Floor offset DB plan subject to PBGC coverage?

When you say, "met the audit requirement threshold", do you mean is had > 100 participants and required an audit, or it did not require an audit?

Can you provide additional information?  How many participants are in the floor offset plan?  How many of those have cash balance accounts?  What is the type of business?

There is nothing special about a floor offset plan that would exempt it from PBGC coverage, but some take the position that only those with cash balance accounts are actually participants.  

I agree with Effen. Unless the plan meets one of the exemptions, it is covered by PBGC.

You only pay the flat rate premium on participants whose benefits are not fully offset. This can be confusing if the owner is the only one who is not fully offset, since normally you would not do a premium filing showing only 1 active participant, especially if that one participant is the owner. But that's how it works for floor offset plans.

They will owe multiple years of back premiums plus interest. I agree that you should let a lawyer handle this in order to preserve privelege.

Your comment about the audit threshold is confusing - did the DC plan hit over 120 participants with account balances this year, and now the IQPA is asking about the PBGC filings in the DB plan? Is that why the issue is coming up now? Or are you the IQPA? It would be helpful to know more about your role in this situation.

And the plan is terminating (or has already terminated)? What is/was the termination date?

You can ask the PBGC for a determination.  

On 7/2/2026 at 1:34 PM, Micks said:

The related defined benefit plan covers only four eligible participants with cash balance accounts

Technically, ALL eligible participants should have a cash balance account as it is not the account that gets offset by the DC account(s). The CB account is converted to the gross Accrued/Normal Retirement Benefit and that is offset by the actuarial equivalent value of the DC account(s) based on assumptions specifically defined in the CBP to get the net benefit. Your CB participant count should be those with the required bookkeeping account. As @C. B. Zeller noted, the count for premium payment is only those with accrued benefits > zero (i.e., those not fully offset).

They are looking at past PBGC premiums plus interest and late filing penalties, not to mention the issues associated with an improper termination. I suspect this creates some IRS issues as well, which then puts tax deferral of contributions and benefits at risk (which I assume is substantial for the principals), and add the incorrect 5500 filings to the mix. This is definitely a situation for qualified legal counsel involvement.

They are unwilling to hire ERISA counsel so will issue another significant deficiency letter at the conclusion of the audit.  Thank you all for your responses and insights.  

Some questions an independent qualified public accountant might consider and evaluate:

If the pension plan’s administrator is unwilling to engage counsel when a prudent fiduciary would do so, should an independent qualified public accountant treat that as a weakness in management’s internal controls, and so intensify the audit’s procedures?

If the accounting firm engaged as the pension plan administrator’s independent qualified public accountant also has an engagement regarding the employer’s financial statements (even if unaudited and unreviewed), the firm might consider whether there is another professional responsibility regarding the issues about PBGC coverage and premiums. Even if the employer’s financial statements are on the cash-receipts-and-disbursements method of accounting, should there be some narrative disclosure of a loss contingency that PBGC might assert a claim for PBGC premiums due?

If the accounting firm engaged as the pension plan administrator’s independent qualified public accountant also has an engagement regarding one or more of the employer’s tax returns and there is doubt about whether the pension plan is tax-qualified, consider whether there is another professional responsibility about whether or how the employer may claim deductions for contributions to the pension plan. For example, if the pension plan and its trust are not tax-qualified under Internal Revenue Code § 401(a), that might affect deductions. Consider the AICPA’s Statement of Standards on Tax Services. Consider Internal Revenue Code § 6694.

Consider that a pension plan administrator’s independent qualified public accountant who applies AICPA standards must satisfy herself that the plan administrator’s Form 5500 report is at least logically consistent with the plan’s financial statements that are the subject of the IQPA’s report. That is so regarding both the audited period’s statements and report and the preceding period’s statements and report.

If there is doubt about whether a pension plan is terminated, might the plan’s financial statements need a receivable (or a narrative disclosure of a gain contingency) if a contribution ought to be made?

Beyond PBGC coverage and premiums, what else might be wrong?

This is not advice to anyone.