The Joint Committee on Employee Benefits (JCEB) of the American Bar Association (ABA) recently issued Q&As containing responses from Pension Benefit Guaranty Corporation (PBGC) staff members to 43 questions. The Q&As, compiled by the JCEB, are based on discussions between JCEB and PBGC representatives at a May 6, 2015 meeting. Responses to the questions are unofficial and nonbinding. Topics addressed include (but are not limited to):

In its written response to a question on church plan litigation and determination, the PBGC said it is closely monitoring the ten lawsuits involving church plans that are currently being litigated in federal courts.

In the meantime, the PBGC continues to follow its longstanding policy for plans that claim to be church plans and stop paying premiums or request premium refunds. These plans will be determined to be church plans under Title IV of ERISA only if they first obtain a letter ruling from the IRS determining that the plan meets the definition of church plan under the Code.

JCEB and PBGC representatives discussed the requirement that the notice of plan benefits due in a standard termination include personal data or the best available data used to calculate an affected party's benefit, except when the affected party has been in pay status for more than one year before the proposed termination. JCEB representatives asked if the exception applies when:

The proposed response stated that the exception should apply to the notice provided to the beneficiary in this situation, because:

However, the PBGC responded that the exception would not apply in the hypothetical situation because the exception applies to an "affected party" as of the proposed termination date, and an affected party includes a beneficiary of a deceased participant under 29 C.F.R. Section 4001.2. Therefore, the exception does not apply if the beneficiary has been in pay status for less than one year.

The PBGC clarified that a determination that the total of all missed contributions exceeds $1 million, such that a lien arises under Code Section 430(k), is made only at the time the required contribution is due. For example, if the total of the missed contributions is $999,000 after the first quarterly contribution is missed, the Code Section 430(k) lien could not arise until the next required contribution is due.

The determination would not be made on a continuing basis (by adding interest for the period following the most recent missed contribution date).

Regarding the active participant reduction reportable event, the PBGC declined to answer several questions on how the regulations governing that event should be interpreted in light of recent changes to ERISA Section 4062(e). For more information on the active participant reduction reportable event, see Practice Note, Reportable Events for Pension Plans under ERISA: Active Participant Reduction.

Addressing other reportable events questions, the PBGC indicated that reporting delinquencies are most common for plan filings for the missed contributions reportable event. These filings are typically untimely or incomplete or both. The PBGC has asked the Office of Management and Budget (OMB) to approve revisions to Forms 10 and 200 that are intended to provide clearer directions on the filing requirements (for more information on these forms, see Practice Note, Reportable Events for Pension Plans under ERISA: Form 10 and PBGC Form 200).

The PBGC also anticipates issuing proposed regulations this year that would provide further guidance on the reportable events regulations.

In 2014, the PBGC declared a moratorium on ERISA Section 4062(e) (29 U.S.C. § 1362(e)) enforcement. However, that moratorium expired December 31, 2014 (see Legal Update, PBGC Announces a Moratorium on ERISA Section 4062(e) Enforcement).

When asked for an update on its ERISA Section 4062(e) enforcement experience, and its plans for finding out about ERISA Section 4062(e) events and pursuing and resolving Section 4062(e) liability, the PBGC stated that, following the recent legislative changes to that provision:

The PBGC declined to answer all other questions on ERISA Section 4062(e).

JCEB representatives asked for an update on the PBGC's experience with multiple employer plans, in particular regarding mergers, spinoffs, withdrawals, partitions, or terminations.

The PBGC:

In response to further questions on the implications of the revisions to ERISA Section 4062(e) (29 U.S.C. § 1362(e)), the PBGC stated that the Early Warning Program continues to be quite active, but:

The PBGC also confirmed that these four transactions raise concerns under the Early Warning Program:

These transactions are evaluated on a case-by-case basis. Plan sponsors are encouraged to contact the PBGC early in the process of considering a transaction. The PBGC is considering publishing guidance on the Early Warning Program and may do so this year. To learn more about the Early Warning Program, see Practice Note, Defined Benefit Plans: Distress and Involuntary Terminations: Preventing an Involuntary Termination.

The PBGC invoked ERISA Section 4069(a) (29 U.S.C. § 1369(a)) in one case litigated in the past year, Pension Benefit Guaranty Corp. v. The Renco Group, Inc. (No. 13–cv–621, (S.D.N.Y. Mar. 6, 2015)). ERISA Section 4069 prohibits transactions that will enable a party to evade liability for an underfunded terminating or terminated single-employer plan (to learn more, see Practice Note, Guide to ERISA Provisions in Credit and Financing Agreements: Transactions to Evade Liability (ERISA Sections 4069, 4212)).

In Renco, the PBGC alleges that Renco engaged in a transaction with a principal purpose of evading the pension liabilities of its subsidiary, RG Steel. PBGC also alleges claims against Renco for state-law fraud, fraudulent concealment, and negligent misrepresentation. On March 14, 2014, the court held that PBGC has authority to bring state-law fraud claims, and that ERISA does not preempt state-law fraud claims where companies engage in fraud when dealing with PBGC. The trial is currently scheduled to begin in July 2015.

The PBGC was asked to provide an update on its recent activity related to its claims that a private equity fund may qualify as a "trade or business" and thus be jointly-and-severally liable under ERISA for various pension-related debts of a portfolio company that is at least 80 percent-owned by the private equity fund (to learn more about this topic, see Practice Note, Controlled Group and Affiliated Service Group Rules: Private Equity Funds and Controlled Group Liability).

The PGBC stated that it had no new information to provide on this topic.

The PBGC indicated that it is working on a proposed rule concerning missing participants that is targeted for release in the fall of 2015. The rule will:

PBGC is coordinating its rule with the two other ERISA agencies, particularly on the search requirements. The PBGC stated that it had no authority to address missing participants in non-terminating defined contribution plans. (To learn more about missing participants in terminating plans, see Practice Note, Locating Missing Participants in Terminating Plans.)

Though the PBGC declined to answer several open questions, the JCEB Q&As still provide valuable insight into the PBGC's current enforcement initiatives and regulatory priorities. Practitioners should be prepared for new regulations, additional guidance and other developments later this year on: