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- Frequently Asked Questions About ERISA 4062(e)
Section 4062(e) is a provision of ERISA intended to help protect pensions in situations where a company ceases operations and workers lose their jobs. On December 16, 2014, President Obama signed into law H.R. 83, which made major changes to Section 4062(e).
A 4062(e) event occurs when:
- There is a permanent cessation of operations at a facility; and
- That cessation results in a workforce reduction of more than a 15% reduction in the total number of eligible employees; where
- Eligible employees are employees eligible to participate in any employee pension plan (i.e. any defined benefit plan or defined contribution plan) maintained by members of the controlled group.
If a 4062(e) event has occurred, reporting to PBGC is required. See Forms and Instructions.
Pension plans falling into either of the following categories are exempt from 4062(e):
- Pension plans that had fewer than 100 participants with accrued benefits as of the plan valuation date; or
- Pension plans that were at least 90% funded in the plan year before the cessation occurred. The funded level for this exemption is measured by comparing the plan’s assets to the plan’s unfunded vested benefits, as determined for purposes of paying PBGC premiums.
If a plan falls under one of these exemptions, then no reporting is required. If a 4062(e) event has occurred, companies are required to satisfy the resulting liability. See Frequently Asked Questions About ERISA 4062(e) for more information about how to satisfy the liability.
Forms and Instructions
If an event under Section 4062(e) has occurred, notice is required to be provided to PBGC and is in addition to any Reportable Event notice that may be required under Section 4043 (see the Active Participant Reduction event on the Reportable Events and Large Unpaid Contributions page).
On May 15, 2019, PBGC published a notice that PBGC intends to request OMB approval of a form series and instructions to be used when fulfilling 4062(e) notification requirements. The proposed form series and instructions list the information and documents required to notify PBGC of: (1) a substantial cessation of operations (Form 4062(e)-01); (2) election to make additional annual contributions (Form 4062(e)-02); (3) payment of an additional contribution, termination of obligation for future contributions, or receipt of funding waiver from the IRS (Form 4062(e)-03); and (4) failure to pay an additional contribution (Form 4062(e)-04). PBGC is soliciting public comments on the proposed form series and instructions
Currently, no special format is required, but the notice should identify the affected plan and employer and include a statement that there has been a cessation of operations under ERISA section 4062(e) and a request that PBGC determine the resulting liability.
The notice must be filed with the PBGC’s Corporate Finance & Restructuring Department (CFRD) within 60 days of the cessation. It may be mailed to CFRD at 1200 K Street, NW, Washington, DC 20005-4026, faxed to 202-842-2643, or emailed to email@example.com.
For assistance, contact PBGC by sending an email to firstname.lastname@example.org.
Practitioners may also call our toll-free practitioner number at 1-800-736-2444 (ext. 4070) or 202-326-4070 (DC area). TTY/ASCII users may call the federal relay service toll-free at 1-800-877-8339 and ask to be connected to the appropriate number.
PBGC has prepared Frequently Asked Questions to assist practitioners in understanding recent changes to Section 4062(e). For more information see Frequently Asked Questions About ERISA 4062(e).