “Exceptions List” of filings and actions not covered by this relief, see PBGC’s Disaster Relief web page.

Modified Filing Requirements: Most of the forms, instructions, and modules of PBGC’s e-filing portal affected by the Miscellaneous Corrections, Clarifications, and Improvements Final Rule have been updated, approved by OMB, and are now available for use—including:

• Reportable Events – Forms 10 and 10-Advance and related instructions and the corresponding part of PBGC’s e-filing portal, all of which are accessible from PBGC’s “Reportable Events and Large Unpaid Contributions” webpage.
• Financial and Actuarial Information Reporting (“4010 Filings”) –The 4010 module of PBGC’s e-filing portal and the summary of 4010 filing requirements (i.e., the illustrative form, instructions and screen shots), all of which are accessible from PBGC’s “4010 Filings” webpage.
• Premiums – The 2020 Comprehensive Premium Filing Instructions (Note: My PAA is now ready to accept electronic premium filings for plan years beginning in 2020).

These forms and instructions and the e-filing portal are also accessible from PBGC’s “Forms for Pension Practitioners and Employers” webpage. The parts of the Standard Termination Filing Instructions where the post-distribution certification requirements are described will be updated in the near future.

New Guidance Document Database: PBGC has launched a searchable guidance document database that provides users direct access to guidance documents in accordance with Executive Order 13891. Also, visitors may go to the Legal Resources section of PBGC.gov to find legal documents, materials and other relevant resources.