Employee notification when PBGC variable premiums are required

[richard]

If a calendar year DB plan has a variable premium for 2000, my understanding is that an employee notice is required unless either:

1. the current liability ratio (assets divided by current liability) as of 12/31/99 is at least 90%,

or

2. 80% < 12/31/99 CLRatio < 90%,

12/31/98 CLRatio > 90%, and

12/31/97 CLRatio > 90%,

or

3. 80% < 12/31/99 CLRatio < 90%,

12/31/97 CLRatio > 90%, and

12/31/96 CLRatio > 90%.

Where the CLRatios in each case are the current liability (measured using the highest allowable interest rate at the date) divided by the market value of assets at that date.

This applies to plans with both over 100 participants as well as those with under 100 participants.

Is this an accurate statement of when the employee notice can be avoided?

[Guest JAREL]

I believe your analysis is correct as far as the "current" year 2000 is concerned (no DRC contribution required), but I think you can also avoid notice if for the "prior" year 1999 no DRC contribution was required due to the 80%/90% rules. I always have to look at these rules two or three times when I'm in doubt, so don't just take my word for it.