Guest Article

(From the December 13, 2010 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

In Lieu of Final Regulations PBGC Issues Reportable Events Guidance for 2011

The PBGC announced that it will not finalize the more rigorous reportable events regulation it proposed in November 2009 until sometime in 2011. In the meantime, the PBGC is extending its existing guidance on reporting missed quarterly contributions and on funding-related determinations for purposes of waivers, extensions and advance reporting.

More Rigorous Regulation Is Expected to Be Finalized in 2011

In November 2009, the PBGC observed that the current reportable events regime was depriving it of needed "early warning" signs of plans in financial distress. It proposed a regulation that would eliminate most automatic waivers and extensions, and would require reporting of missed quarterly contributions regardless of plan size or the motivation for the missed contribution. It also proposed two new reportable events, for 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. The PGBC expected to finalize the regulation in 2010.

Recently, the PBGC announced that it does not expect to issue a final regulation amending the reportable events regime until sometime in 2011. To provide guidance in the interim, it issued Technical Update 10-04.

Technical Update Guidance Is Extended

Technical Update 10-04 states that the PBGC's earlier guidance in Technical Update 09-04 will continue to apply until the PBGC's final reportable events regulation become effective. Technical Update 10-04 specifically addresses:

As was the case in 2010, 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 2011 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, 2010 for purposes of applying the $50 million advance-reporting threshold test for reportable events in 2011. For missed quarterly contributions, if the failure is not motivated by financial inability, the post-event reporting requirement is waived if the plan has fewer than 25 participants for whom flat-rate premiums were payable for the 2010 plan year. If the plan has at least 25 but less than 100 participants for whom flat-rate premiums were payable for the 2010 plan year, the post-event reporting 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 2011 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, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Deborah Walker 202.879.4955. Copyright 2010, Deloitte.