PBGC Changes How It Announces Disaster Relief

Practical Law Legal Update w-015-5318 (Approx. 5 pages)

PBGC Changes How It Announces Disaster Relief

by Practical Law Employee Benefits & Executive Compensation

Disaster Relief

Under the guidelines discussed in the announcement, the PBGC will issue disaster relief by extending the due date for the plan filing, payment, or other required action to the last day of the IRS relief period for due dates that fall within that period. Specifically:

A plan filing will not be subject to a late filing penalty under ERISA Sections 4071 or 4302 (29 U.S.C. §§ 1371 or 1452) for the relief period.
A premium payment will not be subject to a late payment penalty or interest charges under ERISA Section 4007 (29 U.S.C. § 1307) for the relief period.
The extended due date for a filing or other required action will be used to calculate any other due date based on the due date of the filing or other action. For example, the announcement provides the example of a plan that is filing certain actuarial information by an alternative due date that is 15 days after a plan's Form 5500 due date (29 C.F.R. § 4010.10(b)). If the plan's deadline to file a Form 5500 is extended because of a disaster, then the 15-day period in the PBGC's regulation is automatically measured from the last day of the Form 5500 disaster relief period.

The PBGC's announcement provides an example of how the new disaster relief system will work. If the IRS issues a news release a news release providing disaster relief for taxpayers in a specified disaster area for the period September 4, 2018 through January 31, 2019, and a plan's plan administrator is located in the disaster area covered by the IRS disaster relief news release and notifies the PBGC that it is eligible for disaster relief on or before January 31, 2019 (either by submitting a Comprehensive Premium Filing (CPF) in which such eligibility is reported or by sending an email to PBGC), then if the plan pays its 2018 premium:

On or before January 31, 2019, no late payment charges (interest or penalties) will be assessed.
After January 31, 2019, late payment charges will begin accruing on February 1, 2019.

Requirements

All of the following conditions must be met for the announcement's disaster relief to apply:

The person responsible for a filing, payment, or other action under PBGC regulations, such as a plan administrator or contributing sponsor, is located in the disaster area. Or, a person responsible for providing information or other assistance needed for the filing, payment, or other action, such as a service provider (including the plan's enrolled actuary) or bank, is located in the disaster area.
The due date of the filing, payment, or other action falls within the relief period.
The filer notifies the PBGC of the filer's eligibility for disaster relief on or before the last day of the relief period.
The filing or action is not one of the exceptions described in the announcement.

Exceptions List

The disaster relief announced by the PBGC does not apply to certain filings that involve particularly important or time-sensitive information where there may be a high risk of substantial harm to participants or PBGC's insurance program, including:

Advance notices of reportable events under ERISA Section 4043 (29 U.S.C. § 1343) (which is filed on Form 10 Advance) (see Practice Note, Reportable Events for Pension Plans Under ERISA Occurring On or After January 1, 2016: Reportable Events Requiring Advance Notice).
Post-event notices for the following five reportable events under ERISA Section 4043:
- failure to make required contributions under $1 million;
- inability to pay benefits when due;
- liquidation;
- loan default; and
- insolvency or similar settlement.
- (See Practice Note, Reportable Events for Pension Plans Under ERISA Occurring On or After January 1, 2016: Reportable Events Requiring Post-Event Notice.)
Notices of large missed contributions under ERISA Section 303(k) (29 U.S.C. § 1083(k)) (Form 200) (see Practice Note, Reportable Events for Pension Plans Under ERISA Occurring On or After January 1, 2016: PBGC Form 200).
Actions related to distress terminations for which PBGC has issued a distribution notice.

The announcement provides information on how a plan can request disaster relief on a case-by-case basis for these filings.

Notifying the PBGC

The PBGC announcement also provides information on how a plan should notify the PBGC of the plan's eligibility for disaster relief. There are separate instructions for seeking relief for premium filings and all other filings or actions.

Practical Implications

The preamble to the PBGC's announcement explains that the PBGC's new practice is meant to be clearer and simpler for plan sponsors. Since the PBGC disaster relief notices rely on data from IRS disaster relief news releases, the PBGC's notices have always been issued later than the IRS news releases. Under the PBGC's announcement, filers will no longer have to wait for the PBGC to act. The PBGC's new approach also eliminates the need to issue multiple disaster relief notices with duplicative language and unnecessary detail.

PBGC Changes How It Announces Disaster Relief | Practical Law