The Pension Benefit Guaranty Corporation (PBGC) has issued final rules that apply to multiemployer pension plans that were terminated by mass withdrawal and insolvent multiemployer pension plans. These rules go into effect on July 1, 2019.
For plans terminated by mass withdrawal, the following rules apply:
- For a terminated plan with no more than $50 million in vested benefit liabilities, an actuarial valuation is required every five years. Otherwise, an actuarial valuation must be done annually (due date is 150 days following the end of each plan year)
- Annual plan solvency determinations must be performed
- If a plan is determined to be insolvent for the current or succeeding plan year, certain notices are required to be sent to the PBGC, plan participants, and beneficiaries:
- A notice of Insolvency will be due by the later of (A) 90 days before the beginning of the insolvency year or (B) 30 days after the date that plan insolvency has been determined
- A notice of insolvency benefit level showing the benefits that are payable to plan participants and beneficiaries during insolvency; such notices will no longer be required annually but will be required if there are any changes to a participant’s benefit level
- An initial application for financial assistance from the PBGC must be filed at the same time that a notice of insolvency benefit level is filed, but no later than 90 days prior to the first day of the month for which plan assets will not be sufficient to cover the plan’s benefit payment obligations
For insolvent plans receiving financial assistance from the PBGC, the following rules apply:
- For an insolvent plan receiving financial assistance from the PBGC and with no more than $50 million in vested benefit liabilities, an actuarial valuation is required every five years
- Otherwise, an actuarial valuation must be done annually (due date is 180 days following the end of each plan year)
- Alternative information, as defined on PBGC’s website, may be submitted by an insolvent plan receiving financial assistance from the PBGC and with no more than $50 million in vested benefit liabilities. This option is not available to insolvent plans with more than $50 million in vested benefit liabilities
Certain withdrawal liability information must be reported annually by both plans terminated by mass withdrawal and insolvent plans, starting with plan years ending after July 1, 2019:
- Withdrawal liability assessed to employers (in the aggregate and by individual employer)
- For each employer not yet assessed withdrawal liability, the PBGC must be notified of the employer’s name, contribution owed to the plan in the year before withdrawal, and the reasons that the employer has not been assessed withdrawal liability
The above information is due 180 days after the close of each plan year.
The PBGC’s website will provide instructions for electronic filing and content requirements for the notices and information outlined above.