PBGC Issues Proposed Regulations Requiring Electronic Filing of Certain Multiemployer Plan Notices | Practical Law

PBGC Issues Proposed Regulations Requiring Electronic Filing of Certain Multiemployer Plan Notices | Practical Law

The PBGC issued proposed regulations requiring multiemployer plans to electronically file certain notices with the Pension Benefit Guaranty Corporation (PBGC). The notices are filed when a multiemployer plan is terminated or becomes insolvent (or may become insolvent).

PBGC Issues Proposed Regulations Requiring Electronic Filing of Certain Multiemployer Plan Notices

by Practical Law Employee Benefits & Executive Compensation
Published on 02 Apr 2015 • USA (National/Federal)
The PBGC issued proposed regulations requiring multiemployer plans to electronically file certain notices with the Pension Benefit Guaranty Corporation (PBGC). The notices are filed when a multiemployer plan is terminated or becomes insolvent (or may become insolvent).
On April 2, 2015, the Pension Benefit Guaranty Corporation (PBGC) issued proposed regulations that would require electronic filing of multiemployer pension plan notices required by ERISA when plans are terminated or become insolvent (or may become insolvent).

Multiemployer Plan Notices Affected by the Proposed Regulations

The proposed regulations would require the following multiemployer plan notices to be filed electronically with the PBGC:
  • Notices of termination under 29 C.F.R. Part 4041A.
  • Notices of insolvency and insolvency benefit level under 29 C.F.R. Part 4245.
  • Notices of insolvency and insolvency benefit level under 29 C.F.R. Part 4281.
  • Applications for financial assistance under 29 C.F.R. Part 4281.

Notice under ERISA Section 4041A

Under ERISA Section 4041A, there are two types of multiemployer plan terminations:
  • Mass withdrawal terminations, which occur when all employers withdraw or cease to be obligated to contribute to the plan.
  • Plan amendment terminations, which occur when a multiemployer plan adopts an amendment:
    • providing that participants will receive no credit for service with any employer after a specified date; or
    • that makes it no longer a covered plan.
The PBGC's regulation on Termination of Multiemployer Plans (29 C.F.R. Part 4041A) requires the plan sponsor of a terminated multiemployer plan to file a notice of termination to alert the PBGC to possible demands on the multiemployer insurance program.

Notice under ERISA Section 4245(e)

ERISA Section 4245(e) requires two types of notification:
  • Notice of insolvency, which states a plan sponsor's determination that the plan is or may become insolvent.
  • Notice of insolvency benefit level, which states the level of benefits that will be paid during an insolvency year.
The PBGC's regulation on Notice of Insolvency, 29 C.F.R. Part 4245, establishes the procedure for complying with these notice requirements. The regulation allows a single notice of insolvency to cover more than one plan year, which allows plan sponsors to file only a single notice of insolvency benefit level for any future year.

Notice under ERISA Section 4281

The PBGC's regulation on Duties of Plan Sponsor Following Mass Withdrawal (29 C.F.R. Part 4281) implements the requirements of ERISA Section 4281. Under this regulation, plan sponsors must:
  • Provide notices to the PBGC, participants and beneficiaries that a plan is, or will be, insolvent (29 C.F.R. §§ 4281.43 and 4281.44).
  • Provide notices of insolvency benefit level to the PBGC and to participants and beneficiaries who are in pay status or may reasonably be expected to enter pay status during the year (29 C.F.R §§ 4281.45 and 4281.46).
  • Submit an application to the PBGC for financial assistance if a plan is, or will be, unable to pay guaranteed benefits when due (29 C.F.R § 4281.47).

Proposed Regulations

The preamble to the proposed regulations notes that:
  • The electronic filing requirements would be applicable to filings made on or after January 1, 2016.
  • The PBGC would grant case-by-case exemptions to the electronic filing requirement in the proposed regulations in appropriate circumstances for filers that demonstrate good cause for exemption.
  • Electronic filing of the notices affected by the proposed regulations would:
    • simplify the filing process by including all required and optional fields and readily accessible guidance in the application, which is expected to reduce the need to contact the PBGC for assistance; and
    • improve the efficiency of the PBGC's operations and it's ability to protect potential personally identifiable information (PII).
  • The PBGC believes that requiring electronic filing for these notices would result in benefits for both the public and the government. The PBGC's regulation in 29 C.F.R. Section 4000.3 already requires electronic filing of certain notices (premium declarations under 29 C.F.R. Part 4007 and financial and actuarial information required under 29 C.F.R. Part 4010).
  • The PBGC is not proposing at this time to require electronic filing of notices of benefit reduction and of restoration of benefits. The PBGC may require electronic filing of other multiemployer plan filings in the future.
  • These proposed regulations do not involve any conforming amendments reflecting the Multiemployer Pension Reform Act of 2014 (MPRA) (for more information on MPRA, see Legal Update, President Signs Bill Reforming Multiemployer Pension Plan Rules). The PBGC expects to address those changes in a future rulemaking.

Practical Implications

Administrators of multiemployer plans should be aware of the proposed regulations and consider putting processes in place to electronically file the notices affected by the proposed regulations once the proposed regulations are finalized.