[Federal Register Volume 74, Number 49 (Monday, March 16, 2009)]
[Rules and Regulations]
[Pages 11022-11035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-5741]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 4001, 4010, and 4044
RIN 1212-AB09
Annual Financial and Actuarial Information Reporting; Pension
Protection Act of 2006
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
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SUMMARY: This is a final rule to amend PBGC's regulation on Annual
Financial and Actuarial Information Reporting. The amendments implement
the provisions of the Pension Protection Act of 2006, Public Law 109-
280 (PPA 2006), which changed the standards for determining which
persons are required to report under section 4010 (Authority to Require
Certain Information) of the Employee Retirement Income Security Act of
1974 and made other changes to the reporting requirements. In addition
to providing guidance on implementing the PPA 2006 changes, the final
rule waives reporting in certain cases for controlled groups with
aggregate plan underfunding of $15 million or less, modifies the
standards for determining which plans are exempt from the actuarial
information requirements, revises the actuarial information
requirements to conform with other PPA 2006 changes, and provides other
clarifications.
DATES: Effective April 15, 2009. (See Applicability in SUPPLEMENTARY
INFORMATION.)
FOR FURTHER INFORMATION CONTACT: John H. Hanley, Director, Legislative
and Regulatory Department; or Catherine B. Klion, Manager, or Grace H.
Kraemer, Attorney, Regulatory and Policy Division, Legislative and
Regulatory Department, Pension Benefit Guaranty Corporation, 1200 K
Street, NW., Washington, DC 20005-4026; 202-326-4024. (TTY/TDD users
may call the Federal relay service toll-free at 1-800-877-8339 and ask
to be connected to 202-326-4024.)
SUPPLEMENTARY INFORMATION:
Background
Pension Benefit Guaranty Corporation (PBGC) administers the pension
insurance programs under Title IV of the Employee Retirement Income
Security Act of 1974 (ERISA). In order to give PBGC an opportunity to
anticipate and attempt to minimize potential liabilities that may arise
from the termination of significantly underfunded plans, ERISA section
4010 requires the reporting of actuarial and financial information by
controlled groups with pension plans that have significant
underfunding. That information is exempt from disclosure under the
Freedom of Information Act (5 U.S.C. 552) and may not be made public,
except as may be relevant to any administrative or judicial action or
proceeding.
Pursuant to ERISA section 4010, PBGC issued its initial regulation
on Annual Financial and Actuarial Information Reporting in 1995 (29 CFR
part 4010). The regulation specifies the items of identifying,
financial, and actuarial information that filers must submit under
ERISA section 4010. PBGC reviews the information that is filed and
enters it into an electronic database for more detailed analysis.
Computer-assisted analysis of this information helps PBGC to anticipate
possible major demands on the pension insurance system and to focus
PBGC resources on situations that pose the greatest risks to that
system. Because other sources of information are usually
[[Page 11023]]
not as current as the ERISA section 4010 information, the ERISA section
4010 filing plays a major role in PBGC's ability to protect participant
and premium-payer interests.
In March 2005, PBGC amended part 4010 to require electronic
reporting and to make other less significant changes. Reporting is now
accomplished through PBGC's secure e-4010 Web-based application.
PPA 2006 Changes
On August 17, 2006, the President signed into law the Pension
Protection Act of 2006, Public Law 109-280 (PPA 2006), which made
numerous changes in the area of pension law, including changes to ERISA
section 4010. Before its amendment by PPA 2006, ERISA section 4010(b)
required reporting, in general, if: (1) The aggregate unfunded vested
benefits of all plans maintained by members of a controlled group
exceeded $50 million, disregarding plans with no unfunded vested
benefits (the ``$50 Million Gateway Test''); (2) the conditions
specified in ERISA section 302(f) and section 412(n) of the Internal
Revenue Code (Code) for imposing a lien for missed contributions
exceeding $1 million had been met with respect to any plan maintained
by any member of the controlled group; or (3) the Internal Revenue
Service (IRS) had granted minimum funding waivers in excess of $1
million to any plan maintained by any member of the controlled group,
and any portion of the waivers was still outstanding.
Section 505 of PPA 2006 amended ERISA section 4010(b)(1), replacing
the $50 Million Gateway Test with a test based on the funding target
attainment percentage of each plan in the controlled group. As amended
by PPA 2006, ERISA section 4010(b)(1) requires reporting if:
the funding target attainment percentage (as defined in subsection
(d)) at the end of the preceding plan year of a plan maintained by
the contributing sponsor or any member of its controlled group is
less than 80 percent.\1\
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\1\ Filers with pre-PPA 2006 information years are reminded that
PBGC regulations provide that if a filer for the immediately
preceding information year is not required to file for the current
information year, the filer must submit information, in accordance
with the instructions on PBGC's Web site, http://www.pbgc.gov,
demonstrating why a filing is not required for the current
information year. This requirement will apply, for example, to a
filer that was required to file for the information year ending on
December 31, 2007, based on the $50 Million Gateway Test, but that
is not required to file for the information year ending on December
31, 2008, based on the new 80% FTAP Gateway Test.
This preamble refers to the new funding target attainment percentage
test as the 80% FTAP Gateway Test.
Although PPA 2006 did not alter the substance of the other two
gateway tests (found in paragraphs (b)(2) and (b)(3) of ERISA section
4010), it made other changes that affect these provisions. For
instance, because PPA 2006 made changes to references in paragraph
(b)(2), references in Sec. 4010.4(a) (which describes who must file
under part 4010) need to be amended. Similarly, PPA 2006 made changes
to the minimum funding waiver provisions, which are referred to in part
4010.
Finally, PPA 2006 added ERISA sections 4010(d)(1) and 4010(e).
ERISA section 4010(d)(1) lists three items that must be included in the
information filers submit to PBGC.\2\ ERISA section 4010(e) requires
PBGC to submit to Congress an annual summary report of the information
submitted to PBGC pursuant to ERISA section 4010.
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\2\ ERISA section 4010(a), which was unaltered by PPA 2006,
provides that filers must provide the information specified by PBGC
in regulations.
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On February 20, 2008 (at 73 FR 9243), PBGC published in the Federal
Register a proposed rule to amend part 4010 of PBGC's regulations to
implement the PPA 2006 changes and provide other guidance. PBGC
received four public comments on the proposed rule, all from actuarial
consulting firms. All of the commenters sought clarification of some of
the proposal's provisions and three commenters requested that
additional waivers from the section 4010 reporting requirements be
granted in the final rule. The comments are discussed below with the
topics to which they relate.
Overview of Final Rule
This final rule amends part 4010 of PBGC's regulations to implement
the change to ERISA section 4010(b)(1). In particular, this final rule
provides guidance on how to determine whether reporting is required
based on a plan's funding target attainment percentage. The final rule
also makes conforming changes to address the PPA 2006 changes affecting
the section 4010 reporting triggers based on the imposition of certain
liens or on the granting of certain minimum funding waivers.
In conjunction with these changes, the final rule also: (1) Waives
reporting in certain cases for controlled groups with aggregate
underfunding of $15 million or less; (2) modifies the standards for
determining which plans are exempt from reporting actuarial
information; (3) modifies the reporting requirements primarily to
implement the PPA 2006 changes; (4) provides guidance on reporting
requirements for sponsors of multiple employer plans; and (5) makes
other clarifications. The final rule is applicable to information years
beginning after 2007.
The final rule is nearly the same as the proposed rule, but there
are a few differences. The key changes are that the final rule--
Clarifies that for purposes of the gateway tests, only
plans that are in existence on the last day of the information year and
that are sponsored by persons who are members of the contributing
sponsor's controlled group on the last day of the information year are
counted;
Clarifies that fair market value of the plan's assets, for
purposes of part 4010 excludes contributions receivable (i.e.,
contributions received by the plan after the end of the plan year);
Modifies the proposed rule reporting requirements for
sponsors of multiple employer plans and provides for an alternative
method of compliance for certain contributing sponsors of multiple
employer plans; and
Modifies the plan actuarial reporting requirements to
require filers to report certain information regarding liens and
outstanding minimum funding waivers.
Modifies the proposed rule requirements for certain plans
to which special funding rules apply.
A detailed discussion of the final rule follows.
Information Year
In the original proposed rule under ERISA section 4010 (60 FR
35308, Jul. 6, 1995), PBGC introduced the concept of ``information
year.'' The information year is the fiscal year, except that if two or
more members of a controlled group have different fiscal years, the
information year is the calendar year (Sec. 4010.5). In the preamble
to that original proposed rule, PBGC explained that ``information
year'' serves four purposes:
First, it will help persons determine which plan years and
fiscal years to use to identify Filers. Second, it will help Filers
determine whether a pension plan qualifies for a filing exemption.
Third, it is used to identify the information to be submitted by a
Filer. Fourth, it establishes the due date for submission of
required information by a Filer. The regulation does not require a
Filer to change its fiscal year or the plan year of any pension
plan. Further, the regulation does not require a Filer to report
financial information on any accounting period other than an
existing fiscal year or to report actuarial information for any
period other than the existing plan year of a pension plan.
Generally, the Information Year is the fiscal year of the Filer. If
all members of a controlled group do not report financial
[[Page 11024]]
information on the same fiscal year, the Information Year is the
calendar year.
``Information year'' has been integral to the process of reporting
under ERISA section 4010 and PBGC finds no indication that PPA 2006
alters this. Therefore, under the final rule, reporting will continue
to be based on the concept of ``information year.'' The final rule
provides guidance for unusual situations, such as where the plan year
and the information year differ.
The final rule clarifies how the ERISA section 4010 requirements
apply to certain unusual plan year situations, such as when a plan has
two plan years that end in the information year or has no plan year
that ends in the information year. Under the final rule, the last plan
year ending on or before the end of the information year is treated as
the plan year that ends within the information year.
The final rule also clarifies that the gateway tests apply only to
plans maintained as of the end of the information year and hence
exclude plans no longer maintained by the controlled group as of the
end of the information year. In addition, the final rule clarifies that
when two or more members of a controlled group have different fiscal
years, the determination of whether an entity is exempt from the ERISA
section 4010 reporting requirements is made on the basis of a calendar
year information year.
One commenter requested guidance on applying the information year
rules to certain spinoffs, citing as an example the application of the
80% FTAP Gateway Test both to a plan created by a midyear spinoff from
a pre-existing plan within the controlled group, and to the pre-
existing plan, where the assets and liabilities at the pre-existing
plan's valuation date include the assets and liabilities of the spunoff
plan. Because section 4010 issues involving midyear spinoffs are
infrequent and factually specific, PBGC believes they are better
addressed on a case-by-case basis. Filers can obtain guidance on such
issues by contacting PBGC's Department of Insurance Supervision and
Compliance.
Funding Target Attainment Percentage
As discussed above, ERISA section 4010(b)(1), as amended by PPA
2006, requires reporting if the funding target attainment percentage at
the end of the preceding plan year of a plan maintained by the
contributing sponsor or any member of its controlled group is less than
80 percent. ERISA section 303(d)(2) and Code section 430(d)(2) provide
that the ``funding target attainment percentage'' of a plan for a plan
year is the ratio (expressed as a percentage) which--
(A) The value of plan assets for the plan year (as reduced under
subsection (f)(4)(B)), bears to
(B) The funding target of the plan for the plan year (determined
without regard to subsection (i)(1)).
In accordance with ERISA section 303(g)(1) and Code section
430(g)(1), the value of plan assets and the funding target of a plan
for a plan year are determined as of the valuation date of the plan for
the plan year. Under ERISA section 303(g)(2) and Code section
430(g)(2), the valuation date for nearly all plans subject to ERISA
section 4010 reporting will be the beginning of the plan year.\3\ Thus,
while ERISA section 4010(b)(1) refers to the funding target attainment
percentage at the end of the preceding plan year, in nearly all cases
both elements of the funding target attainment percentage must be
calculated as of the beginning of the plan year. This creates an
ambiguity with regard to the date as of which the funding target
attainment percentage is to be calculated for purposes of ERISA section
4010(b)(1).
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\3\ ERISA section 303(g)(2) and Code section 430(g)(3) provide
that the valuation date of a plan for any plan year is the first day
of the plan year, except that certain small plans may designate any
date in the plan year to be the valuation date for the plan year and
succeeding plan years. For this purpose, small plans are plans with
100 or fewer participants on each day of the plan year, when
aggregated with all plans in the controlled group. Because PBGC will
exclude controlled groups with under $15 million in underfunding,
plans that would be considered small plans for purposes of
determining valuation dates would rarely be subject to reporting
under part 4010. Therefore, the valuation date for nearly all plans
subject to ERISA section 4010 reporting would be the beginning of
the plan year.
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The final rule resolves this ambiguity by providing that the
funding target attainment percentage (for purposes of the 80% FTAP
Gateway Test) is determined as of the valuation date for the plan year
ending within the information year--generally, the first day of the
plan year that ends within the information year. Because plans will
need to determine the funding target attainment percentage as of the
valuation date for other purposes, measuring the funding target
attainment percentage as of the valuation date for the 80% FTAP Gateway
Test will be less burdensome on prospective filers than requiring a
separate determination as of the end of the preceding plan year. In
addition, using this measurement date will give controlled groups ample
time to determine whether reporting is required pursuant to the 80%
FTAP Gateway Test and to prepare the ERISA section 4010 filing (if
required) by the due date.
ERISA section 303(d)(2) and Code section 430(d)(2) provide that in
determining the funding target attainment percentage of a plan for a
plan year, plan assets are reduced by the amount of the prefunding
balance and the funding standard carryover balance. Plan sponsors are
permitted under ERISA section 303(f) and Code section 430(f) to make
certain elections to use, increase, or reduce a prefunding balance or a
funding standard carryover balance effective at the beginning of the
plan year. Under PPA 2006, the Department of the Treasury (Treasury) is
to provide guidance on the timing and manner of these elections. On
August 31, 2007 (at 72 FR 50544), Treasury published a proposed rule on
Benefit Restrictions for Underfunded Pension Plans that would provide
such guidance. Treasury's proposed regulation would require that an
election that affects the funding target attainment percentage for a
plan year be made well before the due date for the ERISA section 4010
filing. If Treasury's final regulation retains this rule, filers will
have no difficulty reflecting these elections in determinations of
whether reporting is required under ERISA section 4010. However, if the
final Treasury regulation allows a plan sponsor to make such an
election after the due date for the ERISA section 4010 filing, PBGC
would expect controlled groups to anticipate any such election when
determining the funding target attainment percentage, regardless of
when the election is made.
Certain Plans To Which Special Funding Rules Apply
There are three categories of plans to which special funding rules
apply:
Delayed effective date plans--Sections 104, 105, and 106
of PPA 2006 delay the effective date of the funding amendments for
certain plans described in those sections, which in general deal with
plans of rural cooperatives, plans affected by settlement agreements
with PBGC, and plans of government contractors.
Frozen airline plans--Section 402(b) of PPA 2006 provides
alternate funding rules for frozen plans sponsored by commercial
passenger airlines and airline caterers.
Non-frozen airline plans--Section 402(a)(2) of PPA 2006,
as amended by the U.S. Troop Readiness, Veterans' Care, Katrina
Recovery, and Iraq Accountability Appropriations Act, 2007, Public Law
110-28, provides funding relief for non frozen plans
[[Page 11025]]
sponsored by commercial passenger airlines and airline caterers.
The proposed regulation provided that sections 104, 105, 106, and
402 of PPA 2006 were generally to be disregarded for purposes of 4010
reporting. For example, under the proposed rule, the funding target
attainment percentage underlying the 80% FTAP gateway test was to be
determined as if these plans were not subject to alternate funding
rules. The final regulation retains the proposed regulation requirement
with respect to frozen airline plans and delayed effective date plans.
Plans subject to section 402(a)(2) of PPA 2006 (certain non-frozen
plans of commercial passenger airlines and airline caterers) use a
discount rate of 8.25 percent to determine their funding target for
purposes of ERISA section 303 and IRC section 430 for ten years. Under
the proposed regulation, this provision would not have affected the
FTAP calculation for purposes of the 80% FTAP Gateway Test or reporting
the FTAP if a filing is required. The final regulation does not address
this issue. PBGC will provide additional guidance as appropriate.
With respect to delayed effective plans, the final regulation, like
the proposed regulation, does not address the treatment of any credit
balance in determining the FTAP for plans subject to those sections, in
particular whether the credit balance is treated as if it were a
carryover balance and thus subtracted from assets when determining the
FTAP. PBGC is examining this issue as well and will provide additional
guidance as appropriate.
The preamble to the proposed rule stated that where provisions of
PPA sections 104, 105, 106 and 402 affected a required actuarial
valuation reporting item, PBGC would expect that filers could, in
consultation with PBGC, provide appropriately modified information
instead of the information listed in Sec. 4010.8(a)(11). PBGC is
providing those modifications in the final regulation. In the case of a
plan year for which the application of the new funding rules is
deferred under PPA 2006 sections 104, 105, and 106, the requirements in
connection with the actuarial valuation report are those that were in
effect as of December 31, 2007 (since those requirements are tied to
the same pre-PPA funding rules that such plans must use to determine
their funding requirements). With respect to the frozen airline plans,
which are subject to completely different funding rules, the final
regulation provides that the requirements in connection with the
actuarial valuation report are included with the 4010 filing
instructions on PBGC's Web site, www.pbgc.gov. Because the funding
relief for non-frozen airline plans follows the basic framework of the
PPA 2006 funding rules and there is thus no need for special guidance,
Sec. 4010.8(a)(11) applies.
Minimum Funding Waivers
ERISA section 4010(b) requires section 4010 reporting if the IRS
has granted minimum funding waivers in excess of $1 million to any plan
maintained by any member of the controlled group and as of the end of
the plan year ending within the information year there is an
outstanding balance on such waivers.
The minimum funding waiver will continue to be included for all
five years of the amortization period unless the waiver amortization
bases are reduced to zero pursuant to ERISA section 303(e)(5) and Code
section 430(e)(5). The final regulation provides that funding waivers
granted under ERISA section 302 and Code section 412 for a plan year
before ERISA section 303 or Code section 430 became effective count for
this purpose. This treatment of pre-PPA 2006 funding waivers is
consistent with Treasury's proposed rule on Determination of Minimum
Required Pension Contributions, 73 FR 20203 (Apr. 15, 2008) (see Sec.
1.430(a)-1(h)(3)). However, regardless of what the final Treasury
regulation provides, pre-PPA 2006 funding waivers will count for
purposes of determining whether an ERISA section 4010 filing is
required.
To simplify the regulation, the final rule eliminates the provision
in the current regulation that provides that a minimum funding waiver
is not outstanding under certain circumstances where an agreement
requires the maintenance of a specific credit balance. PBGC found that
this occurred infrequently. In those cases where it does occur, PBGC
will consider waiving the ERISA section 4010 reporting requirement on a
case-by-case basis under Sec. 4010.11.
Waiver for Controlled Groups With Aggregate Plan Underfunding not
Exceeding $15 Million
The technical explanation of PPA 2006 prepared by the staff of the
Joint Committee on Taxation \4\ states: ``It is intended that the PBGC
may waive the [section 4010 filing] requirement in appropriate
circumstances, such as in the case of small plans.'' Similarly, PBGC
seeks to balance the benefit it derives from annual reporting of
financial and actuarial information with the burden reporting imposes
on filers.
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\4\ Joint Committee on Taxation, Technical Explanation of H.R.
4, the ``Pension Protection Act of 2006,'' as passed by the House on
July 26, 2006, and as considered by the Senate on August 3, 2006
(JCX-38-06), August 3, 2006.
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Based on its experience, PBGC has determined that controlled groups
with aggregate plan underfunding of $15 million or less present a level
of risk and exposure to PBGC that is sufficiently low to warrant the
waiver of reporting triggered solely by the 80% FTAP Gateway Test.
Thus, under the proposed rule, persons that would be required to file
solely because one or more plans are less than 80 percent funded would
qualify for a waiver of reporting requirements if the aggregate ``4010
funding shortfall'' is less than $15 million (disregarding plans with
no 4010 funding shortfall). (This waiver is referred to in this
preamble as the ``$15 million waiver.'') The final rule defines a
plan's 4010 funding shortfall as the funding shortfall under ERISA
section 303(c)(4) and Code section 430(c)(4), but determined without
regard to the credit balance reduction under ERISA section 303(f)(4)(B)
and Code section 430(f)(4)(B). In developing this waiver, PBGC
recognized that PPA 2006 requires PBGC to submit to Congress an annual
summary report of ERISA section 4010 information submitted to PBGC and
that any waiver would therefore also affect the information provided to
Congress.
Three commenters expressed concerns about situations in which
reporting would not be waived when the aggregate 4010 funding shortfall
exceeds $15 million and the only plans that are less than 80 percent
funded are small plans. For example, a small plan that is less than 80
percent funded could trigger a reporting requirement for an entire
controlled group even though the other, larger plans are funded well
above the 80 percent level. These commenters offered a variety of ways
the proposed $15 million waiver could be modified to waive reporting
for filers in such situations, including: (1) Excluding plans that are
over 90 percent (or 95 percent) funded when determining the aggregate
4010 funding shortfall; (2) increasing the $15 million threshold, and
(3) waiving reporting if the 80% FTAP Gateway Test is failed only by
one or more plans that meet PBGC's definition of an exempt plan under
Sec. 4010.8(c) (generally a plan with fewer than 500 participants) for
purposes of reporting actuarial information, regardless of the
aggregate 4010 funding shortfall amount. The fourth commenter did not
express concern about situations in which reporting would not be waived
when
[[Page 11026]]
the aggregate 4010 funding shortfall exceeds $15 million and the only
plans that are less than 80 percent funded are small plans, but did
request that PBGC provide examples to clarify the application of the
$15 million waiver to controlled groups with both small and large
plans. PBGC believes that this application of the $15 million waiver is
clear and that further clarification is unnecessary.
The final rule does not change the proposed $15 million waiver.
PBGC is more concerned about the dollar amount of underfunding than the
funding percentage. In the case of a large plan, a funding percentage
of 90 or 95 percent can represent hundreds of millions of dollars of
underfunding. PBGC continues to believe that the $15 million waiver
reasonably balances the need for information and the burden of
reporting, and that consistent with the technical explanation of PPA
2006 by the staff of the Joint Committee on Taxation, the waiver will
generally exempt controlled groups maintaining only small plans from
section 4010 reporting. Moreover, PBGC believes that the exemption from
reporting actuarial information in Sec. 4010.8(c) will minimize the
potential reporting burdens for sponsors of small plans without
impairing PBGC's ability to collect information on controlled groups
with plans representing a large amount of underfunding and thereby
representing significant financial exposure for PBGC.
PBGC believes that, in most of the situations about which the
commenters expressed concern, a contributing sponsor could make
additional, relatively nominal, contributions to the small plan to
increase its funding percentage to 80 percent or merge the small plan
into one of the better funded larger plans to avoid the reporting
requirement. One commenter expressed concern that if a small plan with
a funding percentage below 80 percent becomes part of a controlled
group during the information year as a result of a business
transaction, there might not be enough time to fund the plan up or
merge it with a better funded plan so as to avoid the reporting
requirement. This commenter suggested that reporting be waived if the
only plan under the 80 percent funding threshold (1) meets PBGC's
definition of an exempt plan for purposes of reporting actuarial
information and (2) became a member of a controlled group as a result
of a recent acquisition. PBGC is not adopting the commenter's
suggestion. PBGC believes that situations in which a section 4010
filing is triggered solely by a small plan's becoming a member of a
controlled group during the information year will occur infrequently,
and further can sometimes be avoided in the normal course of planning
corporate transactions. However, filers in such situations may contact
PBGC's Department of Insurance Supervision and Compliance to discuss a
waiver or extension under PBGC's discretionary authority (see Sec.
4010.11).
As under the proposed rule, the $15 million waiver does not apply
if reporting is required for any reason other than having a plan with a
funding target attainment percentage below 80 percent.
One commenter requested guidance as to whether an employer may
apply the separate lines of business rules under the Code for purposes
of determining whether this employer must file under section 4010. The
separate lines of business rules under Code section 414(r), allow an
employer to be treated as operating separate lines of business for
purposes of meeting the minimum coverage requirements under Code
section 410(b), if certain requirements are met. There is no nexus
between the filing requirements under ERISA section 4010 and the
nondiscrimination requirements under Code section 410(b). Accordingly,
the separate lines of business rules under Code section 414 (r) have no
bearing on the filing requirements of ERISA section 4010.
Actuarial Information Reporting Requirements
In addition to the requirements described in ERISA section 4010(a),
which provides that filers must submit certain financial and actuarial
information as prescribed by PBGC in regulations, ERISA section
4010(d), as amended by PPA 2006, specifies three items of actuarial
information that are required to be filed with PBGC. That section
provides that information filed under ERISA section 4010 must include:
(A) The amount of benefit liabilities under the plan determined
using the assumptions used by the corporation [PBGC] in determining
liabilities;
(B) The funding target of the plan determined as if the plan has
been in at-risk status for at least 5 plan years; and
(C) The funding target attainment percentage of the plan.
The final rule provides detailed guidance on how to determine benefit
liabilities for ongoing plans using the assumptions used by PBGC in
determining liabilities. This determination is similar to that set
forth in the current regulation under Sec. 4010.8(d)(2). As with the
current regulation, the final rule requires filers to use the
assumptions prescribed by Sec. Sec. 4044.51 through 4044.57 of PBGC's
regulation on Allocation of Assets in Single-Employer Plans (29 CFR
part 4044). However, as explained below, in two respects the final
regulation modifies or expands previous guidance (including informal
guidance) given by PBGC or PBGC staff relating to certain assumptions
not specified in Sec. Sec. 4044.51 through 4044.57.
First, the final regulation provides that solely for purposes of
determining the earliest retirement age (ERA) at valuation date and the
unreduced retirement age (URA) to be used when determining expected
retirement age (XRA), an active participant is to be treated as
continuing in service after the end of the plan year. This provision
modifies informal guidance provided by PBGC staff that future expected
service should be disregarded when determining XRAs for ERISA section
4010 benefit liability calculations.\5\ This modification eliminates an
inconsistency between how filers compute benefit liabilities for ERISA
section 4010 purposes and how PBGC calculates benefit liabilities as
part of its plan monitoring functions. The main impact of this change
on ERISA section 4010 filers is that they will need to make a one-time
modification of their computer programs. The final rule includes
examples demonstrating how XRA is calculated and applied in determining
benefit liabilities.
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\5\ Q&A 17 in the 2001 Blue Book and Q&A 19 in the 2002 Blue
Book, available on PBGC's Web site, http://www.pbgc.gov. Blue Books
are summaries of the questions and answers discussed at meetings
between PBGC staff and representatives of the Enrolled Actuaries
Program Committee in preparation for the annual Enrolled Actuaries
Meetings. The summaries reflect the views of individual staff
members and do not represent the official position of PBGC.
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Second, the final regulation provides that a filer may reflect pre-
retirement decrements \6\ other than mortality (such as turnover and
disability) when determining benefit liabilities, subject to the
following two requirements:
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\6\ ``Pre-retirement decrement'' is an actuarial term used to
describe possible reasons an active participant might cease to be an
active participant before retirement (e.g., termination, disability
or death).
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If any pre-retirement decrements other than mortality are
used to calculate benefit liabilities for a plan, all pre-retirement
decrements used for minimum funding purposes for that plan must be
used. For example, if a plan uses both termination and disability
decrements to determine the minimum required contribution, the benefit
liability must be determined either including or excluding both the
termination and the disability decrements.
[[Page 11027]]
Assumptions about the rate of incidence related to a pre-
retirement decrement must be the same as those used to determine the
funding target for minimum funding purposes.
This provision expands informal guidance provided by PBGC staff \7\
and is consistent with common actuarial practice. Although the rules
about pre-retirement decrements have not changed from the proposed
regulation, the language describing these rules has been modified to
address questions raised by a commenter. For example, the final
regulation states the first requirement described above explicitly. In
addition, language has been added to explain that different XRAs may
apply for different pre-retirement decrements \8\ and how the pre-
retirement decrement rules apply in situations where there is no clear
distinction between termination and retirement decrements, as may be
the case with certain hybrid plans.
---------------------------------------------------------------------------
\7\ Q&A 25 in the 2000 Blue Book.
\8\ When valuing pre-retirement decrements, the XRA represents
the assumed age at which benefits will commence.
---------------------------------------------------------------------------
The final regulation also clarifies that the assumptions used to
determine the minimum required contribution for the plan year ending
within the filer's information year, other than assumptions for
decrements, interest, and expenses, must be used when determining
benefit liabilities. The types of assumptions in this category include
form of payment, cost-of-living increases, and marital status.
In addition to providing detailed guidance on how to determine
benefit liabilities,\9\ the final rule reflects new requirements (under
PPA 2006) to provide the funding target of the plan determined as if
the plan has been in at-risk status for at least 5 plan years, and the
funding target attainment percentage of the plan. The final rule
requires filers to report whether the plan, at any time during the plan
year, was subject to any of the limitations described in ERISA section
206(g) (e.g., funding-based limits on benefits and benefit accruals)
and, if so, which limitations applied, when such limitations applied,
and when such limitations were lifted (if applicable).
---------------------------------------------------------------------------
\9\ Although the final rule provides detailed guidance about how
benefit liabilities are calculated for section 4010 reporting
purposes, there are a few issues that are not addressed (e.g., how
to value temporary supplements or lump sums). PBGC will provide
additional guidance as appropriate upon request.
---------------------------------------------------------------------------
The final rule includes two new plan actuarial information
reporting requirements that were not included in the proposed rule.
Filers must report--
Whether a required installment or other required payment
to the plan was not made and, as a result, a lien described in ERISA
section 303(k) and Code section 430(k) was triggered during the
information year, and the required installment or other required
payment was not made within ten days after its due date; and
Whether IRS granted one or more minimum funding waivers
totaling in excess of $1 million, if any portion thereof is
outstanding.
This information, which is readily available, will make it easier for
PBGC to quickly determine and track the conditions that trigger ERISA
section 4010 filings and easily identify situations involving liens or
large waivers.
As with the current regulation, the final rule requires submission
of the actuarial valuation report for the plan year ending within the
filer's information year and specifies what information must be
included in or attached to the report. The required items of
information have been modified to better suit the new PPA 2006 funding
structure. All of the required actuarial information is information
that PBGC expects most actuaries would include in post-PPA 2006
valuation reports (e.g., target normal cost, information on shortfall
amortization bases, information on funding assumptions, an age/service
scatter). However, because the funding rules have changed so
dramatically as a result of PPA 2006, and because Treasury regulations
implementing the new funding rules are not yet final, the regulation's
list of required items may exclude some relevant actuarial information.
To allow PBGC to expand the list of required items as it gains more
experience with the new funding requirements under PPA 2006, the final
rule provides that the online instructions to PBGC's secure e-4010 Web-
based application may require that additional items be included in (or
attached to) the valuation report. PBGC expects that any additional
items would be items typically required to be reported on the Form 5500
Schedule SB (defined benefit plan actuarial information).
Because some of the actuarial reporting requirements are geared to
the new funding rules under PPA 2006, which generally are applicable to
plan years beginning after 2007, the final regulation includes special
rules for plan years beginning before 2008 in Sec. 4010.8(h).
Exempt Plans
Section 4010.8(c) of PBGC's current regulation provides that
actuarial information need not be reported for plans with fewer than
500 participants, as of the end of the plan year ending within the
filer's information year. (It also provides an exemption for certain
overfunded plans.) One commenter noted that certain actuarial
information is more easily obtained on a plan's valuation date, than as
of the end of the plan year. In response to that comment, and based on
further consideration by PBGC, the final rule allows participants to be
counted on either date for this purpose.
Through means other than reporting under part 4010, such as through
PBGC's early warning program (see Technical Update 00-3 \10\) and
reportable events notices, PBGC has discovered that a number of plans
with fewer than 500 participants have significant underfunding and
thereby represent significant financial exposure for PBGC. In such
cases, PBGC needs actuarial information on these plans to properly
evaluate its risk and exposure for the entire controlled group.
---------------------------------------------------------------------------
\10\ Technical Updates are available on PBGC's Web site, http://www.pbgc.gov.
---------------------------------------------------------------------------
Therefore, PBGC is modifying the exemption from reporting actuarial
information. Under the final rule, actuarial information is not
required if (1) the plan has fewer than 500 participants as of the end
of the plan year ending within the filer's information year or as of
the valuation date for that plan year, and (2) the plan's 4010 funding
shortfall does not exceed $15 million. The 4010 funding shortfall is
described above in the discussion of the $15 million waiver.
The final rule retains the exemption in the current regulation from
providing actuarial information for plans that have no unfunded
benefits. For this purpose, unfunded benefits are determined in the
same manner as for purposes of ERISA section 4010(d)(1), which requires
the reporting of benefit liabilities using the assumptions used by
PBGC. The only difference is that the filer will be allowed to use the
retirement age assumptions used by the plan for that plan year for
purposes of section 303 of ERISA (without regard to the at-risk
assumptions of section 303(i) of ERISA) instead of the retirement age
assumptions in Sec. 4044.8(d)(2).
As under the current regulation, these exemptions from reporting
actuarial information do not apply if the plan has a funding waiver or
has been more than 10 days late with minimum funding contributions.
[[Page 11028]]
Special Rules for Multiple Employer Plans
Although multiple employer plans are uncommon and only a handful
have been subject to ERISA section 4010 reporting (a situation that is
not expected to change under the new rules), PBGC has received a number
of inquiries over the years on how the section 4010 requirements apply
to contributing sponsors of multiple employer plans. In response to
those inquiries, the proposed rule provided for reduced reporting for
certain multiple employer plans and made several clarifications. The
proposed rule generally provided that only information on employers
that were among the 10 largest employers in terms of participants (for
hourly plans) or contributions (for salaried plans) would need to be
reported and that filers could provide actuarial information on
multiple employer plans by reference if that information (for the same
plan year) had been provided by another filer.
A commenter suggested that PBGC waive reporting for a contributing
sponsor of a multiple employer plan if the sponsor's portion of the
multiple employer plan liability is a de minimis amount and all other
waiver conditions are met. In response to that comment, and based on
further consideration by PBGC, the final rule provisions on multiple
employer plans differ from those in the proposed rule.
The final rule provides an alternative method of compliance for
certain sponsors of multiple employer plans. An eligible contributing
sponsor (defined as a contributing sponsor of a multiple employer plan
that would not be subject to reporting if the plan were disregarded in
applying the gateway tests) satisfies the section 4010 requirements if
any contributing sponsor of the plan provides a timely filing for an
information year that coincides with or overlaps with the eligible
contributing sponsor's information year. PBGC may request some or all
of the information that would otherwise be required from the eligible
contributing sponsor; PBGC will make such a request no earlier than the
date the information would otherwise have been due. The eligible
contributing sponsor must provide the requested information within 45
days after the date of the request.
For most multiple employer plans, the alternative method of
compliance will have the effect of a full waiver of reporting for all
but one of the contributing sponsors. The alternative method of
compliance is simpler than the proposed rule provisions for multiple
employer plans and, unlike those provisions, will not require
contributing sponsors to share information, much of which is
confidential, with other controlled groups.
The final rule, like the proposed rule, clarifies that the entire
4010 funding shortfall of a multiple employer plan is counted when
determining whether the $15 million waiver applies to any employer that
is a contributing sponsor of the multiple employer plan. However, a
sponsor of a multiple employer plan that does not qualify for the $15
million waiver may have its reporting requirement effectively waived
under the alternative method of compliance discussed above.
The final rule requires any filer that is a contributing sponsor of
a multiple employer plan to provide a list of all contributing sponsors
to that plan. The final rule clarifies that with the exception of that
list, a filer is not required to provide additional identifying or
financial information for another contributing sponsor of the multiple
employer plan if that other contributing sponsor is not a member of the
filer's controlled group.
Other Changes
The final rule includes an automatic one-day extension of the ERISA
section 4010 reporting deadline for controlled groups whose 105-day
reporting period includes February 29. This provision codifies a ``leap
year extension'' of the ERISA section 4010 reporting deadline
exemplified by Technical Updates 04-1 and 08-1.
The final rule also incorporates the provisions of Technical Update
96-3 that are still relevant in light of PPA 2006. Thus, Technical
Update 96-3 is superseded with respect to information years beginning
after 2007.
The final rule makes other clarifying, conforming, or editorial
changes. Except as specifically discussed in this preamble, no
substantive change is intended or should be inferred.
Transition Rules
Under the final rule, the funding target attainment percentage
(used for the 80% FTAP Gateway Test and reporting under Sec. 4010.8)
and the 4010 funding shortfall (used for the $15 million waiver and the
definition of exempt plans) are determined as of the valuation date for
the plan year ending within the information year. These measurements
are tied to provisions of PPA 2006 that apply only to plan years
beginning after 2007. Thus, for plan years beginning in 2007 but ending
in information years that begin after 2007, these terms are not defined
by statute. To address this situation, the proposed rule required that
employers use surrogates for determining the funding target attainment
percentage and the 4010 funding shortfall for plan years beginning
before 2008. The surrogates provided under the proposed rule are as
follows:
The funding target attainment percentage surrogate is the
ratio (expressed as a percentage) of the actuarial value of assets
(reduced by any credit balance) to the current liability (determined
using the highest permissible interest rate) for the 2007 plan
year.\11\ (A special rule applies in situations where a carryover
balance is reduced in accordance with ERISA section 303(f) and Code
section 430(f) as of the beginning of the 2008 plan year.)
---------------------------------------------------------------------------
\11\ This surrogate is similar to a surrogate in Treasury's
proposed rule on Benefit Restrictions for Underfunded Pension Plans,
72 FR 50544 (Aug. 31, 2007) and in Treasury's proposed rule on
Determination of Minimum Required Pension Contributions, 73 FR 20203
(Apr. 15, 2008).
---------------------------------------------------------------------------
The 4010 funding shortfall surrogate is the excess, if
any, of the plan's current liability (determined using the highest
permissible interest rate) over the actuarial value of assets for the
2007 plan year.
One commenter suggested that in determining the funding target
attainment percentage surrogate, that under certain circumstances, the
actuarial value of assets not be reduced by the credit balance. The
commenter requested that for plan years beginning in 2007, the funding
target attainment percentage (FTAP) transition rule provide that assets
not be reduced by the credit balance if the ratio of unreduced assets
to liability is at least 90 percent. This would make the 4010 FTAP
transition rule consistent with the transition rule in Treasury's
proposed regulations under Code section 436.\12\ IRC section 436(j)(3)
provides a permanent exemption to the rule requiring assets be reduced
by carryover and prefunding balances. The proposed Treasury regulations
under Code section 436 incorporate this statutory exemption in its
transition rule for plan years beginning in 2007. ERISA section 4010,
however, does not provide any exception to the rule requiring that
assets be reduced by carryover and prefunding balances. Accordingly,
the final rule does not adopt the commenter's suggestion and PBGC's
final rule retains the surrogates provided under the proposed rule:
---------------------------------------------------------------------------
\12\ Treasury's proposed rule on Benefit Restrictions for
Underfunded Pension Plans, 72 FR 50544 (Aug. 31, 2007).
---------------------------------------------------------------------------
[[Page 11029]]
Although the surrogates described above have not changed from those
in the proposed rule, PBGC has modified the regulatory language to
describe the methodology explicitly rather than by reference to
Treasury rules.
Applicability
Section 505(e) of PPA 2006 provides that the amendments made by
section 505 apply with respect to ``years beginning after 2007.'' This
applicability provision of PPA 2006 uses the term ``year'' rather than
``plan year,'' although the term ``plan year'' appears in other
applicability provisions in PPA 2006. PBGC interprets this section of
PPA 2006 to mean that the amendments apply to any information year
beginning after 2007. Therefore, these rules apply to information years
beginning after 2007.
Technical Update 07-2 provides guidance regarding the application
of these rules for information years beginning in 2007. In the rare
case of a short information year beginning in 2008 (for example, an
information year beginning on January 1, 2008, and ending on March 31,
2008), the filer should contact PBGC to obtain a reporting extension.
Compliance With Rulemaking Guidelines
Executive Order 12866
PBGC has determined, in consultation with the Office of Management
and Budget, that this final rule is a ``significant regulatory action''
under Executive Order 12866, as amended. The Office of Management and
Budget has therefore reviewed the final rule under Executive Order
12866.
Regulatory Flexibility Act
PBGC certifies under section 605(b) of the Regulatory Flexibility
Act that the amendments in this final rule will not have a significant
economic impact on a substantial number of small entities. This final
rule implements statutory changes made by Congress. It provides
guidance on how to determine whether reporting under ERISA section 4010
is required and what to report. Furthermore, PBGC is providing an
exemption for controlled groups that have total plan underfunding of
$15 million or less. Accordingly, as provided in section 605 of the
Regulatory Flexibility Act (5 U.S.C. 601 et seq.), sections 603 and 604
do not apply.
Paperwork Reduction Act
The information requirements relating to reporting under ERISA
section 4010 have been approved by the Office of Management and Budget
under the Paperwork Reduction Act (OMB control number 1212-0049,
expires March 31, 2012).
List of Subjects
29 CFR Part 4001
Pensions.
29 CFR Part 4010
Pension insurance, Pensions, Reporting and recordkeeping
requirements.
29 CFR Part 4044
Pension insurance, Pensions.
0
For the reasons given above, PBGC is amending 29 CFR parts 4001, 4010,
and 4044 as follows.
PART 4001--TERMINOLOGY
0
1. The authority citation for part 4001 continues to read as follows:
Authority: 29 U.S.C. 1301, 1302(b)(3).
0
2. In Sec. 4001.2, three new definitions are added in alphabetical
order, to read as follows:
Sec. 4001.2 Definitions.
* * * * *
Earliest retirement age at valuation date means the later of: a
participant's age on his or her birthday nearest to the valuation date,
or the participant's attained age as of his or her Earliest PBGC
Retirement Date (as determined under Sec. 4022.10 of this chapter).
* * * * *
Expected retirement age (XRA) means the age, determined in
accordance with Sec. Sec. 4044.55 through 4044.57 of this chapter, at
which a participant is expected to begin receiving benefits when the
participant has not elected, before the allocation date, an annuity
starting date. This is the age to which a participant's benefit payment
is assumed to be deferred for valuation purposes. An XRA is equal to or
greater than the participant's earliest retirement age at valuation
date but less than his or her normal retirement age.
* * * * *
Unreduced retirement age (URA) means the earlier of the normal
retirement age specified in the plan or the age at which an unreduced
benefit is first payable.
* * * * *
PART 4010--ANNUAL FINANCIAL AND ACTUARIAL INFORMATION REPORTING
0
3. The authority citation for part 4010 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1310.
Sec. 4010.1 [Amended]
0
4. Section 4010.1 is amended by removing the words ``the PBGC under
section 4010 of ERISA'' and adding in their place the words ``PBGC
under ERISA section 4010''; and by removing the last sentence of the
section.
0
5. In Sec. 4010.2:
0
a. In the introductory text, the words ``controlled group, ERISA, fair
market value'' are removed and the words ``controlled group, earliest
retirement age at valuation date, ERISA, expected retirement age (XRA),
fair market value'' are added in their place, and the words ``and plan
year'' are removed and the words ``plan year, and unreduced retirement
age (URA)'' are added in their place.
0
b. The definitions of ``exempt entity,'' ``exempt plan,'' ``filer,''
and ``information year'' are amended by removing the words ``of this
part'' where they appear once in each definition.
0
c. The definition of ``exempt entity'' is amended by removing the word
``who'' and adding in its place the word ``that''; by removing the word
``whom'' and adding in its place the word ``which''; and by removing
the figures ``4010.4(d)'' and adding in their place the figures
``4010.4(c)''.
0
d. The definition of ``information year'' is amended by removing the
words ``the year'' and adding in their place the words ``the
information year''.
0
e. Four new definitions are added in alphabetical order, to read as
follows:
Sec. 4010.2 Definitions.
* * * * *
At-risk status means, with respect to a plan for a plan year, at-
risk status as defined in ERISA section 303(i)(4) and Code section
430(i)(4).
* * * * *
Funding target means, with respect to a plan for a plan year, the
funding target as provided under ERISA section 303(d)(1) and Code
section 430(d)(1) determined as of the valuation date for the plan
year.
Funding target attainment percentage means, with respect to a plan
for a plan year, the funding target attainment percentage as determined
under Sec. 4010.4(b) for the plan year.
* * * * *
Valuation date means, with respect to a plan for a plan year, the
valuation date as determined under ERISA section 303(g)(2) and Code
section 430(g)(2).
0
6. In Sec. 4010.3, paragraph (a) is revised to read as follows:
Sec. 4010.3 Filing requirement.
(a) General. Except as provided in Sec. 4010.8(c) (relating to
exempt plans)
[[Page 11030]]
and except where one or more waivers under Sec. 4010.11 apply, each
filer must submit to PBGC annually, on or before the due date specified
in Sec. 4010.10, all information specified in Sec. 4010.6(a) with
respect to all members of a controlled group and all plans maintained
by members of the filer's controlled group. Under Sec. 4000.3(b) of
this chapter, except as otherwise provided by PBGC, the information
must be submitted electronically in accordance with the instructions on
PBGC's Web site, http://www.pbgc.gov.
* * * * *
0
7. Section 4010.4 is amended to read as follows:
Sec. 4010.4 Filers.
(a) General. A contributing sponsor of a plan and each member of
the contributing sponsor's controlled group on the last day of the
information year is a filer with respect to an information year (unless
exempted under paragraph (c) of this section) if--
(1) For any plan (including an exempt plan) maintained by the
members of the contributing sponsor's controlled group on the last day
of the information year, the funding target attainment percentage for
the plan year ending within the information year is less than 80
percent;
(2) Any member of the controlled group fails to make a required
installment or other required payment to a plan and, as a result, the
conditions for imposition of a lien described in ERISA section 303(k)
and Code section 430(k) have been met during the information year, and
the required installment or other required payment is not made within
ten days after its due date; or
(3) Any plan maintained by a member of the controlled group has
been granted one or more minimum funding waivers under ERISA section
302(c) and Code section 412(c) totaling in excess of $1 million, and as
of the end of the plan year ending within the information year, any
portion thereof is still outstanding.
(b) Funding target attainment percentage--(1) General. Except as
provided in paragraph (b)(3) of this section, the funding target
attainment percentage for a plan for a plan year equals the funding
target attainment percentage as provided under ERISA section 303(d)(2)
and Code section 430(d)(2) determined as of the valuation date for the
plan year.
(2) Prefunding balance and funding standard carryover balance
elections. For purposes of determining the funding target attainment
percentage for a plan for the plan year, prefunding balances and
funding standard carryover balances must reflect any elections (or
deemed elections) under ERISA section 303(f) and Code section 430(f)
that affect the value of such balances as of the beginning of the plan
year, regardless of when the elections (or deemed elections) are made.
(3) Transition rule for plan years beginning before 2008. For plan
years beginning before 2008, the funding target attainment percentage
for a plan for the plan year is determined as the fraction (expressed
as a percentage), the numerator of which is the net transition plan
assets determined under paragraph (b)(4) of this section, and the
denominator of which is the plan's current liability determined using
the highest rate of interest allowable under Code section 412(l)(7) as
of the valuation date for the 2007 plan year.
(4) Net transition plan assets--(i) In general. Net transition plan
assets for purposes of paragraph (b)(3) of this section are equal to
plan assets as determined under paragraph (b)(4)(ii) of this section
reduced by any credit balance in accordance with paragraph (b)(4)(iii)
of this section.
(ii) Determination of assets. Plan assets under this paragraph
(b)(4)(ii) are determined under Code Section 412(c)(2) as in effect for
the plan year beginning in 2007, except that the value of plan assets
before subtracting the plan's funding standard account credit balance
described in paragraph (b)(4)(iii) of this section can neither be less
than 90 percent of the fair market value of plan assets nor greater
than 110 percent of the fair market value of plan assets on the
valuation date for that plan year.
(iii) Subtraction of credit balance. If a plan has a funding
standard account credit balance as of the valuation date for the plan
year beginning in 2007, that balance is subtracted from the asset value
described in paragraph (b)(4)(ii) of this section as of that valuation
date.
(iv) Effect of funding standard carryover balance reduction for
2008 plan year. Notwithstanding paragraph (b)(4)(iii) of this section,
if, for the plan year beginning in 2008, the employer has made an
election to reduce some or all of the funding standard carryover
balance as of the first day of that year in accordance with ERISA
section 303(f) and Code section 430(f), then the present value
(determined as of the valuation date for the plan year beginning in
2007 using the valuation interest rate for that plan year) of the
amount so reduced is not treated as part of the funding standard
account credit balance when that balance is subtracted from the asset
value under paragraph (b)(4)(iii) of this section.
(c) Exempt entities. A person is an exempt entity for an
information year if the conditions of paragraphs (c)(1) through (4) of
this section are satisfied.
(1) The person is not a contributing sponsor of a plan (other than
an exempt plan) as of the last day of the information year.
(2) The person has revenue for its fiscal year ending within the
controlled group's information year that is five percent or less of the
revenue of the person's controlled group for the fiscal year(s) ending
within the information year.
(3) The person has annual operating income for the fiscal year
ending within the controlled group's information year that is no more
than the greater of--
(i) Five percent of the controlled group's annual operating income
for the fiscal year(s) ending within the information year, or
(ii) $5 million.
(4) The person has net assets at the end of the fiscal year ending
within the controlled group's information year that is no more than the
greater of--
(i) Five percent of the controlled group's net assets at the end of
the fiscal year(s) ending within the information year, or
(ii) $5 million.
(d) Transition rule; failure to make required contribution; minimum
funding waiver. For plan years beginning before 2008, where the
reference is made in paragraph (a)(2) of this section to ``ERISA
section 303(k) and Code section 430(k)'' a reference to ``ERISA section
302(f)(1)(A) and (B) and Code section 412(n)(1)(A) and (B)'' shall
apply in its place, and where the reference is made in paragraph (a)(3)
of this section to ``ERISA section 302(c) and Code section 412(c)'' a
reference to ``ERISA section 303 and Code section 412(d)'' shall apply
in its place as those provisions are in effect for plan years beginning
before 2008.
(e) Minimum funding waiver--(1) General. For purposes of Sec.
4010.4(a)(3), a portion of the minimum funding waiver for a plan is
considered outstanding unless prior to the plan year ending within the
information year the statutory amortization period has ended, or, as of
the valuation date for the plan year ending within the information
year, the amortization bases are deemed to be reduced to zero pursuant
to ERISA section 303(e)(5) and Code section 430(e)(5).
(2) Example. Company A sponsors Plan X, which received a minimum
funding waiver of $700,000 for the plan year ending December 31, 2004,
and another waiver of $500,000 for the plan year ending December 31,
2008. Assume
[[Page 11031]]
that the amortization bases of the waivers are not reduced to zero
pursuant to ERISA section 303(e)(5) and Code section 430(e)(5), and the
waivers are therefore outstanding for the full five-year statutory
amortization period. Also, assume Company A has a calendar information
year. For the 2009 information year, Company A must report under ERISA
section 4010. However, for the 2010 information year, Company A,
assuming no other obligation to report under ERISA section 4010, is not
required to report.
(f) Certain plans to which special funding rules apply. The
provisions of sections 104, 105, 106, and 402(b) of the Pension
Protection Act of 2006, Public Law 109-280 (dealing with plans of
certain rural cooperatives, certain plans affected by settlement
agreements with PBGC, certain plans of government contractors, and
certain frozen plans of commercial passenger airlines and airline
caterers), are disregarded for purposes of this part, except that these
provisions are taken into account in determining the information to be
submitted under Sec. 4010.8(i) of this part (in connection with the
actuarial valuation report).
0
8. In Sec. 4010.5:
0
a. Paragraph (b) is amended by removing the words ``shall be'' and
adding in their place the word ``is''.
0
b. The heading of paragraph (c)(1) is removed and paragraph (c)(1) is
redesignated as paragraph (c) with the heading ``Controlled group
members with different fiscal years.''.
0
c. Redesignated paragraph (c) is amended by removing the words ``shall
be'' and adding in their place the word ``is'' and by adding to the end
of the paragraph the following new sentence: ``(If any two members of
the controlled group report financial information on the basis of
different fiscal years, the determination of whether an entity is an
exempt entity is based on a calendar year information year for purposes
of this paragraph (c) and Sec. 4010.4(c).)''.
0
d. Paragraph (c)(2) is removed.
0
e. New paragraphs (d) and (e) are added to read as follows:
Sec. 4010.5 Information year.
* * * * *
(d) Examples. The following examples illustrate the rule in
paragraph (c) of this section.
(1) Example 1. Companies A and B are the only members of the same
controlled group, and both are contributing sponsors to nonexempt
plans. Company A has a July 1 fiscal year, and Company B has an October
1 fiscal year. The information year is the calendar year. Company A's
financial information with respect to its fiscal year ending June 30,
2009, and Company B's financial information with respect to its fiscal
year ending September 30, 2009, must be submitted to the PBGC following
the end of the 2009 calendar year information year.
(2) Example 2. The facts are the same as in Example 1 except that
Company B is not a contributing sponsor of a plan and would be an
exempt entity using the calendar year as the information year. Because
Company B is an exempt entity based on a calendar year information
year, it is excluded when determining the information year. Thus, the
information year is the July 1 fiscal year. Note that Company B is an
exempt entity even if it would not be exempt based on the July
information year.
(3) Example 3. The facts are the same as in Example 2 except that
Company B would not be an exempt entity using the calendar year
information year but would be exempt based on an information year that
is the July 1 fiscal year. Since Company B is not exempt based on a
calendar year information year, it may not be excluded when determining
the information year. Therefore, the information year is the calendar
year and Company B is not an exempt entity.
(e) Special rules for certain plan years. If a plan maintained by
the members of the contributing sponsor's controlled group has two plan
years that end in the information year or has no plan year that ends in
the information year, the last plan year ending on or immediately
before the end of information year is deemed to be the plan year ending
within the information year.
0
9. In Sec. 4010.6:
0
a. Paragraph (a)(1) is amended by removing the words ``the controlled
group'' and adding in their place the words ``the filer's controlled
group''.
0
b. Paragraphs (a)(1) and (a)(2) are amended by removing the words ``the
PBGC's website'' (which appear once in each paragraph) and adding in
their place the words ``PBGC's Web site, http://www.pbgc.gov''.
0
c. Paragraphs (b) and (c) are amended by removing the words ``the
PBGC'' (which appear once in each paragraph) and adding in their place
the word ``PBGC''.
0
10. In Sec. 4010.7:
0
a. Paragraphs (a) introductory text and (b) introductory text are
amended by removing the words ``the PBGC's website'' (which appear once
in each paragraph) and adding in their place the words ``PBGC's Web
site, http://www.pbgc.gov''; and by removing the words ``controlled
group'' (which appear once in each paragraph) and adding in their place
the words ``filer's controlled group''.
0
b. Paragraph (a)(1)(ii) is amended by adding the word ``and'' after the
semicolon at the end of the paragraph.
0
c. Paragraph (a)(2) is amended by removing the words ``date immediately
preceding the date'' and adding in their place the words ``day
before''.
0
d. Paragraph (b)(1)(iii) is amended by removing the words ``since the
beginning of the filer's information year'' and adding in their place
the words ``during the filer's information year''.
0
e. Paragraph (b)(1)(iv) is amended by removing the words ``had not been
maintained'' and adding in their place the words ``was not
maintained''; and by removing the word ``and'' after the semicolon at
the end of the paragraph.
0
f. Paragraph (b)(1)(v) is amended by adding the word ``and'' after the
semicolon at the end of the paragraph.
0
g. Paragraph (b)(2) is amended by removing the words ``maintaining the
plan'' and adding in their place the words ``maintaining the plan (if
applicable)''; and by removing the words ``paragraph (b)(1) as of the
date immediately preceding that date'' and adding in their place the
words ``paragraph (b)(1) of this section as of the day before that
date''.
0
h. New paragraph (b)(1)(vi) is added to read as follows:
Sec. 4010.7 Identifying information.
* * * * *
(b) * * *
(1) * * *
(vi) In the case of a multiple employer plan, a list of the
contributing sponsors as of the end of the plan year ending within the
filer's information year, including the name, employer identification
number, contact information, fiscal year, and a statement as to whether
each contributing sponsor is a publicly-traded company; and
* * * * *
0
11. Section 4010.8 is revised to read as follows:
Sec. 4010.8 Plan actuarial information.
(a) Required information. Except as provided elsewhere in this
part, for each plan (other than an exempt plan) maintained by any
member of the filer's controlled group, each filer is required to
provide, in accordance with the instructions on PBGC's Web site, http://www.pbgc.gov, the following actuarial information determined (except
as specified below) as of the end of plan year ending within the
filer's information year--
[[Page 11032]]
(1) The number of--
(i) Retired participants and beneficiaries receiving payments,
(ii) Terminated vested participants, and
(iii) Active participants;
(2) The fair market value of the plan's assets (excluding any
contributions received after year-end);
(3) The amount of benefit liabilities under the plan, setting forth
separately the amount of the liabilities attributable to retired
participants and beneficiaries receiving payments, terminated vested
participants, and active participants, determined, for this purpose in
accordance with paragraph (d) of this section;
(4) A description of the actuarial assumptions used to determine
the benefit liabilities in paragraph (a)(3) of this section;
(5) The funding target (as of the valuation date) for the plan year
ending within the information year determined in accordance with ERISA
section 303(i) and Code section 430(i) as if the plan had been in at-
risk status for a consecutive period of at least five plan years;
(6) The funding target attainment percentage (as of the valuation
date) for the plan year ending within the information year;
(7) The adjusted funding target attainment percentage as defined in
ERISA section 206(g)(9)(B) and Code section 436(j)(2) for the plan year
ending within the information year;
(8) Whether the plan, at any time during the plan year, was subject
to any of the limitations described in ERISA section 206(g) and Code
section 436, and, if so, which limitations applied, when such
limitations applied, and when (if applicable) they were lifted;
(9) Whether a required installment or other required payment to the
plan was not made, and, as a result, a lien described in ERISA section
303(k) and Code section 430(k) was triggered during the information
year, and the required installment or other required payment was not
made within ten days after its due date;
(10) Whether any portion of the total minimum funding waiver(s) in
excess of $1 million granted with respect to such plan is outstanding;
(11) A copy of the actuarial valuation report for the plan year
ending within the filer's information year that contains or is
supplemented by the following information for that plan year--
(i) The funding target calculated pursuant to ERISA section 303
without regard to subsection 303(i)(1) (and Code section 430 without
regard to subsection 430(i)(1)), setting forth separately the value of
the liabilities attributable to retirees and beneficiaries receiving
payment, terminated vested participants, and active participants
(showing vested and nonvested benefits separately);
(ii) A summary of the actuarial assumptions and methods used for
purposes of ERISA section 303 and Code section 430, including the form
of payment and benefit commencement date assumptions for all active and
deferred vested participants not yet receiving benefits, information on
how lump sums are valued (for plans that provide lump sums other than
de minimis lump sums), and any changes in those assumptions and methods
since the previous valuation and the justifications for such changes.
(iii) The effective interest rate (as defined in ERISA section
303(h)(2)(A) and Code section 430(h)(2)(A));
(iv) The target normal cost calculated pursuant to ERISA section
303 without regard to subsection 303(i)(2) (and Code section 430
without regard to subsection 430(i)(2));
(v) For the plan year and each of the four preceding plan years, a
statement as to whether the plan was in at-risk status for that plan
year;
(vi) In the case of a plan that is in at-risk status, the target
normal cost calculated pursuant to ERISA section 303 and Code section
430 as if the plan has been in at-risk status for five consecutive
years;
(vii) The value of the plan's assets (reflecting any averaging
method) as of the valuation date and the fair market value of the
plan's assets as of the valuation date;
(viii) The funding standard carryover balance and the prefunding
balance (maintained pursuant to ERISA section 303(f)(1) and Code
section 430(f)(1)) as of the beginning of the plan year and a summary
of any changes in such balances in the past year (e.g., amounts used to
offset the minimum funding requirement, amounts reduced in accordance
with any elections under ERISA section 303(f)(5) and Code section
430(f)(5), interest credited to such balances, and excess contributions
used to increase such balances);
(ix) A list of amortization bases (shortfall and waiver) under
ERISA section 303 and Code section 430, including the year each base
was established, the original amount, the installment amount, and the
remaining balance at the beginning of the plan year;
(x) An age/service scatter for active participants including
average compensation information for pay-related plans and average
account balance information for hybrid plans presented in a format
similar to that described in the instructions to Schedule SB of the
Form 5500;
(xi) Expected disbursements (benefit payments and expenses) during
the plan year;
(xii) A summary of the principal eligibility and benefit provisions
on which the valuation of the plan was based (and any changes to those
provisions since the previous valuation), along with descriptions of
any benefits not included in the valuation, any significant events that
occurred during the plan year, and the plan's early retirement factors;
in the case of a plan that provides lump sums, other than de minimis
lump sums, the summary must include information on how annuity benefits
are converted to lump sum amounts (e.g., whether early retirement
subsidies are reflected); and
(xiii) Any other similar information as specified in instructions
on PBGC's Web site, http://www.pbgc.gov; and
(12) A written certification by an enrolled actuary that, to the
best of his or her knowledge and belief, the actuarial information
submitted is true, correct, and complete and conforms to all applicable
laws and regulations, provided that this certification may be qualified
in writing, but only to the extent the qualification(s) are permitted
under 26 CFR 301.6059-1(d).
(b) Alternative compliance for plan valuation report. If any of the
information specified in paragraph (a)(11) of this section is not
available by the date specified in Sec. 4010.10(a), a filer may
satisfy the requirement to provide such information by--
(1) Including a statement, with the material that is submitted to
PBGC, that the filer will file the unavailable information by the
alternative due date specified in Sec. 4010.11(b), and
(2) Filing such information (along with a certification by an
enrolled actuary under paragraph (a)(12) of this section) with PBGC by
that alternative due date.
(c) Exempt plan. The actuarial information specified in this
section is not required with respect to a plan if the plan satisfies
the conditions in paragraph (c)(1) through (3).
(1) The plan--
(i) Has fewer than 500 participants as of the end of the plan year
ending within the information year or as of the valuation date for that
plan year and has a 4010 funding shortfall (as defined in Sec.
4010.11(c)) for the plan year ending within the information year that
is not in excess of $15 million, or
(ii) Has benefit liabilities as of the end of the plan year ending
within the filer's
[[Page 11033]]
information year, (determined in accordance with paragraph (d) of this
section) equal to or less than the fair market value of the plan's
assets.
(2) The plan has received, by or within ten days after the due
dates, all required installments or other payments required to be made
during the information year under ERISA sections 302 and 303 and Code
sections 412 and 430.
(3) The plan has no outstanding minimum funding waivers (as
described in Sec. 4010.4(a)(3)) as of the end of the plan year ending
within the information year.
(d) Value of benefit liabilities. The value of a plan's benefit
liabilities at the end of a plan year must be determined using the plan
census data described in paragraph (d)(1) of this section and the
actuarial assumptions and methods described in paragraph (d)(2) or,
where applicable, (d)(3) of this section.
(1) Census data--(i) Census data period. Plan census data must be
determined (for all plans for any information year) either as of the
end of the plan year or as of the beginning of the next plan year.
(ii) Projected census data. If actual plan census data are not
available, a plan may use a projection of plan census data from a date
within the plan year. The projection must be consistent with
projections used to measure pension obligations of the plan for
financial statement purposes and must give a result appropriate for the
end of the plan year for these obligations. For example, adjustments to
the projection process are required where there has been a significant
event (such as a plan amendment or a plant shutdown) that has not been
reflected in the projection data.
(2) Actuarial assumptions and methods. The value of benefit
liabilities must be determined using the following rules in paragraphs
(d)(2)(i) through (iv) of this section:
(i) Assumptions included in Sec. Sec. 4044.51 through 4044.57.
Interest, expenses, mortality and retirement assumptions must be as
prescribed in Sec. Sec. 4044.51 through 4044.57 of this chapter.
(ii) Assumptions not included in Sec. Sec. 4044.51 through
4044.57. Assumptions for decrements other than mortality and retirement
(such as turnover or disability) used to determine the minimum required
contribution under ERISA section 303 and Code section 430 for the plan
year ending within the filer's information year may be used, but only
if all such assumptions are used. For plans where there is no
distinction between termination and retirement assumptions, any
termination/retirement rates at ages after the Earliest PBGC Retirement
Date (as defined in Sec. 4022.10 of this chapter) must be treated as
retirement rates and replaced by expected retirement ages; termination/
retirement rates at ages below the Earliest PBGC Retirement Date must
be treated as pre-retirement decrements. Assumptions used to determine
the minimum required contribution for the plan year ending within the
filer's information year, other than assumptions for decrements,
interest, and expenses (e.g., form of payment, cost-of-living
increases, marital status), must be used.
(iii) Benefits to be valued. Benefits to be valued include all
benefits earned or accrued under the plan as of the end of the plan
year ending within the information year and other benefits payable from
the plan including, but not limited to, ancillary benefits and
retirement supplements, regardless of whether such benefits are
protected by the anti-cutback provisions of Code section 411(d)(6).
(iv) Future service. Future service expected to be accrued by an
active participant in an ongoing plan during future employment (based
on the assumptions used to determine benefit liabilities) must be
included in determining the earliest and unreduced retirement ages used
to determine the expected retirement age and in determining an active
participant's entitlement to early retirement subsidies and supplements
at the expected retirement age. See the examples in paragraph (e) of
this section.
(3) Special actuarial assumptions for exempt plan determination.
Solely for purposes of determining whether a plan is an exempt plan for
an information year, the value of benefit liabilities may be determined
by substituting for the retirement age assumptions in paragraph (d)(2)
of this section the retirement age assumptions used by the plan for the
plan year ending within the information year for purposes of section
303 of ERISA without regard to the at-risk assumption of subsection
303(i) of ERISA and Code section 430 without regard to the at-risk
assumption of subsection 430(i).
(e) Examples. The following examples demonstrate how XRA is
determined and applied for purposes of determining benefit liabilities
under paragraph (d) of this section:
(1) Example 1. (i) Facts. Plan X has a normal retirement age of 65,
but allows benefits to commence as early as age 55 for participants who
complete at least 10 years of service before termination. Early
retirement benefits are reduced for participants with fewer than 25
years of service. Employee A is an active participant who is age 40 and
has completed 5 years of service. Assume the ``medium'' XRA look-up
table applies, and that for purposes of Sec. 4010.8(d), the filer has
decided not to take pre-retirement decrements other than mortality
table into account as permitted under Sec. 4010.8(d)(2)(i).
(ii) Determination of XRA. If A continues working, the earliest age
A could start receiving benefit is age 55. Therefore, A's earliest
retirement age at valuation (ERA) is 55. Because the earliest that A
can receive an unreduced benefit is when A completed 25 years of
service (at age 60), A's URA is age 60. Under the medium XRA look-up
table, A's XRA is 58.
(iii) Determination of Benefit Liabilities. The benefit liability
is the present value of A's benefit accrued as of the measurement date
assuming A retires at age 58 and elects to have benefits commence
immediately. Since A will not be eligible to receive unreduced benefits
at that time, the accrued benefit is reduced in accordance with the
plan's early retirement reduction provisions, including any subsidies
to which A will be entitled under the assumption that A works until age
58.
(2) Example 2. Employee B is also an active participant in plan X
and is age 40 with 15 years of service. B will complete 25 years of
service at age 50. However, because the plan does not allow for benefit
commencement before age 55, B's ERA, URA and thus, XRA are all age 55.
The benefit liability is the present value of B's benefit accrued as of
the measurement date assuming B retires at age 55 and elects to
commence benefits immediately. Since B will be eligible to receive an
unreduced benefit at that time, the full unreduced benefit amount is
valued.
(3) Example 3--(i) Facts. Assume the same facts as in Example 1,
except that for purposes of Sec. 4010.8(d), the filer has decided to
take pre-retirement decrements other than mortality into account as
permitted under Sec. 4010.8(d)(2)(i). Assume the only pre-retirement
decrement other than mortality is turnover. The plan's turnover rates
go from age 21 to age 54, and the retirement rates go from age 55 to
age 65.
(ii) Determination of XRA. If A terminates employment at or before
age 45, A will not be eligible to receive benefits until age 65.
Therefore, the portion of Employee A that is assumed to terminate
before age 45 has an ERA, URA, and XRA of age 65. The portion
[[Page 11034]]
of A that remains in service to age 45, after the application of the
applicable turnover decrements, and then terminates at or after age 45,
but before age 55, will be entitled to receive a reduced benefit as
early as 55. Therefore, the portion of A that is assumed to terminate
during this period has an ERA of 55, a URA of 65 and an XRA of 60.
Since the turnover rates stop at age 55, the portion of A that remains
in service to age 55 is assumed to remain in service until the XRA for
that portion of A. For that portion of A, the ERA is 55, the URA is 60
and the XRA is 58. (For purposes of Sec. 4010.8(d), the plan's assumed
retirement rates are replaced by XRAs.)
(iii) Determination of benefit liabilities. The benefit liability
of A is the sum of the present value of A's full accrued benefit at age
65 for the portion of A that terminates between age 40 and age 45, the
present value of A's accrued benefit reduced for commencement at age 60
for the portion of A that terminates between age 45 and age 54, and the
present value of A's accrued benefit reduced for commencement at age 58
for the portion of A that remains employed until age 55.
(4) Example 4. Assume the same facts as in Example 3, except that
Employee B, the sole active participant, is age 40 with 15 years of
service. The portion of B that is assumed to terminate before age 50
would be entitled to receive a reduced benefit as early as age 55 or an
unreduced benefit at age 65. That portion of B has an ERA of 55, a URA
of 65, and an XRA of 60. The benefit liability for that portion of B is
the present value of B's benefit accrued as of the measurement date
assuming B commences a reduced benefit at age 60. The portion of B that
survives to age 50 would be entitled to receive an unreduced benefit as
early as age 55. That portion of B has an ERA, URA and XRA of 55. The
benefit liability for this portion of B is the present value of B's
benefit accrued as of the measurement date assuming B retires and
commences unreduced payments at age 55.
(f) Multiple employer plans. If, with respect to a multiple
employer plan, the actuarial information required under this section
4010 for the plan year ending within the filer's information year has
been filed under part 4010 by another filer, the filer may include this
actuarial information by reference. The filer must report the name, EIN
and plan number of the multiple employer plan and the name of the other
filer that submitted this information.
(g) Previous filing for plan year. If the actuarial information for
the plan year as required under this Sec. 4010.8 has been submitted by
the filer in a previous 4010 submission, the filing may include that
actuarial information by reference to the previous submission.
(h) Special rules for plan years beginning before 2008. For plan
years beginning before 2008:
(1) The requirements of paragraphs (a) (5) through (8) of this
section do not apply.
(2) The references in paragraph (a)(9) of this section to ERISA
section 303(k) and Code section 430(k) are replaced with references to
sections of ERISA and the Code, as in effect before amendment by the
Pension Protection Act of 2006, Public Law 109-280.
(3) Instead of the requirement of paragraph (a)(11) of this
section, the actuarial valuation report requirements in Sec.
4010.8(a)(5) in effect as of December 31, 2007, apply.
(i) Plans subject to special funding rules under sections 104, 105,
106 and 402(b) of the Pension Protection Act of 2006. Instead of the
requirements of paragraph (a)(11) of this section:
(1) In the case of a plan year for which the application of new
funding rules is deferred for a plan under sections 104, 105, and 106
of the Pension Protection Act of 2006, Pub. L. 109-280 (dealing with
plans of certain rural cooperatives, certain plans affected by
settlement agreement with PBGC, and certain plans of government
contractors), the requirements in Sec. 4010.8(a)(5) (in connection
with the actuarial valuation report) in effect as of December 31, 2007,
apply to the plan.
(2) In the case of a plan year for which a plan is subject to
section 402(b) of the Pension Protection Act of 2006, Public Law 109-
280 (dealing with certain frozen plans of commercial passenger airlines
and airline caterers), the plan must meet the requirements in
connection with the actuarial valuation report in accordance with
instructions on PBGC's Web site, http://www.pbgc.gov.
Sec. 4010.9 [Amended]
0
12. In Sec. 4010.9:
0
a. Paragraph (a) is amended by removing the words ``the PBGC's Web
site'' and adding in their place the word ``PBGC's Web site, http://www.pbgc.gov''; and by removing the words ``controlled group member''
and adding in their place the words ``member of the filer's controlled
group''.
0
b. Paragraph (c) is amended by removing the words ``within 15 days
after they are prepared'' adding in their place the words ``within 15
days after they are prepared, if they are prepared'' and by removing
the words ``audited and unaudited financial statements'' and adding in
their place the words ``audited and unaudited financial statements, if
prepared''.
0
c. Paragraph (d) is amended by removing the words ``the PBGC'' where
they appear three times and adding in their place each time the word
``PBGC''.
Sec. 4010.10 [Amended]
0
13. In Sec. 4010.10:
0
a. Paragraphs (a), (b), (c), and (d) are amended by removing the words
``the PBGC'' wherever they appear and adding in their place the word
``PBGC''.
0
b. Paragraphs (c), (d), and (e) are amended by removing the words ``The
PBGC'' wherever they appear and adding in their place the word
``PBGC''.
0
c. Paragraph (a) is amended by removing the word ``shall'' and adding
in place the word ``must''; and by adding the following new sentence at
the end of the paragraph: ``The filing deadline is extended to the
106th date after the close of the filer's information year if the 105-
day reporting period includes February 29.''
0
14. Section 4010.11 is revised to read as follows:
Sec. 4010.11 Waivers and extensions.
(a) Aggregate funding not in excess of $15 million. Unless
reporting is required by Sec. 4010.4(a)(2) or (a)(3), reporting is
waived for a person (that would be a filer if not for the waiver) for
an information year if, for the plan year ending within the information
year, the aggregate 4010 funding shortfall for all plans (including any
exempt plans) maintained by the person's controlled group (disregarding
those plans with no 4010 funding shortfall) does not exceed $15
million.
(b) Other waiver authority. PBGC may waive the requirement to
submit information with respect to one or more filers or plans or may
extend the applicable due date or dates specified in Sec. 4010.10 of
this part. PBGC will exercise this discretion in appropriate cases
where it finds convincing evidence supporting a waiver or extension;
any waiver or extension may be subject to conditions. A request for a
waiver or extension must be filed in writing with PBGC at the address
provided in Sec. 4010.10(c) no later than 15 days before the
applicable due date specified in Sec. 4010.10 of this part, and must
state the facts and circumstances on which the request is based.
(c) 4010 funding shortfall for waivers and exemptions--(1) General.
Except as provided in paragraph (c)(2) of this section, a plan's 4010
funding shortfall for a plan year equals the funding shortfall as
provided under ERISA
[[Page 11035]]
section 303(c)(4) and Code section 430(c)(4) determined as of the
valuation date for the plan year, except that the value of plan assets
is determined without regard to the reduction under ERISA section
303(f)(4)(B) and Code section 430(f)(4)(B) (dealing with reduction of
assets by the amount of prefunding and funding standard carryover
balances).
(2) Transition rule for plan years beginning before 2008. For plan
years beginning before 2008, a plan's 4010 funding shortfall for a plan
year equals the excess, if any, of the plan's current liability over
the value of plan assets. For this purpose, both current liability and
plan assets are determined in the manner provided in Sec.
4010.4(b)(3), except that assets are not reduced by the credit balance
in the funding standard account.
(3) Multiple employer plans. For purposes of Sec. 4010.8(c) and
paragraph (a) of this section, the entire 4010 funding shortfall of any
multiple employer plan of which the filer or any member of the filer's
controlled group is a contributing sponsor is included.
0
15. Sections 4010.12, 4010.13, and 4010.14 are redesignated as
Sec. Sec. 4010.13, 4010.14, and 4010.15.
0
16. New Sec. 4010.12 is added to read as follows:
Sec. 4010.12 Alternative method of compliance for certain sponsors of
multiple employer plans.
(a) In general. Subject to paragraph (b) of this section, an
eligible contributing sponsor (as defined in paragraph (c) of this
section) of a multiple employer plan satisfies the requirements of this
part for an information year if any contributing sponsor of the
multiple employer plan provides a timely filing under this part for an
information year that coincides with or overlaps with the eligible
contributing sponsor's information year.
(b) PBGC request for additional information. PBGC may request some
or all of the information that would otherwise be required under this
part from an eligible contributing sponsor that uses the alternative
method of compliance in this section. PBGC will make such a request no
earlier than the date the information would otherwise have been due.
The eligible contributing sponsor must provide the requested
information no later than 30 days after PBGC makes the request. The
requested information need not be submitted electronically.
(c) Eligible contributing sponsor. For purposes of this section, an
eligible contributing sponsor of a multiple employer plan is a
contributing sponsor that would not be subject to reporting if the plan
were disregarded in applying the gateway tests in Sec. 4010.4(a).
Sec. 4010.13 [Amended]
0
17. Redesignated Sec. 4010.13 is amended by removing the words
``section 4010(c) of ERISA'' and adding in their place the words
``ERISA section 4010(c)''; by removing the words ``the PBGC'' and
adding in their place the word ``PBGC''; and by removing the word
``shall'' and adding in its place the word ``will''.
Sec. 4010.14 [Amended]
0
18. Redesignated Sec. 4010.14 is amended by removing the words
``section 4071 of ERISA'' and adding in their place the words ``ERISA
section 4071''; by removing the words ``the PBGC'' and adding in their
place the word ``PBGC''; and by removing the words ``The PBGC'' and
adding in their place the word ``PBGC''.
PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
0
19. The authority citation for part 4044 continues to read as follows:
Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.
Sec. 4044.2 [Amended]
0
20. In Sec. 4044.2:
0
a. In the introductory text, the words ``distribution date, ERISA, fair
market value'' are removed and the words ``distribution date, earliest
retirement age at valuation date, ERISA, expected retirement age (XRA),
fair market value'' are added in their place and the words
``termination date, and'' are removed and the words ``termination date,
unreduced retirement age (URA), and'' are added in their place.
0
b. The definitions of ``earliest retirement age at valuation date'',
``expected retirement age (XRA)'', and ``unreduced retirement age
(URA)'' are removed.
Issued in Washington, DC, this 12th day of March 2009.
Vincent K. Snowbarger,
Acting Director, Pension Benefit Guaranty Corporation.
Issued on the date set forth above pursuant to a resolution of
the Board of Directors authorizing publication of this final rule.
Judith R. Starr,
Secretary, Board of Directors, Pension Benefit Guaranty Corporation.
[FR Doc. E9-5741 Filed 3-13-09; 8:45 am]
BILLING CODE 7709-01-P