Guest Article

(From the December 7, 2009 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

Reportable Events: PBGC Interim Guidance for 2010 Is Unchanged, but Proposed Regulations Will Likely Eliminate most Automatic Waivers

According to the Pension Benefit Guaranty Corporation, the current reportable events regime deprives it of "early warnings" that would enable it to mitigate distress situations. As such, the PBGC is proposing to eliminate most automatic waivers and extensions, and seeks to require reporting of missed quarterly contributions regardless of plan size or the motivation for missing the contribution. PBGC is also proposing two new reportable events: when a plan's adjusted funding target attainment percentage falls below 60 percent, and for certain transfers to a health benefits account under the plan. 74 Federal Register 61248 (November 23, 2009).

On the Horizon: PBGC Will Require more Reporting

The PBGC is requesting comments on its new proposed rule by January 22, 2010, and anticipates the rule will become effective sometime in 2010. Once effective, it will apply to post-event reports for those reportable events that occur on or after the effective date, and to advance reports that are due on or after the effective date.

Under the proposed rule, post-event notices would generally be required, without waiver or extension, when any of the following reportable events are triggered:

Advance notices would generally be required, without waiver or extension, when any of the following reportable events are to occur:

In addition, the proposed rule would add two new reportable events:

Technical Update 09-04 Provides Guidance in the Interim

Although it expects to finalize the more rigorous proposed rule in 2010, the PBGC issued guidance making clear that the current reporting regime will continue to be in effect until then. Technical Update 09-4 affirms that PBGC's earlier guidance (in Technical Updates 09-1 and 09-3) will continue to apply in compliance with the reportable event requirements. Technical Update 09-4 specifically addresses:

As was the case in 2009, for funding-related determinations a plan's unfunded vested benefits and the value of its assets and vested benefits are determined for plan years beginning in 2010 in the same manner as the variable rate premiums for the preceding plan year. For example, a calendar year plan with a January 1 valuation date will use the variable rate premium values determined as of January 1, 2009 for purposes of applying the $50 million advance-reporting threshold test for reportable events in 2010. For missed quarterly contributions, if the failure is not motivated by financial inability, the reporting requirement is waived if the plan has fewer than 25 participants for whom flat-rate premiums were payable for the prior year. If the plan has at least 25 but less than 100 participants for whom flatrate premiums were payable for the prior year, the reportable events post-notice requirement is considered satisfied if financial inability was not the reason for the missed contribution and a simplified notice is filed with the PBGC by the time the first missed-quarterly reportable event report for the 2010 plan year would otherwise be due.

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, Bart Massey 202.220.2104, Mark Neilio 202.378.5046, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Deborah Walker 202.879.4955. Copyright 2009, Deloitte.