The Pension Benefit Guaranty Corporation (PBGC) is amending its multiemployer reporting, disclosure and valuation regulations to reduce the number of actuarial valuations required for smaller plans terminated by mass withdrawal, add a valuation filing requirement and a withdrawal liability reporting requirement for certain terminated plans and insolvent plans, remove certain insolvency notice and update requirements, and reflect the repeal of the multiemployer plan reorganization rules.
The agency says the rule reduces costs by allowing smaller plans terminated by mass withdrawal to perform actuarial valuations less frequently and by removing certain notice requirements for insolvent plans. This reduces plan administrative costs and, in turn, may reduce financial assistance provided by PBGC.
The plan sponsor of a multiemployer plan terminated by mass withdrawal is responsible for specific duties, including an annual actuarial valuation of the plan’s assets and benefits. The PBGC’s final rule reduces administrative burden by allowing a plan sponsor to perform an actuarial valuation only every five years if the present value of the plan’s nonforfeitable benefits is $50 million or less. The final rule adds a new requirement for plan sponsors of certain terminated plans and insolvent plans to file actuarial valuations with PBGC. Where the present value of the plan’s nonforfeitable benefits is $50 million or less, a plan receiving financial assistance from PBGC may file alternative valuation information.
The plan sponsor of a multiemployer plan also is responsible for determining, giving notice of, and collecting withdrawal liability. The final rule requires plan sponsors of certain terminated plans and insolvent plans to file with PBGC information about withdrawal liability payments and whether any employers have withdrawn but have not yet been assessed withdrawal liability.
The plan sponsor of a multiemployer plan terminated by mass withdrawal that is insolvent or is expected to be insolvent for a plan year must provide certain notices to PBGC and participants and beneficiaries. Similarly, the plan sponsor of a multiemployer plan that is certified by the plan’s actuary to be in critical status and that is expected to become insolvent under Section 4245 of the Employee Retirement Income Security Act (ERISA) must provide certain notices to PBGC and interested parties. Notices include a notice of insolvency and a notice of insolvency benefit level. The final rule eliminates outdated information included in the notices and changes the frequency of the notices. A plan sponsor is required to provide notices of insolvency if the plan sponsor determines the plan is insolvent in the current plan year or is expected to be insolvent in the next plan year. The final rule also eliminates the requirement to provide most annual updates to the notices of insolvency benefit level.The rule is effective July 1, 2019.