Small plan has an end-of-year valuation date and thus uses the lookback year for PBGC purposes. For this plan, assume it has an effective date of 1/1/2023 and a standard 3-year cliff vesting schedule. Let’s also assume we have a participant that earns their third year of vesting during the 2025 plan year and becomes 100% vested as of the end of the year. As of 1/1/2025 the participant does not have a vested funding target, but as of 12/31/2025, the participant would be fully vested into their funding target. The PBGC states that that the UVB date of this plan would be 12/31/2025 for the 2026 premium payment year. Within the reporting of the UVB amount, would I consider the participant’s funding target to be vested or unvested for my calculations?
We reached out to the PBGC and their response stated that since the participant is vested as of the UVB date, that their vested funding target should be included. However, the program we use only counts the vested funding target as of the beginning of the year and claims that the PBGCs response was just the opinion of one person at the PBGC.
