PBGC Premium Refund

[emmetttrudy]

We have a Cash Balance Plan that ceased to be covered as of May 2010 (all participants were terminated and paid out except the owner, and the plan did not terminate). At the time, the plan sponsor sent a letter to the PBGC explaining it was no longer covered and why. The PBGC sent a letter in response agreeing, and memorializing the actual date at which the plan ceased to be covered. We in turn filed an amended 2010 filing, requesting a pro-rated refund because the plan had paid a premium for the entire year of 2010. The refund in question is approximately $400.

After the amended filing was submitted, the PBGC first sent a letter saying the plan was not eligible for a refund. The plan sponsor wrote another response letter explaining the situation and re-requesting the refund. The PBGC then called the plan sponsor and informed him that they refund, or allow pro-ration of, premiums in only two circumstances: plan termination; or, change of plan year--creating a short year. They also claimed the instructions clarify this. I read the 2011 PBGC premium filing instructions and could not find this explained anywhere.

Anyone know of any backup for their position?

[Andy the Actuary]

Would you please describe the circumstances? It's difficult to get past the cost/benefits of the efforts to obtain a $400 refund.

HOWEVER, 20 years ago I had this multi-zillionaire client who felt the State of Missouri (aka, the state of chaos) had overcharged his chain of businesses $8 for some sort of business tax. He paid his CPA firm over $300 to rectify the situation. So, I guess if you tell the client that it's going to cost more than $400 to get the refund and he's willing to pay, then you go for it.

[david rigby]

Andy is correct. Someone has already spent significantly more than $400 chasing this refund.

[Calavera]

Page 26 of the 2011 PBGC instruction: "There is no premium proration where a plan ceases to be a covered plan before the end of the plan year."

[K2retire]

HOWEVER, 20 years ago I had this multi-zillionaire client who felt the State of Missouri (aka, the state of chaos) had overcharged his chain of businesses $8 for some sort of business tax.

That was about the same time that people were having major difficulties getting personal income tax refunds from the State of Missouri. Fortunately that has improved.

[emmetttrudy]

Page 26 of the 2011 PBGC instruction: "There is no premium proration where a plan ceases to be a covered plan before the end of the plan year."

thank you, i missed that the first time through.

[emmetttrudy]

Would you please describe the circumstances? It's difficult to get past the cost/benefits of the efforts to obtain a $400 refund.

HOWEVER, 20 years ago I had this multi-zillionaire client who felt the State of Missouri (aka, the state of chaos) had overcharged his chain of businesses $8 for some sort of business tax. He paid his CPA firm over $300 to rectify the situation. So, I guess if you tell the client that it's going to cost more than $400 to get the refund and he's willing to pay, then you go for it.

The plan sponsor is doing most, if not all, of the work. For them it is more the principle than the cost.

[Andy the Actuary]

For them it is more the principle than the cost.

And what principle is your client defending?