PBGC Clarifies Rules around Pension Plan Changes Made by CARES Act

On July 20th, the PBGC published an update for how to calculate PBGC premium payments for pension plan sponsors that are taking advantage of the delayed contribution due dates afforded by the CARES Act. Further, it provides relief from unneeded filings. Employers that are taking advantage of the delayed due dates should read on. 

Updated Message

The PBGC changed the deadline for reflecting 2020 contributions on the PBGC form and now contributions made as late as December 31, 2020 can be counted toward the 2020 premium. The plan sponsor would complete the PBGC premium filing on October 15 as usual not reflecting the contributions and then amend both the Form 5500 and PBGC forms in early 2021 reflecting the 2020 contributions. You can find out more in our updated article, Quarterly Contributions: To Delay or Not to Delay. PBGC Premium Savings Either Way

Of important note, contributions can only be included as assets for PBGC variable premium calculations if the contribution is made by the date of the filing.  So an employer looking to make their premium payment on the last day possible, October 15th for calendar-year plans, can only include 2019 receivable contributions up to that date, even though some 2019 contributions may still be made after that date.  Furthermore, the PBGC will not accept an amended filing by an employer looking for a premium credit once those delayed contributions are made. 

PBGC Clarifies Rules around Pension Plan Changes Made by CARES Act

The PBGC clarified for employers that as long as they make their required contributions by the adjusted due date, no late contribution notice requirements are triggered.  If contributions are not made by the revised dates, the usual reporting requirements will then apply.

Further miscellaneous provisions related to distress termination and early warning program inquiries are also included but will only apply to a limited number of pension plans.  The full Q&A style release can be found here.

For more information about adjusted due dates, late contribution guidelines, or pension plan changes, please contact Matt Klein in the form below.

Published July 21, 2020

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Category: Findley Post, Retirement Plans