Quarterly pension contributions required for small plan?

[tuni88]

Under this new pension law, are there any circumstances in which quarterly pension contributions are required for a small DB plan? Ours never has and never will have more than 50 participants.

It used to be 100 participants made a difference, I think, so we paid once a year. Are we still exempt from paying quarterly due to our size?

[Mike Preston]

Hate to say, but you were never exempt. And you aren't now.

However, if your plan is funded to the point where it is considered 100% funded (that definition has changed over time, but the basic percentage remains the same) in the prior year, then there are no quarterly contributions required for the next year.

[david rigby]

The only thing to add to Mike's comment is to make sure you are really in compliance with the funding standards. That is, if quarterlies were due in the past, but ignored, there is an interest penalty added to the required contribution. If the actual contribution was insufficient to cover that interest penalty, then the plan may have a funding deficiency, possibly over multiple years. Although the dollar amount of an interest penalty is usually small, the consequence of an ignored funding deficiency are not pleasant.

The plan's Enrolled Actuary will know how to check this.

[tuni88]

The only thing to add to Mike's comment is to make sure you are really in compliance with the funding standards. That is, if quarterlies were due in the past, but ignored, there is an interest penalty added to the required contribution. If the actual contribution was insufficient to cover that interest penalty, then the plan may have a funding deficiency, possibly over multiple years. Although the dollar amount of an interest penalty is usually small, the consequence of an ignored funding deficiency are not pleasant.

The plan's Enrolled Actuary will know how to check this.

We always paid early in the year so maybe that's why it was never an issue. So it wasn't our small plan size back then that mattered, is that right? We had to pay quarterly no matter our size? Size has never mattered haha?

Was there EVER a circumstance in which paying quarterly was not required? How about under the new law?