Elimination of Reporting Waiver for Missed Quarterlies

[Andy the Actuary]

In the past, the PBGC waived the reporting of missed quarterly contributions for certain small plans. This waiver is kaput starting in 2009.

ASPPA reports, "PBGC's experience is that many plans that did not report missed quarterlies because of the automatic waiver later terminated with unfunded liabilities, and that if missed-quarterly reports had been made, PBGC might have been able to work with plan sponsors to avoid the underfunded terminations."

Does anyone, anywhere, anytime in the name of J. Fred Muggs have even a conjecture of how the PBGC could have worked with employers to avoid underfunded terminations? Presumably, to have an underfunded termination, the plan sponsor's financials must have been in the toilet. Other than expediting the plan sponsor's financial ruin, what could the PBGC have done? And, it presumptuous that it would follow that the plan would not be underfunded just because the plan sponsor made timely quarterly contributions.

[JAY21]

I read the ASPPA ASAP but didn't understand the subsequent paragraph about the only remaining waiver available for 2009 and thereafter is where the minimum required contribution is made by 30 days after the "due date". What is the "due date" for this purpose ? (30 days after 12/31/09 ??).

[Andy the Actuary]

This apparently means if you make the missed quarterly contribution before the reporting date, you don't have to report it. Example: 1st qtr installment due 4/15/2009. Contribution is not made by 4/15/2009. Must report to PBGC by 5/15/2009. If installment in total is made by 5/15/2009, then there is no reporting requirement.

But what should not be lost is suppose there is no quarterly contribution requirement but there is a 2009 contribution requirement for a calendar year plan. If contribution is not made in total by 9/15/2010, then must report to the PBGC by 10/15/2010.

[AndyH]

This is a horrific abusive excess of authority, IMHO. The quarterly/credit balance rules under PPA make no sense to start with. Now 2 life plans are threatened with outrageous penalties if they don't fund quarterly?????? And again we get a couple of weeks notice. Ridiculous. Is ASPPA doing anything about this? What are they doing for DB plans?

p.s. Is there an editable Form 10 on the Web somewhere? PBGC sure couldn't be bothered to do something that customer friendly.

[Mike Preston]

ACOPA, in conjunction with ASPPA, is both writing a comment letter and arranging for meetings with PBGC to try and get some relief. Stay tuned.

There are currently at least 4 separate subcommittees charged with drafting comment letters on a lot of subjects. Quarterlies, 430/436 regulations, hybrid plans, etc. Putting something on the table that is researched properly, worded properly, has appropriate action steps included, etc., etc. takes a tremendous amount of work. I'm happy to say that we have dozens of actuaries (and others from ASPPA) investing a lot of time towards these projects. Anybody who wants to be involved in matters such as these is encouraged to send me or Judy Miller (jmiller@asppa.org) an email.

[JAY21]

If ASPPA and COPA are unsucessful in their efforts to talk some sense into the PBGC, do we have 4 notices annually to the PBGC per plan (those PBGC plans required to make quarterly contributinos) where a plan doesn't make its contribution until AFTER all 4 quarterly due dates ?

[AndyH]

Of course, but I've already completed part of it for you.

Under explanation, simply put "This is a horrific abusive excess of authority".

[Mike Preston]

Here is a link to the letter. Meetings are already scheduled. Let's hope it gets a receptive audience.

http://www.asppa.org/pdf_files/PBGC_missed..._ASPPA_COPA.pdf

[JAY21]

That's an excellent letter. Thanks for sharing that.

[AndyH]

Thanks Mike. And Tom.