PBGC Makes Proposals About Plan Terminations

The agency is proposing that termination forms may be filed electronically and that plan sponsors be offered a pre-filing consultation.

The Pension Benefit Guaranty Corporation (PBGC) intends to request that the Office of Management and Budget (OMB) extend approval, under the Paperwork Reduction Act of 1995, of a collection of information program operating under its regulations on Termination of Single-Employer Plans and Missing Participants. 

The request also involves implementation forms and instructions. The agency notes that under section 4041 of the Employee Retirement Income Security Act (ERISA), as amended, a single-employer pension plan may terminate voluntarily only if it satisfies the requirements for either a standard or a distress termination. Under the PBGC’s termination regulation, a plan administrator wishing to terminate a plan is required to submit specified information to the PBGC in support of the proposed termination and to provide specified information regarding the proposed termination to third parties (participants, beneficiaries, alternate payees, and employee organizations).

In the case of a plan with participants or beneficiaries who cannot be located when their benefits are to be distributed, the plan administrator is subject to the requirements of ERISA section 4050 and the PBGC’s regulation on missing participants

The collection of information under these regulations and the forms and instructions have been approved by the OMB until November 30, 2017. The PBGC is requesting that the OMB extend its approval for three years, with modifications.

The agency is proposing to provide that the plan administrator of a plan terminating in a standard or distress termination that closes out in the private sector, may submit termination forms electronically (scanned and emailed or faxed), rather than by mail or personal delivery only.

In addition, the PBGC is proposing to include an opportunity for plan sponsors to contact the agency for a pre-filing consultation to discuss the filing process and ensure the filing of a distress termination is appropriate given the sponsor’s specific circumstances.

The agency says this consultation will assist it and the plan sponsor in exploring whether a waiver of one or more filing obligations is appropriate, identifying potential issues preventing a distress termination of a particular plan, and may indicate that commencement of an agency-initiated termination of the pension plan is warranted. This consultation will be voluntary and will result in little or no added burden on the plan sponsor.

PBGC is soliciting public comments about its proposals. It’s notice is here.