Opinion letters database

PBGC unable to grant petition for waiver of liability imposed on company pursuant to § 4062 because company failed to prove that a waiver was necessary to avoid unreasonable hardship.

PBGC must deny request for waiver of interest and penalty charges in connection with late premium payment because there was no demonstration of good cause, as the statute requires.

Plan isn't a successor plan of sponsor's previous plan because the previous plan terminated, so the required continuity for successorship was broken. Thus, the Plan is subject to the guarantee limitations of § 4022(b)(1)(A) and the phase-in provisions of § 4022(b)(8).

Proposed amendment to permit employees to elect to receive a distribution of the current value of their frozen account balances in the Profit Sharing Plan in lieu of benefits under the Pension Plan would constitute a reportable event under § 4043(b)(2) if, when adopted, the benefit payable with respect to any participant under the Profit Sharing Plan has a lesser value than the benefit payable under the Pension Plan. Although the adoption of the proposed amendment must be reported, approval of the proposed amendment by PBGC is not required.

Filing a Notice of Intent to Terminate does not impede the continuance of the normal operation of Plan until such time as Plan is terminated.

Absence of provision in plan allowing reversion of excess plan assets to the employer means that the requirements for reversion of excess assets to employer not met. Excess assets must instead be used for the benefit of participants and beneficiaries.

PBGC is reviewing the issue of permitting a wasting trust to be maintained by the employer as part of the termination procedure for sufficient plans. PBGC's interim position is that wasting trusts are permissible in the case of sufficient plans provided that participation by plan participants is voluntary.

Discusses four plans in one plan document with one trust. Sale of a unit and separation of the units assets from the master trust is not a reportable event, nor a termination of one of the plans.

Neither the transfer to the new plan of rights and obligations under the existing plans, nor the adoption of amendments to the existing plans regarding benefit formulas, would constitute reportable events under § 4043. The adoption of amendments to the existing plans providing that no benefits will accrue for service performed on or after the conveyance date would constitute a reportable event, but would not be treated as a termination of the existing plans.

Letters of demand enclosed for payment of employer liability pursuant to § 4062. The statutory 30% limit is explained.

Discusses how the five-year phase-in rule impacts guarantee of certain recent benefit increases and that certain early retirement supplements are not guaranteed.

Explanation of congressional intent and legislative history of employer liability in response to letter from constituent objecting to its imposition.

Discussion of premium payments owed, including late payment penalty and interest charges, and annual report filing obligations.

Involuntary termination requirements in section 4042(a) do not apply to voluntary terminations under section 4041.

Conversion of Plan to a defined contribution plan constitutes a plan termination; advises how to comply with plan termination requirements.

PBGC unable to offer assistance in making decision to terminate or continue plan.

Section 4044 asset allocation rules take precedence over any contrary plan provisions.

Plan is not covered by § 4021, and only plans covered by § 4021 may be subject to trusteeships grounded in the provisions of § 4041 or 4042.

A plan that has both individual accounts and a defined benefit feature is covered.

PBGC requests data so it can make a precise determination of the amount of insured benefits provided by Plan and thus a determination of whether the Plan has sufficient assets to provide those benefits. If Plan proves insufficient, § 4062(b) imposes a liability upon Employer, and Employer cannot avail itself of contingent liability insurance because Plan terminated prior to 09/02/1979.

A conversion of a Title IV plan to a defined contribution plan constitutes a plan termination. Plan may transfer the value of earned benefits to the participants' individual accounts under the new plan if participants consent to the transfer and PBGC issues a notice of sufficiency under § 4041(b).

No coverage because threshold requirement of a written plan document not satisfied. Also, there was no plan provision found that referred to a concept of successorship and no evidence that a separate plan was adopted.

Plan that promises a defined benefit at retirement, and is not an individual account plan, is covered; thus, payment of premiums at the rate enumerated under § 4006 is mandatory. Also, § 4064 defines the termination liability if Plan is a multiemployer plan. Additionally, Plan must notify PBGC if a reportable event occurs under § 4043(b)(2) relating to a reduction in a participant's benefit.

Church plans are exempt from coverage under Title IV. PBGC is presently unable to determine whether the exemption applies to the Plans because IRS has not yet issued regulations under § 414(e) of the Internal Revenue Code setting forth criteria for determining whether a plan is a church plan.

As PBGC's policy with regard to interpretation and application of § 4062(e) is in development, and client is delaying its consolidation pending a resolution of these Title IV issues, client and PBGC may enter into an indemnity agreement that would become effective in the event § 4062(e) does apply.