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Multiemployer Insolvent Plan Administrative Expense FAQs

Who pays for an insolvent plan’s administrative expenses?

The plan continues to pay service providers and the plan receives financial assistance from PBGC to pay its reasonable administrative expenses.

Does PBGC have a list of approved administrative expenses that it defines as reasonable?

No, but PBGC provides general advice to plan administrators and trustees concerning what is reasonable.  PBGC reserves the right to approve unique expenditures from time-to-time with adequate explanation.

Is there a limit to how much financial assistance can be requested for reimbursement by PBGC for administrative expenses?

No, expense amounts always vary by plan.  These variations are a result of plan size, geographic location, legal matters, etc.

What are some of the common administrative expenses PBGC ordinarily funds with financial assistance?

Administrative employees (either union office or third-party), legal and attorney fees, actuarial fees, accountant fees, rent, telephone/internet, fiduciary insurance, office supplies, postage, record retention/storage, etc.

How does a plan’s administrative expenses impact participants’ benefits?

The amount of a plan’s administrative expenses has no impact on participants’ benefits in an insolvent multiemployer plan.  Participants will always receive their guaranteed benefit regardless of the amount of administrative expenses post-insolvency.

What does PBGC do to ensure that the administrative expenses paid for with financial assistance are reasonable and necessary to the operations of the plan?

PBGC auditors review all expenses submitted for reimbursement by the plan to PBGC for reasonableness.  Any concerns PBGC has resulting from these reviews will be resolved on a case-by-case basis with the responsible plan professionals.