PBGC

Question 1

Are multi-employer plan exempt from VRP?

Answer 1

No - they just don’t have to pay it

Question 2

12/31 ptp 50
1/1 ptp: 10
Flat Rate: $2

What is the flat rate premium?

Answer 2

$2 * 50 = $100

Question 3

If the variable rate is 4% and the UVB is 1200, then what is the uncapped VRP?

Answer 3

1. Round UVB up to the next $1000 ($2000), so

$2000 * 0.04 = $80

Question 4

When does the small-employer cap apply? What is its effect?

Answer 4

1. Applies for plans with less than 25 employees on FIRST of year.
2. It can cap the VRP at a smaller amount of 5 * (PTP count)^2

Question 5

To determine the UVB:

1. Do you use MVA or AVA?
2. Do you use stabilized discount rates for FT?
3. Do you include receivable contributions?
4. Do you include current year contributions?

Answer 5

1. Use the FVA (no averaging)
2. No use non-stabilized rates
3. Include the receivable contributions if received before actual filing date. Discount back at prior year effective rate (with MAP-21).
4. Exclude current year contributions and roll forward at current year effective rate ( with MAP-21)

Question 6

If plan elects the standard method, what interest rate and lookback month is used for vested funding target?

Answer 6

1. PPA Segments, no MAP-21, No Averaging

2. Month prior to UVB valuation date

Question 7

If plan elects the alternative method, what interest rate and lookback month is used for vested funding target?

Answer 7

1. Whatever used for funding, with no MAP-21 (i.e. 24 month average segs or Yield Curve)
2. Month used for funding

Question 8

Which of the following benefits are vested for PBGC purposes?

1. QJSA/QPSA
2. Survivor portion of JnS/Certain
3. Disability Benefits
4. Pre-retirement lump sum death benefit
5. Early Retirement type subsidy

Answer 8

1. Yes
2. Yes
3. No - if not disabled
4. Only the portion that is returning EE contributions with interest
5. Only for ptps that are currently eligible for it

Question 9

If a plan elects alternative method for PBGC, how long is election in place at a minimum?

Answer 9

5 years

Question 10

Who is exempt from the VRP?

Answer 10

1. Plans with no vested ptps
2. Plans funded with insurance contracts
3. Plans that have issued a notice of intent to terminate with term date prior to UVB val date
   a. in a prior year
   b. in current year and distribution assets in current year

Question 11

What day is the ptp count as of?

Answer 11

It is generally on the last day of prior year. It is on the first day of the plan year if plan is:

1. new
2. newly covered by the PBGC
3. is continuing plan of a merger/spinoff on first of the year

Question 12

Who is a ptp for PBGC purposes? When does a non-vested participant become excludable? When does a vested participant become excludable?

Answer 12

In general, anyone with a liability under the plan. Can exclude once:

1. Non-vested + 1 YBIS
2. Non-vested + $0 Cashout
3. Non-vested + Death
4. Vested + bought insurance contract
5. Vested + Paid out full benefit

Question 13

What is plan termination premiums? How long do you pay it? When is the count as of? When is it due?

Answer 13

1. If a single employer terminates involuntarily or in distress, then must pay out $1250*PTP
2. Pay for for the next 3 years.
3. The PTP count date is the day before termination.
4. First year - 30 days after the start of the next month, then on plan term anniversary

Question 14

T/F if you are paying the cap, then you don’t need to report the UVB

Answer 14

TRUE - it’s not used in calculation

Question 15

T/F a new plan does not need to file with PBGC in the first year.

Answer 15

FALSE - liability will likely be 0 given that no ptp will likely have a benefit yet.

Question 16

T/F You can only file with PBGC online.

Answer 16

TRUE

Question 17

What is the lookback rule for small PBGC plans? Who can use it? What is the default? When is ptp count as of?

Answer 17

Plans < 100 ptp count may use the UVB, (DR, FVA, FT) as of the previous year

Default for small plans is they are using, and would need to opt out of using

PTP count as of CURRENT year.

Question 18

When are PBGC Premiums due?

Answer 18

15th of the 10th month

Question 19

When do you no longer need to file with the PBGC?

Answer 19

1. Plan ceases to exist either through distributing assets or plan merger
2. Trustee appointed after distress termination
3. Plan no longer covered by PBGC

Question 20

What are the late penalties for PBGC premiums?

Answer 20

1. If you have received a notice from PBGC, then it is 2.5% per partial/full month, capped at 50% of unpaid premium
2. If you fix it before you get a notice from PBGC, then it is 0.5% per partial/full month, capped at 25%
3. There is also an interest charge at the rate for late payment of taxes

Question 21

What are the two reasons a plan may have the PBGC late penalty waived?

Answer 21

1. Paid within 7 days - waive 100% of premiums
2. Waive 80% of penalty if paid within 30 days of initial notice and plan has not PAID a late penalty fee in the last 5 years. Note - this means 0.5% and 25%

Question 22

How does an ESTIMATED variable rate premium work? When do you need to submit a final recon by?

Answer 22

If can’t get final VRP done, then can submit VRP based on FINAL assets and estimated FT.

Then you must submit a final recon by the end of the 6th month (April 30th for calendar plans)

Question 23

If Oct. 15 is a Saturday, so the PBGC premium is due Oct. 18, but the plan doesn’t pay the premium timely - when does interest start accruing from?

Answer 23

Oct 15.

Question 24

How is PBGC premiums handled for short plan years?

Answer 24

Count the full or partial months the plan was covered by the PBGC and divide by 12

Question 25

What is 4010 FTAP?

Answer 25

4010 FTAP is normal FTAP, but FT doesn't use MAP-21, AVA may use MAP-21

Question 26

What is the "information year" for a 4010 PBGC filing?

Answer 26

The company's fiscal year. If multiple non-exempt plans are within the same control group and have different fiscal years, then it is the calendar year

Question 27

When do you need file 4010 filing?

Answer 27

105 days after plan start (106 in leap year). | If reports not available then may submit a statement to that extent and file within 15 days of form 5500 deadline.

Question 28

What info needs to be submitted in a 4010 filing?

Answer 28

1. Identifying Info about non-exempt plans/employers in the controlled group 2. Financial Info about non-exempt employers in the controlled group 3. Actuarial Info about the plan

Question 29

Why would a plan sponsor be required to file under 4010?

Answer 29

1. if any plan in controlled group has 4010 FTAP < 80% AND > 500 ptps AND combined funding shortfall of $15M (ignoring MAP-21 and CB) 2. Any plan in controlled group fails to make a required payment that exceeds $1M 3. Any plan in controlled group was granted a Minimum Funding Waiver > $1M and still have a portion outstanding (BASED ON ORIGINAL AMT) 4. AND not reported on a different PBGC form

Question 30

1. A new plan is adopted on 4/11. 2. A plan becomes covered under PBGC on 5/12. 3. A (singe/multi) plan terminated on 1/17 and finishes paying out assets on 5/18 4. A plan goes into bankruptcy on 2/13 and is appointed a trustee on 4/14. What is the pro-ratio fraction for each?

Answer 30

1. 9/12 2. 8/12 3. 5/12 4. 4/12

Question 31

How much is the premium surcharge for a multi employer plan that terminates in distress?

Answer 31

$0

Question 32

In general, when is the PBGC Premium due?

Answer 32

9 full mos and 15 days after start of plan year (Oct 15 for CY Plan)

Question 33

When is the PBGC Premium due for a new plan?

Answer 33

same as general case, but if due within 90 days of being covered, then 90 days after becoming covered.

Question 34

T/F Alternate Payees and Beneficiaries are not counted in PBGC count.

Answer 34

Trick! It's true - but a deceased/cashout participant is counted if they still have an AP or bene in the plan!

Question 35

T/F an employer can elect to use/burn PFB to avoid 4010 filing

Answer 35

TRUE

Question 36

Do you count actives with no vested benefits in the flat PBGC Premium?

Answer 36

Yes

Question 37

Does the PBGC VRP Assets reflect Credit Balance?

Answer 37

No