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Technical Update 96-5: 1996 Model Participant Notice

Technical Update Number:


The Retirement Protection Act of 1994 added a new requirement to ERISA (Section 4011) that certain underfunded plans annually notify participants and beneficiaries of the plan's funding status and the limits of the PBGC's guarantee.

On June 30, 1995, the PBGC published a final rule implementing the notice requirement. The regulations include a model notice that plans can use to meet the requirement. See 29 CFR Part 2627, 60 Fed. Reg. 34412 (June 30, 1995), 60 Fed. Reg. 36998 (July 19, 1995).

Plans with more than 100 participants began sending out notices for 1995. Plans with 100 or fewer participants must begin distributing notices for 1996.

Model Notice

For the convenience of plan administrators, this Technical Update includes the Model Participant Notice, revised to reflect the 1996 maximum guaranteed benefits that apply to individuals who retire at age 65. The model notice also has been updated to give participants information on the 1996 maximum guaranteed benefits that apply to individuals who retire at ages 62, 60, and 55. The revised model notice includes the new address to obtain the booklet "Your Guaranteed Pension" on the PBGC's Homepage. The booklet now may be obtained free of charge. The model notice in the regulations is being changed accordingly.

1996 Participant Notice

The 1996 participant notice is due two months after the 1995 Form 5500 due date (including extensions), i.e., the same time the plan's summary annual report for 1995 is due. For example, a calendar year plan that files Form 5500 on the extended due date, Tuesday, October 15, 1996, has to issue the participant notice no later than Monday, December 16, 1996. (If any due date (or extended due date) falls on a Saturday, Sunday, or legal holiday, the applicable due date is the next business day.)

For each plan year for which a variable rate premium is payable for a plan, the plan must issue a notice to participants, unless the plan is exempt from the notice requirement under the regulation. Generally, a plan that is at least 90% funded for either the 1995 or 1996 plan year is exempt from having to provide the 1996 participant notice. Also exempt are plans that meet certain transition or other special rules, and most new and newly-covered plans. (See the regulation for the specific exemptions.) The small plan exemption, which applied to the 1995 notice, does not apply to the 1996 participant notice.

Plan Administrator Certification for 1995 Notices

The 1996 PBGC premium forms (Schedule A to Form 1) include a plan administrator certification relating to compliance with the participant notice requirements for the 1995 plan year. In completing the premium forms, plan administrators must certify whether they (i) issued the notice as required or (ii) were not required to issue the notice. If a required notice was not issued or was issued improperly (e.g., was issued late), the plan administrator must provide an explanation.

Appendix A to Part 2627--Model Participant Notice