PBGC Premiums for 1st year filing

[jkdoll2]

The plan is new and it is an EOY plan for 12/31/08. The effective date is 1/1/08. For the 2008 premium filing – they would not have accrued a benefit as of 1/1/08 or be vested as of 1/1/08. Would there be a premium due for 1/1/08? Do I still have to pay the participant count as of 1/1/08 even though they don’t accrue a benefit until they worked 1000 hours in 2008 (around June 2008).

What is the definition for a participant in the participant count for PBGC premium?

[JAY21]

I'm pretty sure your participant count date fora new plan is 1/1/08 (would be 12/31/07 for an existing plan) and so you'd pay just the flat rate premium for the 1st year.

[david rigby]

Best source for confirmation is the instructions on PBGC website. I don't think the valdate is relevant.

[Blinky the 3-eyed Fish]

JK mentioned no AB at 1/1/08, therefore no FT, therefore, no premium. I would file the form even though you have the $0 premium.

The val date is only relevant in calculating the FT should there be one.

[ScottR]

The plan is new and it is an EOY plan for 12/31/08. The effective date is 1/1/08. For the 2008 premium filing – they would not have accrued a benefit as of 1/1/08 or be vested as of 1/1/08. Would there be a premium due for 1/1/08? Do I still have to pay the participant count as of 1/1/08 even though they don’t accrue a benefit until they worked 1000 hours in 2008 (around June 2008).

What is the definition for a participant in the participant count for PBGC premium?

The PBGC instructions say that the participant count for premium purposes is equal to the number of participants with non-zero accrued benefits. The count date for the initial PY is the first day of the year. Thus, for any type of DB or CB plan with no past service benefit liabilities on the effective date of the plan, the participant count is zero for the initial PY. File the PBGC premium form with partic count = $0 and no premium due.

I actually learned this the hard way. I had e-filed a PBGC form late for a new CB plan, and had them pay the fixed rate only. The PBGC immediately assessed a late filing penalty of 5% per month, which the client paid. They turned to me for reimbursement of the late filing penalty. When I researched it, I found that no premium was payable for the initial PY. I requested, and got, refunds from the PBGC of both the premium and the late filing penalty (which was based on the premium amount). Sweet!

... S

[John Feldt ERPA CPC QPA]

In case anyone is curious, the rules changed for plan years after 2000 as described in the previous posts, such that plans that do not grant any past-service (thus having no benefit liability on the plan's effective date) will have a PBGC participant count of zero for the first year.

This would also affect more than just the first year of the plan. A new participant entering on the first day of a future plan year, assuming they have no benefit liability (e.g. plan credits accruals based on participation), would also be excluded from the PBGC participant count for that year.

edit: typo