This Technical Update provides Pension Benefit Guaranty Corporation (PBGC) guidance for cooperative and small-employer charity (CSEC) plans (as defined in section 210(f)(1) of ERISA) on filing PBGC premiums for 2019 and 2020 plan years that reflect the premium changes under the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).[1] This guidance supersedes any inconsistent information with respect to CSEC plans in PBGC's premium filing instructions.[2]
PBGC will amend its premium rates regulation (29 CFR part 4006) at a later date in a rulemaking to incorporate the SECURE Act premium changes.
Summary of premium rules applicable to CSEC plans
Under the SECURE Act, starting with plan years beginning in 2019, premiums for CSEC plans are determined differently than for other single-employer plans. Specifically:
- The flat-rate premium is $19 per participant.
- The variable-rate premium is $9 per $1,000 of unfunded vested benefits (UVBs).
- The liability underlying the UVB calculation (i.e., the present value of vested benefits) is determined using the plan’s funding assumptions (e.g., the plan’s selected discount rate and mortality table). See section 306(j)(5)(C) of ERISA.
- Premium rates are not indexed after 2019.
Except for the SECURE Act changes, the provisions in PBGC’s premium regulations (29 CFR parts 4006 and 4007) and premium filing instructions continue to apply to CSEC plans. This includes, but is not limited to:
- When premiums are due.
- How to count participants.
- The per-participant cap on the variable-rate premium.
- Assets underlying the UVB calculation, including whether and how to include contributions for the prior plan year made during the 8½ month period after the plan year ends.
Some CSEC plans have already paid their 2019 premiums. Some have not (e.g., plans with 2019 plan years beginning on July 1, 2019).
CSEC plans that have already paid 2019 premiums based on prior law are eligible for a refund of the excess of what they paid over what they owe pursuant to the revised rules. To facilitate a refund, plans should amend their 2019 filing to report the premium owed pursuant to the new rules and provide PBGC certain data items used to determine that amount.
CSEC premium filings for 2019 and 2020 plan years
My PAA, PBGC’s premium payment system, does not yet reflect the SECURE Act changes. For example, with respect to the flat-rate premium, My PAA determines the applicable per participant premium based on whether the user checks the “multiemployer” or single-employer” box. My PAA does not have the capability of allowing a CSEC plan to override the regular single-employer plan flat-rate (e.g., $80 for 2019) with the new CSEC flat-rate of $19.
Similarly, if private sector software is used to create and upload an XML file containing the required data, PBGC’s system will flag a 2019 filing as “incorrect” if the data in the XML file indicate a flat-rate other than $80 was used to determine the flat-rate premium (or, in the case of a multiemployer plan, $29).
PBGC anticipates that the My PAA system software will be updated for 2021 filings. CSEC plans should prepare 2019 and 2020 premium filings, including amended filings, by “marking up” a copy of the illustrative form included in the Comprehensive Premium Filing instructions (i.e., by modifying the form to reflect the changes).
The following table shows the necessary “mark ups” to the form (and describes the places where instructions should be disregarded).
| Item* | Description | Change needed |
|---|---|---|
| 5b(1) | Applicable rate for flat-rate premium | Change “$80” to “$19” and enter $19 in the space provided |
| 6 | Alternative premium funding target election | Leave item blank |
| 7c(1) | Premium funding target method | Leave item blank |
| 7c(2) | Discount rate for determining premium funding target | Change “1st segment rate” to “discount rate” and report the discount rate used to determine the present value of vested benefits pursuant to section 4006(a)(3)(E)(v)(i) of ERISA in the space provided for the 1st segment rate (i.e., the plan’s funding discount rate). |
| 7d | Premium funding target | Report the present value of vested benefits pursuant to section 4006(a)(3)(E)(v)(i) of ERISA. |
| 7g | Uncapped variable-rate premium | Change “0.043” to “0.009” and enter the product of 0.009 and the amount reported in item 7f (UVBs) in the space provided. |
*Item numbers correspond to the 2019 illustrative form. See pages 28-32 of the 2019 comprehensive premium filing instructions.
There are many ways a CSEC plan can create a 2019 or 2020 filing to reflect the above changes. For example, you may:
- Use My PAA or private sector software to enter information and create a completed draft form based on prior law and then manually change the information that needs to be changed because of the SECURE Act.
- Copy the illustrative form from the instructions into a word or pdf document and modify accordingly before entering the required information.
Amending 2019 CSEC premium filings
As noted previously, plans that have already submitted a 2019 premium filing and paid the amount owed based on prior law may submit an amended filing reflecting the revised rules and request a refund.
PBGC believes the simplest way to prepare an amended 2019 filing is to generate a hard copy of the previously submitted 2019 filing, in “form” format (i.e., the “filing receipt”) and mark it up as described above.
Be sure to check the “Amended filing” box at the top of the form. Also, be sure to complete item 12 (treatment of overpayment), so PBGC will know whether to refund the overpayment or keep it in the plan’s account to be used as a credit against future premiums. If you select the refund option, additional information must be reported (e.g., whether you want to receive the refund by check or electronic funds transfer (EFT)). See pages 28-32 of the 2019 comprehensive premium filing instructions for additional information about amending a premium filing and requesting refunds.
Submitting 2019 and 2020 CSEC premium filings
Once the required information has been entered on a marked-up form, the form must be manually signed by the plan administrator and enrolled actuary and then scanned and saved as a pdf. The pdf version of the signed form should then be submitted to PBGC via My PAA, using the “Submit a Request” Quick Link feature (available from the Plan Page). To do so, simply select “Submit CSEC Filing” from the drop-down menu that will appear when you click “Other Requests & Correspondence” as shown below.
For additional information, please see the “Submit a Request” Demo, available on the My PAA webpage.
When the form has been successfully submitted, all My PAA filing team members for the plan will receive a confirmation email, including a service request tracking number, which can be used for status request purposes.
Submitting CSEC premium payments for 2019 and 2020 plan years
Payment may be submitted electronically via pay.gov or by paper check. For more information, including mailing addresses for sending checks, see the “Paying outside of My PAA” section of PBGC’s premium filing payment and instructions webpage. Please note - Until My PAA is modified for the new CSEC plan rules, payment for premiums owed cannot be made within My PAA.
Disclaimer
The contents of this Technical Update do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.
Contact Information
For assistance with preparing, amending or submitting a CSEC premium filing for the 2019 or 2020 plan years, call Brad Porter at (202) 229-3789 or Ashley Davis at (202) 229-6003.
For other questions about this Technical Update, contact Amy Viener by phone at (202) 229-3919 or by email at Viener.Amy@pbgc.gov.
[1] “Further Consolidated Appropriations Act, 2020,” Pub. L. No. 116-94, Division O, Title II, Sect. 206 (2019).
[2]The collection of information with respect to premiums is approved under OMB Control No. 1212-0009 (expires December 31, 2022).