Regional Vice President of Sales The Retirement Plan Company
|
Bates & Company, Inc.
|
AimPoint Pension
|
Loan & Distribution Specialist AimPoint Pension
|
Defined Benefit Combo Cash Balance Compliance Consultant Loren D. Stark Company (LDSCO)
|
Compass
|
“BenefitsLink continues to be the most valuable resource we have at the firm.”
-- An attorney subscriber
Guest Article
(From the July 21, 2008 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)
Consistent with changes made by Pension Protection Act (PPA), PBGC has proposed regulations to provide that, when a single-employer pension plan terminates during the contributing sponsor's bankruptcy proceedings, the bankruptcy filing date will be treated as the plan's termination date for purposes of determining the benefits guaranteed by PBGC. 73 FR 37390 (July 1, 2008).
Effective for bankruptcy filings on or after September 16, 2006, PPA § 404 amended ERISA to provide that the benefits which are guaranteed by PBGC and the benefits which are entitled to priority in the statutory hierarchy -- under ERISA §§ 4022 and 4044(a)(3), respectively -- will be determined by treating the bankruptcy filing date as the plan termination date in the event the plan is terminated after the sponsor files for bankruptcy. The effect of the PPA amendment is that the benefits earned after the bankruptcy filing date are not guaranteed.
As explained by the PBGC:
A persistent problem for the PBGC insurance program has been that the funded status of plans often deteriorates significantly while the plan sponsor is in bankruptcy. Many sponsors have failed to make minimum funding contributions to their plans during the bankruptcy, while the plan continues to pay retiree benefits as usual and employees continue to earn additional benefits. Because the termination date often comes after the sponsor has been in bankruptcy for some time, the result has been that PBGC's losses often increase substantially during the course of a bankruptcy proceeding. |
As noted by the PBGC in the preamble, the regulations provide the following changes consistent with the PPA:
|
If the plan has more than one contributing sponsor and all the contributing sponsors did not file for bankruptcy on the same date, PBGC will determine the date to treat as the bankruptcy filing date based on the facts and circumstances.
The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations.
If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Erinn Madden 202.572.7677, Bart Massey 202.220.2104, Mark Neilio 202.378.5046, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Tom Veal 312.946.2595, Deborah Walker 202.879.4955. Copyright 2008, Deloitte. |
BenefitsLink is an independent national employee benefits information provider, not formally affiliated with the firms and companies who kindly provide much of the content and advertisements published on this Web site, including the article shown above. |