Critical Status Notice

[carrots]

Is a Critical Status Notice only needed for Multiemployer Plans with low funding, or is it also needed for Single Employer Plans in a similar position?

[SoCalActuary]

Critical status is only multi-employer. AFTAP notice is used for single employer plan.

[carrots]

That's what I thought. The EBSA in our town seems to think otherwise. We will have to straighten them out!

[SoCalActuary]

From the IRS Code:

Sec. 412. Minimum funding standards

(a) Requirement to Meet Minimum Funding Standard.--

(1) In general.--A plan to which this section applies

shall satisfy the minimum funding standard applicable to the

plan for any plan year.

(2) Minimum funding standard.--For purposes of paragraph

(1), a plan shall be treated as satisfying the minimum funding

standard for a plan year if--

(A) in the case of a defined benefit plan which is

not a multiemployer plan, the employer makes

contributions to or under the plan for the plan year

which, in the aggregate, are not less than the minimum

required contribution determined under section 430 for

the plan for the plan year,

(B) in the case of a money purchase plan which is

not a multiemployer plan, the employer makes

contributions to or under the plan for the plan year

which are required under the terms of the plan, and

© in the case of a multiemployer plan, the

employers make contributions to or under the plan for

any plan year which, in the aggregate, are sufficient to

ensure that the

plan does not have an accumulated funding deficiency

under section 431 as of the end of the plan year.

(b) Liability for Contributions.--

(1) In general.--Except as provided in paragraph (2), the

amount of any contribution required by this section (including

any required installments under paragraphs (3) and (4) of

section 430(j)) shall be paid by the employer responsible for

making contributions to or under the plan.

(2) Joint and several liability where employer member of

controlled group.--If the employer referred to in paragraph (1)

is a member of a controlled group, each member of such group

shall be jointly and severally liable for payment of such

contributions.

(3) Multiemployer plans in critical status.--Paragraph (1)

shall not apply in the case of a multiemployer plan for any plan

year in which the plan is in critical status pursuant to section

432. This paragraph shall only apply if the plan adopts a

rehabilitation plan in accordance with section 432(e) and

complies with such rehabilitation plan (and any modifications of

the plan).

Note that this only applies to multiemployer plans.

[carrots]

Thanks, SoCal!