Part III - Premium Information

6 Flat-rate Premium

a Report the Participant Count Date. See "How to Count Participants" section for special rules relating to New Plans, Newly-covered Plans, Mergers and Spinoffs.

b Flat-rate Premium calculation

1. Applicable rate – Enter the per-participant flat premium rate. For 2011, the rate is $35 for Single-employer Plans and $9 for Multiemployer Plans.
2. Participant count – Report the total number of participants covered by the plan on the Participant Count Date. See "How to Count Participants" section.
3. Flat-rate Premium – Report the product of the Participant Count and the applicable premium rate. If the plan year is a short plan year, the required Flat-rate Premium may be a prorated portion of this amount; however, the amount reported in this item must reflect a full year’s premium.

Note that the Flat-rate Premium may be $0, but you must make a premium filing even if the Flat-rate Premium is $0. This may happen, for example, if your plan is a New Plan that grants no past service credits, so that there are no Benefit Liabilities on the Participant Count Date. A plan with no Benefit Liabilities has no participants for premium purposes.

7 Variable-rate Premium

This item relates to Variable-rate Premium information and applies only to Single-employer Plans.

In general, the Variable-rate Premium is $9 per $1,000, or fraction thereof, of unfunded vested benefits as of the UVB Valuation Date. For certain plans of small employers, this amount is capped at a specified amount (see item 7b).

Some Single-employer Plans are exempt from the Variable-rate Premium; others may have a Variable-rate Premium of $0. In either case, this section must be completed in accordance with the following instructions.

a Exemptions – A Single-employer Plan may claim an exemption from the Variable-rate Premium only if it meets the requirements for one of the exemptions described below:

• Plans with no vested participants – Your plan qualifies for this exemption if the plan has no participants with vested benefits as of the UVB Valuation Date.
• Section 412(e)(3) plans (formerly called 412(i) plans) – Your plan qualifies for this exemption if the plan is described in section 412(e)(3) of the Code and regulations thereunder on the UVB Valuation Date.
• Plans terminating in standard terminations – Your plan qualifies for this exemption if notices of intent to terminate in a standard termination were issued in accordance with ERISA section 4041(a)(2), setting forth a proposed termination date (i.e., the 60- to 90-day prospective date) that is on or before the UVB Valuation Date. However, this exemption is conditional on the plan’s ultimately making a final distribution of assets in full satisfaction of its obligations under the standard termination. If such a distribution is not made, this exemption does not apply and the premium(s) that would otherwise have been required will be due retroactive to the applicable due date(s).

  If an exemption applies, check the applicable box to indicate which exemption applies and skip to item 8.

b Variable-rate Premium cap qualification – If the plan qualifies as a small-employer plan, the Variable-rate Premium is capped at a specified amount (based on the number of plan participants).

Determining whether plan qualifies for the cap – For this purpose:

• a plan is a small-employer plan if the aggregate number of employees of all contributing sponsors of the plan and all members of the contributing sponsors’ controlled groups, as of the first day of the Premium Payment Year, is 25 or fewer,
• the aggregate number of employees is determined in the same manner as under section 410(b)(1) of the Code, taking into account the provisions of section 414(m) and (n) of the Code, but without regard to section 410(b)(3), (4), and (5) of the Code, and
• employees are counted as of the first day of the Premium Payment Year, not as of the Participant Count Date or the UVB Valuation Date.

Note that a plan with 25 or fewer participants does not necessarily qualify for the cap because the eligibility criterion is based on employees, not the Participant Count. For example, if a plan has 15 participants, but there are more than 25 employees (taking into account all employees of all contributing sponsors of the plan and all members of their controlled groups), the plan does not qualify for the cap.

Also note that a plan with more than 25 participants might qualify for the cap. For example, consider a contributing sponsor with 20 employees, all of whom are participants in a plan. If the plan also covers 15 former employees who are either terminated vested or retired, there are 35 participants in total. This plan would qualify for the cap (assuming there are no other contributing sponsors and no controlled group members).

Reporting requirements – If your plan qualifies for this cap, check the box to report that fact.

If your plan qualifies for this cap, instead of reporting both the uncapped Variable-rate Premium ($9 per $1,000 of unfunded vested benefits) and the maximum Variable-rate Premium and then paying the lesser of the two amounts, you may report and pay the maximum Variable-rate Premium. If you choose not to report the uncapped Variable-rate Premium, omit items 7c through 7g(1) and go directly to item 7g(2). Note that if you choose to pay the maximum Variable-rate Premium without determining whether it is less than the uncapped Variable-rate Premium, you may pay a larger Variable-rate Premium than required.

c UVB Valuation Date – Report the UVB Valuation Date for the Premium Payment Year.

d Premium Funding Target information

The Premium Funding Target is the liability measure used to determine the Variable-rate Premium. It is similar to the funding target that is used to determine the minimum funding requirement for the Premium Payment Year, except that only vested benefits are taken into account. See "How to Determine Unfunded Vested Benefits" section for more information, including information on when certain types of benefits are considered vested.

The assumptions used to determine this amount differ depending on which calculation method is used:

• With the standard method, the Premium Funding Target is calculated using the same assumptions used to determine the minimum required contribution for the Premium Payment Year with one exception. In lieu of the discount rates used for funding purposes, the discount rates are the segment rates for the month preceding the month in which the Premium Payment Year begins that are determined in accordance with ERISA section 4006(a)(3)(E)(iv).
• With the alternative method, the Premium Funding Target is calculated using exactly the same assumptions used to determine the minimum required contribution for the Premium Payment Year. You may use the alternative method only if there is an election to do so in effect from a prior year or if you elect to do so for the first time this year. For information on how to make the election, see instructions for Item 5 in Part II.

Note for Mid-size and Large Plans – If the Premium Funding Target (and thus, the Variable-rate Premium) being reported in this filing is an estimate, check the box to report that fact. Note that if you file on an estimated basis, you must ultimately make a reconciliation filing using the actual Premium Funding Target (by amending this filing). In the reconciliation filing, in addition to reporting the actual Premium Funding Target data, be sure to indicate that the reported amount is no longer an estimate by making sure the "estimate" box is no longer checked. See "Correcting Filings and Reconciling Estimates" section.

Note also that to qualify for the automatic penalty relief, the estimated Premium Funding Target must be certified by an enrolled actuary to be a reasonable estimate that:

• takes into account the most recent data available to the enrolled actuary, and
• has been determined in accordance with generally accepted actuarial principles.

See "Late Payment Charges" section for more information on the penalty relief available to Large and Mid-size Plans paying estimated Variable-rate Premiums on the due date.

1. Premium Funding Target method – If you are using the Standard Premium Funding Target to determine unfunded vested benefits, check the "Standard" box. If you are using the Alternative Premium Funding Target to determine unfunded vested benefits, check the "Alternative" box.

   Note that the standard method must be used unless an election to use the alternative method is in effect. For information on how to make the election, see instructions for Part II.

   Also, note that if an election to use the alternative method is in effect, you must use the alternative method. An election is in effect only if an election to use the alternative method was made by checking the election box in item 5 of Part II of this filing, or if an election is in effect from a prior year's filing. Checking the alternative box in item 7(d)(1) does not constitute an election. For more information on how to make the election, see instructions for item 5 in Part II.

Filers are encouraged to review prior filings or to review the Account History on MyPAA to confirm whether an election is in effect.
2. Report the discount rate(s) used to determine the Premium Funding Target. If you are using the:
• Standard Premium Funding Target, these rates must be the segment rates for the month preceding the month in which the Premium Payment Year begins that are determined in accordance with ERISA section 4006(a)(3)(E)(iv) (i.e., the rates that would be determined under ERISA section 303(h)(2)(C) if ERISA section 303(h)(2)(D) were applied by using the monthly yields for the month preceding the month in which the Premium Payment Year begins on investment grade corporate bonds with varying maturities, and in the top 3 quality levels, rather than the average of such yields for a 24-month period). These rates are available at www.pbgc.gov.
• Alternative Premium Funding Target, these rates must be identical to the rates that are used to determine the minimum required contribution for the Premium Payment Year as reported in item 21a of the 2011 Schedule SB, Form 5500. This includes any elections with respect to the optional phase-in from the prior current liability discount rate, the applicable month, and the option to use the full yield curve in lieu of segment rates. If the full yield curve is used for this purpose, rather than reporting the full yield curve, check the box to report that fact.
3. Report the Premium Funding Target (dollars only). Note that if you are using the Alternative Premium Funding Target, the amount reported is generally equal to the total funding target reported in the 2011 Schedule SB (item 3d) reduced by the non-vested portion of the total funding target (item 3c(1)) reported in that same Schedule.

e Market value of assets – Report the fair market value of plan assets (dollars only) as of the UVB Valuation Date for the Premium Payment Year adjusted to reflect contribution receipts as follows:

Adjustments for prior year contributions

If contributions for the prior plan year were made after the UVB Valuation Date and before the date the premium filing is made, increase the market value to include the discounted value of such contributions. Prior year contributions are discounted from the date made to the UVB Valuation Date, using the effective interest rate for the plan year for which the contributions were made.

Adjustments for current year contributions

If contributions for the current plan year were made before the UVB Valuation Date, decrease the market value by the adjusted value of these current year contributions. (Note – this can happen only if the UVB Valuation Date is after the beginning of the plan year). For this adjustment, such contributions are increased to the UVB Valuation Date.

Interest adjustments

For both interest adjustments noted above, use the effective interest rate determined under ERISA section 303(h)(2)(A) and reported in item 5 of Schedule SB for the plan year for which the contributions were made.

Comparison to asset value reported on Schedule SB

In general, the asset value reported here must be the same as the market value of assets reported in the 2011 Schedule SB (item 2a). The amounts would differ only if a premium filing is made before the premium filing due date and prior year contributions are made after the premium filing is made (and thus not included in assets).

f Unfunded vested benefits – Report the excess (rounded up to the next $1,000), if any, of the Premium Funding Target over the fair market value of assets.

g Variable-rate Premium calculation (If the plan does not qualify for the Variable-rate-Premium cap, skip to item 7g(3).)

1. Variable-rate Premium before reflecting the cap – Report the product of 0.009 and the amount of unfunded vested benefits. If the plan does not qualify for the Variable-rate-Premium cap, this item must be left blank.
2. Maximum Variable-rate Premium – The maximum Variable-rate Premium is $5 times the square of the plan’s Participant Count. Report the product of the Participant Count multiplied by the Participant Count multiplied by $5. If the plan does not qualify for the Variable-rate-Premium cap, this item must be left blank.

3. Variable-rate Premium
   • If the plan does not qualify for the Variable-rate Premium cap, report the product of 0.009 and the amount of unfunded vested benefits.

   • If the plan qualifies for the Variable-rate Premium cap, report the lesser of the Variable-rate Premium before reflecting the cap and the maximum Variable-rate Premium, or, if you choose not to calculate/report the Variable-rate Premium before reflecting the cap, report the maximum Variable-rate Premium.

   If this is a short plan year of coverage, the required Variable-rate Premium may be a prorated portion of this amount; however, the full year’s premium amount must be reported in this item.

8 Premium proration (If the plan does not qualify for premium proration, skip to item 9.)

a Number of months in the short plan year – Report the number of months (complete and partial) in the short plan year. For this purpose, each plan month (i.e., each month in the plan year) generally begins on the same day of each successive calendar month. For example, if the plan year begins on July 1, the first day of each successive calendar month is the beginning of a new month; similarly, if the plan year begins on January 15, the second plan month begins on February 15, the third plan month on March 15, etc. Thus, if a short final year begins on January 1 and ends on June 1, there would be six (full or partial) months in the short year. (The last (partial) month, beginning (and ending) on June 1, would count as a full month for purposes of prorating the premium.) Similarly, if a short first year begins on July 31 and ends on December 31, there also would be six (full or partial) months in the short year.

There are two special rules when a plan year begins at or near the end of a calendar month:

• If the plan year begins on the last day of a calendar month, successive plan months begin on the last day of successive calendar months. For example, if the plan year begins on November 30, successive plan months begin on December 31, January 31, the last day of February (the 28^th or 29^th), March 31, etc.
• If the plan year begins on the 29^th or 30^th of a calendar month other than February, the plan month beginning in February begins on the last day of February. For example, if the plan year begins on November 29, successive plan months begin on December 29, January 29, the last day of February (the 28^th or 29^th), March 29, etc. If the plan year begins on December 30, successive plan months begin on January 30, the last day of February (the 28^th or 29^th), March 30, April 30, etc.

Counting months for New and Newly-covered Plans – The short first year of a New Plan is treated as beginning on the Participant Count Date (i.e., the plan effective date). The short first year of a Newly-covered Plan is treated as beginning on the date when the plan becomes covered under ERISA section 4021.

Counting months for terminating plans – The (short) plan year of a terminating plan’s final year is treated as ending on:

• for a Multiemployer Plan that distributed all its assets pursuant to ERISA section 4041A, the date the distribution is completed; or
• for a Single-employer Plan, the earlier of:

  - the date on which the distribution of the plan’s assets in satisfaction of all Benefit Liabilities was completed; or

  - the date that a trustee for the terminating plan was appointed under ERISA section 4042.

b Total premium before proration – Report the sum of the Flat-rate Premium and, if applicable, the Variable-rate Premium.

9 Total premium –

The total premium is determined as follows:

• If the plan does not qualify for premium proration, report the sum of the Flat-rate Premium and, if applicable, the Variable-rate Premium.
• If the plan qualifies for premium proration, multiply the total premium before reflecting proration by the number of months (complete and partial) in the short plan year and then divide by 12. Round to two decimal places after completing the calculation.

If this amount includes cents, report the exact amount (dollars and cents), not a rounded amount.

10 Premium credit

Report the total amount of premium credits available to offset the premium due. Premium credits include:

• Any overpayment of the 2010 premium filing for which a refund was not requested,
• Estimated 2011 Flat-rate Premium paid earlier in the year (Large Plans only), and
• Any other payments made for 2011 (including an estimated Variable-rate Premium for a Large or Mid-size Plan when amending the filing to reconcile the estimate. See "Correcting Filings and Reconciling Estimates" section).

If this amount includes cents, report the exact amount (dollars and cents), not a rounded amount.

11 Amount due

If the total premium due equals or exceeds the total premium credit, subtract the total credit from the total premium and report the result as the amount due. This is the amount you owe PBGC. See Appendix 3 for information on payment options.

If you received an exemption from e-filing, check the box to report whether payment will be made by check or by electronic funds transfer (EFT).

If this amount includes cents, report the exact amount (dollars and cents), not a rounded amount.

12 Treatment of Overpayment

a If the total premium is less than the total premium credit, subtract the total premium from the total credit and report the result as an overpayment.

b If you have an overpayment, you must choose whether to have the overpayment refunded (by check or electronic funds transfer) or credited towards the next year’s premium for the plan. Report your choice by checking the appropriate box.

If you request to use the overpayment as a credit towards next year’s premium for the plan, you should claim the overpayment amount as a credit on the next year’s premium filing for the plan.

If you prefer a refund to a credit, the quickest way to receive your refund is to select the electronic funds transfer option. We strongly recommend this option. To facilitate an electronic funds transfer, indicate whether the account is a checking account or savings account, and provide the bank routing number and account number to which the refund is to be credited. If you want the refund credited to a sub-account within the main account, also provide the sub-account number.

If this amount includes cents, report the exact amount (dollars and cents), not a rounded amount.