Installment Payments and Funding Waivers

[Guest TheShepherd]

I am looking for insight on the interaction of installment payments and funding waivers. Assume an employer is required to make quarterly installment payments but misses a payment during the year. A lien in favor of the plan arises as soon as the installment payment is missed. If the employer eventually receives a funding waiver for the year, presumably the waiver will retroactively cure any installment payments that were missed during the year. However, the employer may already have suffered adverse consequences resulting from the lien (e.g., violation of a financial covenant). Is there any way to prevent the lien in this situation (other than payment of the quarterly installment)?

[david rigby]

Assume an employer is required to make quarterly installment payments but misses a payment during the year. A lien in favor of the plan arises as soon as the installment payment is missed.

Lien? Is this conclusion valid?

My understanding is that a waiver application will specify the $ amount requested, which should include the amount of any interest penalty that accrues due to late quarterly contributions, if applicable. Don't over-analyze it.

[Guest TheShepherd]

Code section 412(n) states that if there is a missed installment payment and the aggregate amount of all missed payments exceeds $1,000,000, then a lien arises in favor of the plan. This lien may be perfected and enforced only by the PBGC (or at its direction). Per the statute, the lien arises immediately on the due date of the missed payment.