The DOL released model funding notices for single and multiemployer plans

DOL site - model funding notices

Let the fun begin.

One issue: we have to estimate the liabilties at 12/31/2008, but using: "the rate provided under section 4006(a)(3)(E)(iv), but using the last month of the year to which the notices relates rather than the month preceding the first month of the year to which the notice relates."

What? Are they assuming everyone uses the Yield Curve method for rates?

Hmmm. Released as a directive to DOL staff ("field assistance bulletin").

"Questions concerning this memorandum may be directed to Stephanie Ward at 202.693.8500."
Grant, if you call with your question, please post the response.

And, if anybody gets a committment from Relius on timing, please post that response.

1. The notice is unworkable. All this end of year vs. valuation date business. It is as if several people wrote it without talking to each other.

2. I wager Relius will not have this working by April 30.


3. We can take some comfort in "good faith compliance"

The more I learn about the Annual Funding Notice, the scarier it gets ..... having to supply those 12/31/2008 asset and liability numbers.

No, this does not involve a Yield Curve, but that is the only "good news". We do have to recalculate PBGC liabilities based upon using the Dec. 2008 segment rates.


For a SMALL plan, if they happen to file their Form 5500 "early", it accelerates the deadline for this notice to the same date as the 5500 is filed, perhaps even earlier than the April 30 deadline for large plans.

For LARGE plans .........,
the deadline is April 30.
So, all your trust accounting basically needs to be completed before April 30 even though your 5500 is not due until Oct. 15 (if on extension).
The EOY assets have to be broken down by asset category, as % of total assets on 12/31/2008 (don't include the receivables in that breakdown)

It is even worse for the 12/31/2008 liabilities -- Q&A-7 says to use the December 2008 PBGC segment interest rates for reporting those liabilities (not the Dec. 2007 rates that we used to calculate the 2008 variable premium liabilities). The liability calculation would also be different than the 2008 premium liability to the extent that we have to include the additional liability related to 2008 benefit accruals.

The FAB says plan administrators are permitted to "project liabilities in a reasonable manner to year-end using standard actuarial techniques". I am familiar with many actuarial techniques, but I don't have one that will take my 1/1/2008 premium target liability (computed using segment rates of 4.93%/6.13%/6.69%) and convert it to a 12/31/2008 liability that adds in the 2008 benefit accrual liability and revalues it all using Dec. 2008 segment rates of 6.72%/7.12%/6.36%). It looks like we have to get a jump-start on calculating our 2009 variable premium liability, that would otherwise not be needed until early October 2009. [similar jump-start for small plans, having to compute these 2009 variable premium liabilities no later than Oct. 15, vs. the April 30, 2010 deadline for the 2009 PBGC premium submission]

Is it true that only PBGC covered plans need to complete this?

Is there any other exclusions?

Yes, it only applies to PBGC covered plans.