PBGC Patches Pension Rule Typos and Confusions
Published Date: 1/21/2025
Proposed Rule
Summary
The Pension Benefit Guaranty Corporation (PBGC) is updating its rules to fix small errors, clear up confusing parts, and improve how things work—especially around premium payments and ending single-employer pension plans. These changes help make the rules easier to understand and follow, with no new costs or deadlines for most people. If you want to share your thoughts, you’ve got until March 24, 2025, to speak up!
Analyzed Economic Effects
10 provisions identified: 7 benefits, 3 costs, 0 mixed.
CSEC Plans: Premium Calculation Codified
If you sponsor a cooperative and small employer charity (CSEC) plan, PBGC proposes to codify SECURE Act changes about how your variable-rate premium is calculated by adding a new Sec. 4006.5(h). The new rule says a CSEC plan's premium funding target is its funding liability under section 306(j)(5)(C) of ERISA for the UVB valuation year.
Community Newspaper Plans: Premium Rule Added
If your plan is a community newspaper plan, PBGC proposes to add a reference in Sec. 4006.4(f) recognizing these plans as subject to special funding rules under section 303(m) of ERISA and section 430(m) of the Code. Those special funding rules would be disregarded for purposes of determining unfunded vested benefits (UVBs) under the premium rules.
Final Premium Due Date: 45-Day Option
For terminating single-employer plans, PBGC proposes the final premium filing would be due the earlier of the normal premium due date or 45 days after the post-distribution certification (Form 501) is filed. The rule explicitly sets the 45-day alternative in Sec. 4007.11(d)(2).
Standard Termination Notice: Clear Deadlines
PBGC proposes that a standard termination notice (Form 500) must be filed on or before the earlier of 180 days after the proposed termination date or 60 days before making any distribution governed by section 4041(b). This is set out in revised Sec. 4041.25(a).
Majority-Owner Waiver: Tighter Ownership Test
PBGC proposes to limit when an option to acquire ownership will be treated as actual ownership for determining a "majority owner". Under new Sec. 4041.21(b)(2)(v), an option is counted only if the person has a 5% or greater direct ownership interest, or if the person was a director, fiduciary, or participated in management for each of the 3 years before plan termination.
New-Plan Definition Updated for Retroactive Adoptions
PBGC proposes to change the definition of "New plan" in Sec. 4006.2 to mean a plan with an effective date during the premium payment year. This reflects SECURE Act elections that let an employer treat a newly adopted plan as having been adopted in the prior taxable year.
90-Day Penalty Grace Conditional on Timely Notice
PBGC would change Sec. 4041.29(b) so the 90-day grace period for assessing penalties after a post-distribution certification is available only if the plan administrator filed a standard termination notice within 180 days of the proposed termination date.
Electronic Filing Required for Key Filings
PBGC proposes to require electronic filing (by email or e-filing portal) for standard termination filings under part 4041, missing participant filings under part 4050, and coverage determination requests under section 4021, as added in Sec. 4000.3(b)(5)-(7).
Actuarial Certification Rules Moved to Instructions
PBGC proposes to revise Sec. 4010.8(a)(12) so that the rules about certification of actuarial information by an enrolled actuary are set out in the related filing instructions (and permitted under 26 CFR 301.6059-1(d)), giving PBGC flexibility to allow e-certifications in the future.
No Right to Reconsider Alternative Allocation Decisions
PBGC proposes to amend Sec. 4211.23(c) to remove language that implies plan sponsors have a right to reconsideration of PBGC decisions on alternative allocation methods; instead, PBGC clarifies such decisions are not subject to appeal or reconsideration under part 4003, though PBGC may review decisions on request or on its own initiative.
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Key Dates
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