Technical Update 00-5: Due Date 2000 Participant Notice
November 22, 2000
The PBGC has received questions about the due date of the 2000 Participant Notice for calendar year defined benefit pension plans. These questions have arisen in light of the extension of the 1999 Form 5500 due date to October 16, 2000, for certain employee benefit plans. This Technical Update clarifies that the due date of the 2000 Participant Notice for a calendar year plan generally is Monday, December 18, 2000, regardless of whether the plan administrator can establish reasonable cause for late filing of the 1999 Form 5500 after October 16, 2000.
2000 Participant Notice
The Retirement Protection Act of 1994 requires certain underfunded plans to notify participants and beneficiaries annually of the plan's funding status and the limits of PBGC's guarantee. (See Section 4011 of ERISA and 29 CFR Part 4011.) The requirement to issue a Participant Notice for the 2000 plan year applies to the plan administrator of any single-employer plan that pays a variable rate premium for the 2000 plan year, unless the plan meets an exemption. The regulation includes a model notice that plans can use to meet this requirement.
The Participant Notice for a plan year is due two months after the due date (including extensions) for the prior year's Form 5500. Thus, the 2000 Participant Notice is due two months after the due date (including extensions) for the 1999 Form 5500. (Due dates that fall on a weekend of Federal holiday are extended to the next business day.)
1999 Form 5500
On March 22, 2000, the Department of Labor, the Internal Revenue Service, and the PBGC (the agencies) granted an automatic extension of time to file the 1999 Form 5500 to October 16, 2000, for plans whose 1999 Form 5500 would otherwise have been due on or before July 31, 2000 (primarily calendar year plans) to allow filers more time to make a smooth transition to the new computerized ERISA Filing Acceptance System (EFAST).
On October 6, 2000, the agencies announced in Press Release USDL: 01-1 that, although they would not provide an additional automatic extension of the 1999 Form 5500 due date, "they do not intend to impose late filing penalties for the 1999 Form 5500 . . . in cases where, despite a good faith effort to meet deadlines, filings are delayed because of transition year difficulties." The press release stated that the agencies were "encouraging filers who will be unable to meet their [1999 Form 5500] filing deadline to attach a statement to their filing explaining the reasons for the delay. Where a statement establishes reasonable cause for the late filing, the agencies will not take any further action solely as a result of the late filing." See www.dol.gov/dol/pwba.
Due Date - 2000 Participant Notice
For calendar year plans, the due date for the 2000 Participant Notice is (except in certain very limited cases) Monday, December 18, 2000. This is two months after the October 16, 2000 extended due date for the 1999 Form 5500. Any penalty relief provided for late filing of the 1999 Form 5500 does not further extend the October 16, 2000 due date for the 1999 Form 5500, and thus does not extend the due date for the 2000 Participant Notice beyond December 18, 2000.
The PBGC will consider waiving any penalty assessed for failure to satisfy the Participant Notice requirements based on reasonable cause. However, transition year difficulties resulting in late filing of the 1999 Form 5500 generally would not be reasonable cause for purposes of the 2000 Participant Notice. In most cases the plan administrator will have the information needed for the Participant Notice well before the December 18, 2000 due date, regardless of when the Form 5500 is filed.
Plan Administrator Certification for 2000 Participant Notice
The 2001 PBGC premium forms (Schedule A to Form 1) will include a plan administrator certification relating to compliance with the participant notice requirements for the 2000 plan year. In completing the premium forms, plan administrators must certify whether they (a) were not required to issue a notice; (b) issued a notice as required; or (c) are attaching an explanation. If a required Participant Notice was issued late, the plan administrator must provide an explanation with the premium filing. Thus, for most calendar year plans, if the 2000 Participant Notice is issued after December 18, 2000, the plan administrator must attach an explanation. An explanation is required if a Participant Notice is issued late, regardless of whether there was reasonable cause either for the late issuance of the 2000 Participant Notice or for the late filing of the 1999 Form 5500.