[Federal Register: April 15, 2004 (Volume 69, Number 73)]
[Notices]
[Page 20079-20080]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ap04-101]
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PENSION BENEFIT GUARANTY CORPORATION
Required Interest Rate Assumption for Determining Variable-Rate
Premium; Interest on Late Premium Payments; Interest on Underpayments
and Overpayments of Single-Employer Plan Termination Liability and
Multiemployer Withdrawal Liability; Interest Assumptions for
Multiemployer Plan Valuations Following Mass Withdrawal
AGENCY: Pension Benefit Guaranty Corporation.
[[Page 20080]]
ACTION: Notice of interest rates and assumptions.
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SUMMARY: This notice informs the public of the interest rates and
assumptions to be used under certain Pension Benefit Guaranty
Corporation regulations. These rates and assumptions are published
elsewhere (or can be derived from rates published elsewhere), but are
collected and published in this notice for the convenience of the
public. Interest rates are also published on the PBGC's Web site
(http://www.pbgc.gov).
The PBGC notes that the provisions of the Job Creation and Worker
Assistance Act of 2002 that temporarily increased the required interest
rate to be used to determine the PBGC's variable-rate premium to 100%
(from 85%) of the annual yield on 30-year Treasury securities expired
at the end of 2003. The Pension Funding Equity Act of 2004, which was
signed into law by the President on April 10, 2004, changes the rules
for determining the required interest rate for plan years beginning in
2004 or 2005. The PBGC intends shortly to publish a Federal Register
notice reflecting the new required interest rates and post the changes
on the PBGC's Web site.
DATES: The interest assumptions for performing multiemployer plan
valuations following mass withdrawal under part 4281 apply to valuation
dates occurring in May 2004. The interest rates for late premium
payments under part 4007 and for underpayments and overpayments of
single-employer plan termination liability under part 4062 and
multiemployer withdrawal liability under part 4219 apply to interest
accruing during the second quarter (April through June) of 2004.
FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General
Counsel, Office of the General Counsel, Pension Benefit Guaranty
Corporation, 1200 K Street, NW., Washington, DC 20005, 202-326-4024.
(TTY/TDD users may call the Federal relay service toll-free at 1-800-
877-8339 and ask to be connected to 202-326-4024.)
SUPPLEMENTARY INFORMATION:
Variable-Rate Premiums
Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income
Security Act of 1974 (ERISA) and Sec. 4006.4(b)(1) of the PBGC's
regulation on Premium Rates (29 CFR part 4006) prescribe use of an
assumed interest rate (the ``required interest rate'') in determining a
single-employer plan's variable-rate premium.
The PBGC notes that the provisions of the Job Creation and Worker
Assistance Act of 2002 that temporarily increased the required interest
rate to be used to determine the PBGC's variable-rate premium to 100%
(from 85%) of the annual yield on 30-year Treasury securities expired
at the end of 2003. The Pension Funding Equity Act of 2004, which was
signed into law by the President on April 10, 2004, changes the rules
for determining the required interest rate for plan years beginning in
2004 or 2005. The PBGC intends shortly to publish a Federal Register
notice reflecting the new required interest rates and post the changes
on the PBGC's Web site.
Late Premium Payments; Underpayments and Overpayments of Single-
Employer Plan Termination Liability
Section 4007(b) of ERISA and Sec. 4007.7(a) of the PBGC's
regulation on Payment of Premiums (29 CFR part 4007) require the
payment of interest on late premium payments at the rate established
under section 6601 of the Internal Revenue Code. Similarly, Sec.
4062.7 of the PBGC's regulation on Liability for Termination of Single-
Employer Plans (29 CFR part 4062) requires that interest be charged or
credited at the section 6601 rate on underpayments and overpayments of
employer liability under section 4062 of ERISA. The section 6601 rate
is established periodically (currently quarterly) by the Internal
Revenue Service. The rate applicable to the second quarter (April
through June) of 2004, as announced by the IRS, is 5 percent.
The following table lists the late payment interest rates for
premiums and employer liability for the specified time periods:
------------------------------------------------------------------------
Interest
From-- Through-- rate
(percent)
------------------------------------------------------------------------
4/1/98..................................... 12/31/98 8
1/1/99..................................... 3/31/99 7
4/1/99..................................... 3/31/00 8
4/1/00..................................... 3/31/01 9
4/1/01..................................... 6/30/01 8
7/1/01..................................... 12/31/01 7
1/1/02..................................... 12/31/02 6
1/1/03..................................... 9/30/03 5
10/1/03.................................... 3/31/04 4
4/1/04..................................... 6/30/04 5
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Underpayments and Overpayments of Multiemployer Withdrawal Liability
Section 4219.32(b) of the PBGC's regulation on Notice, Collection,
and Redetermination of Withdrawal Liability (29 CFR part 4219)
specifies the rate at which a multiemployer plan is to charge or credit
interest on underpayments and overpayments of withdrawal liability
under section 4219 of ERISA unless an applicable plan provision
provides otherwise. For interest accruing during any calendar quarter,
the specified rate is the average quoted prime rate on short-term
commercial loans for the fifteenth day (or the next business day if the
fifteenth day is not a business day) of the month preceding the
beginning of the quarter, as reported by the Board of Governors of the
Federal Reserve System in Statistical Release H.15 (``Selected Interest
Rates''). The rate for the second quarter (April through June) of 2004
(i.e., the rate reported for March 15, 2004) is 4.00 percent.
The following table lists the withdrawal liability underpayment and
overpayment interest rates for the specified time periods:
------------------------------------------------------------------------
Interest
From Through rate
(percent)
------------------------------------------------------------------------
7/1/97..................................... 12/31/98 8.50
1/1/99..................................... 9/30/99 7.75
10/1/99.................................... 12/31/99 8.25
1/1/00..................................... 3/31/00 8.50
4/1/00..................................... 6/30/00 8.75
7/1/00..................................... 3/31/01 9.50
4/1/01..................................... 6/30/01 8.50
7/1/01..................................... 9/30/01 7.00
10/1/01.................................... 12/31/01 6.50
1/1/02..................................... 12/31/02 4.75
1/1/03..................................... 9/30/03 4.25
10/1/03.................................... 6/30/04 4.00
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Multiemployer Plan Valuations Following Mass Withdrawal
The PBGC's regulation on Duties of Plan Sponsor Following Mass
Withdrawal (29 CFR part 4281) prescribes the use of interest
assumptions under the PBGC's regulation on Allocation of Assets in
Single-Employer Plans (29 CFR part 4044). The interest assumptions
applicable to valuation dates in May 2004 under part 4044 are contained
in an amendment to part 4044 published elsewhere in today's Federal
Register. Tables showing the assumptions applicable to prior periods
are codified in appendix B to 29 CFR part 4044.
Issued in Washington, DC, on this 12th day of April 2004.
Joseph H. Grant,
Deputy Executive Director and Chief Operating Officer, Pension Benefit
Guaranty Corporation.
[FR Doc. 04-8589 Filed 4-14-04; 8:45 am]
BILLING CODE 7708-01-P