New PBGC Premium Deadlines for 2008 filings

[JAY21]

If I'm reading the new 2008 PBGC premium rules and deadlines correctly you must value the unfunded vested benefits (for variable rate purposes) as of the Valuation Date that falls within the premium filing year (not prior plan year EOY Val).

While the deadline appears generous being 16 months after the start of the 2008 premium year (e.g., 4/30/09 for 2008 filings) how many 2008 EOY valuations for Sole Props/LLCs will have their self-employment earnings to you before 4/30/09 (some, but many go on extension).

So how does one file the 2008 PBGC premium based upon the 12/31/08 Valuation which uses the 2008 self-employment earnings that might not get done until say August 2009 (via tax return extension). Do we need to put these people on notice that they can't extend their tax returns since we need the Net Schedule C (or net k-1 income) before 4/30 to do PBGC filings ? Is there any relief that I am missing ?

Under 2007 rules we could use the "snapshot" Val date as of 1 day before premium year (or 1st day of premium year) giving you 8.5 months to get data and get it done.

Thoughts anyone ? Another provision forcing us into BOY vals ?

[JAY21]

I think I see it better now. Since you are using the ERISA 303 Funding Target (or PBGC version of Funding Target) I believe this does not include the accrual for the premium year (though it has interest credited to end of year for EOY val) so accruals are only through BOY, even for an EOY val, so you wouldn't need the 2008 earned income for PBGC filing only the 1/1/08 Funding Target minus assets for UVBs, so no 2008 compensation needed. If anyone disagrees let me know.

[tymesup]

Many of these Schedule C sponsors won't be covered by the PBGC, also.

[SoCalActuary]

I think I see it better now. Since you are using the ERISA 303 Funding Target (or PBGC version of Funding Target) I believe this does not include the accrual for the premium year (though it has interest credited to end of year for EOY val) so accruals are only through BOY, even for an EOY val, so you wouldn't need the 2008 earned income for PBGC filing only the 1/1/08 Funding Target minus assets for UVBs, so no 2008 compensation needed. If anyone disagrees let me know.

The only unfortunate part is that you have to schedule the work during the first quarter of 2009 after you know the interest rates you will be using for your 2008 valuation. This means that you have one more thing to do in the first 4 months of the year in addition to the normal valuation process later in the year.

But remember this, there will not be a penalty imposed for missing the 4/30/09 deadline, just interest on the premiums due. Since that might be very small numbers, you can help the client make an intelligent decision balancing the additional fees of another valuation vs. the interest on the premiums.

[ak2ary]

ASPPA is actively lobbying the PBGC to have this date pushed back for plans with EOY val dates or with under 100 lives. PBGC has asked ASPPA how big a problem it is since, in their opinion, the vast majority of theEOY val plans are not PBGC covered. ASPPA has been looking for input on how many/what percentage of small plans are both EOY and PBGC covered. Any input you might have on this should be sent to Judy Miller at ASPPA

[jkdoll2]

We have about 6 plans that are end of year and PBGC covered. Our actuary says we need to wait until technical corrections are done before we can file the premiums for 2008. all of our plans are under 100 participants and some or cash balance plans.

W do need to know what to do with end of year valuations and premiums due in April. I sometimes dont even get census until mid summer.