[Federal Register Volume 76, Number 246 (Thursday, December 22, 2011)]
[Notices]
[Page 79714]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-32804]
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PENSION BENEFIT GUARANTY CORPORATION
Premium Changes Based On Recharacterization of Contributions
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Policy statement.
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SUMMARY: This policy statement addresses PBGC's policy on accepting and
responding to amended premium filings based on recharacterization of
contributions. Recharacterization of contributions refers to a
situation in which contributions originally designated as being for the
plan year in which they were made are retroactively redesignated as
being for the preceding plan year. This makes plan assets for the
current year higher, and the plan's variable-rate premium lower, than
originally reported. Such recharacterization seeks not to correct a
factual error but to change a valid designation and is not an
appropriate basis for an amended premium filing or premium refund.
FOR FURTHER INFORMATION CONTACT: Catherine B. Klion
(klion.catherine@pbgc.gov), Manager, or Deborah C. Murphy
(murphy.deborah@pbgc.gov), 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 and 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:
The Pension Benefit Guaranty Corporation (PBGC) administers the
pension insurance program under title IV of the Employee Retirement
Income Security Act of 1974 (ERISA). Under sections 4006 and 4007 of
ERISA, plans covered by title IV must pay premiums to PBGC. For single-
employer plans, premiums include an amount (the variable-rate premium,
or VRP) based on unfunded vested benefits (the excess, if any, of the
value of vested benefits over the value of plan assets).
A contribution made to a pension plan during the first eight-and-a-
half months of a plan year may be characterized as being either for the
current year (the plan year in which it is made) or for the prior year
(the preceding plan year). The characterization affects when the
contribution is first reflected in plan assets. If a contribution is
characterized as being for the prior year, it is treated as a
receivable (which increases plan assets) as of the beginning of the
current year and thus reduces any VRP for the current year. If a
contribution is characterized as being for the current year, it does
not increase plan assets as of the beginning of the current year and
thus does not affect VRP for the current year.
The year for which a contribution is made is designated on Schedule
SB (formerly Schedule B) (actuarial information) to the annual report
for the plan on IRS/DOL/PBGC Form 5500. PBGC has received a number of
amended premium filings, showing increased assets and decreased VRP,
supported by amended Schedules SB (or B) that reflect
recharacterization of contributions, and submitted with a view to
obtaining premium refunds. PBGC has in practice accepted such amended
filings and granted the refunds. Upon further consideration of the
matter, however, PBGC has concluded that in general, such amendments
should be rejected and the associated premium refunds denied.
Permitting the amendment of premium filings gives filers a way to
correct mistakes in the data reported in the filings. Where the
correction of erroneous data results in a lower premium, it is
appropriate to refund the amount of the overpayment. However,
recharacterization of a contribution does not correct a mistake;
rather, it seeks to undo a valid designation of the year for which the
contribution was made. Thus, it is not an appropriate basis for
amending the relevant premium filing and claiming a refund.\1\
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\1\ The same principles would apply to an amended filing made
with a view to obtaining a credit against the next year's premium.
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PBGC's consideration of amended premium filings takes into account
the facts and circumstances of each case. In general, however, as
explained above, PBGC's policy will be to reject amended filings and
deny refunds based on recharacterization of contributions.
For questions about premium filings, contact Robert Callahan
(callahan.robert@pbgc.gov) or Bill O'Neill (oneill.bill@pbgc.gov),
Financial Operations Department; (202) 346-4067.
Issued in Washington, DC, this 16th day of December, 2011.
Joshua Gotbaum,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2011-32804 Filed 12-21-11; 8:45 am]
BILLING CODE 7709-01-P