PBGC Flashcards
Are multi-employer plan exempt from VRP?
No - they just don’t have to pay it
12/31 ptp 50
1/1 ptp: 10
Flat Rate: $2
What is the flat rate premium?
$2 * 50 = $100
If the variable rate is 4% and the UVB is 1200, then what is the uncapped VRP?
- Round UVB up to the next $1000 ($2000), so
$2000 * 0.04 = $80
When does the small-employer cap apply? What is its effect?
- Applies for plans with less than 25 employees on FIRST of year.
- It can cap the VRP at a smaller amount of 5 * (PTP count)^2
To determine the UVB:
- Do you use MVA or AVA?
- Do you use stabilized discount rates for FT?
- Do you include receivable contributions?
- Do you include current year contributions?
- Use the FVA (no averaging)
- No use non-stabilized rates
- Include the receivable contributions if received before actual filing date. Discount back at prior year effective rate (with MAP-21).
- Exclude current year contributions and roll forward at current year effective rate ( with MAP-21)
If plan elects the standard method, what interest rate and lookback month is used for vested funding target?
- PPA Segments, no MAP-21, No Averaging
2. Month prior to UVB valuation date
If plan elects the alternative method, what interest rate and lookback month is used for vested funding target?
- Whatever used for funding, with no MAP-21 (i.e. 24 month average segs or Yield Curve)
- Month used for funding
Which of the following benefits are vested for PBGC purposes?
- QJSA/QPSA
- Survivor portion of JnS/Certain
- Disability Benefits
- Pre-retirement lump sum death benefit
- Early Retirement type subsidy
- Yes
- Yes
- No - if not disabled
- Only the portion that is returning EE contributions with interest
- Only for ptps that are currently eligible for it
If a plan elects alternative method for PBGC, how long is election in place at a minimum?
5 years
Who is exempt from the VRP?
- Plans with no vested ptps
- Plans funded with insurance contracts
- Plans that have issued a notice of intent to terminate with term date prior to UVB val date
a. in a prior year
b. in current year and distribution assets in current year
What day is the ptp count as of?
It is generally on the last day of prior year. It is on the first day of the plan year if plan is:
- new
- newly covered by the PBGC
- is continuing plan of a merger/spinoff on first of the year
Who is a ptp for PBGC purposes? When does a non-vested participant become excludable? When does a vested participant become excludable?
In general, anyone with a liability under the plan. Can exclude once:
- Non-vested + 1 YBIS
- Non-vested + $0 Cashout
- Non-vested + Death
- Vested + bought insurance contract
- Vested + Paid out full benefit
What is plan termination premiums? How long do you pay it? When is the count as of? When is it due?
- If a single employer terminates involuntarily or in distress, then must pay out $1250*PTP
- Pay for for the next 3 years.
- The PTP count date is the day before termination.
- First year - 30 days after the start of the next month, then on plan term anniversary
T/F if you are paying the cap, then you don’t need to report the UVB
TRUE - it’s not used in calculation
T/F a new plan does not need to file with PBGC in the first year.
FALSE - liability will likely be 0 given that no ptp will likely have a benefit yet.
T/F You can only file with PBGC online.
TRUE
What is the lookback rule for small PBGC plans? Who can use it? What is the default? When is ptp count as of?
Plans < 100 ptp count may use the UVB, (DR, FVA, FT) as of the previous year
Default for small plans is they are using, and would need to opt out of using
PTP count as of CURRENT year.
When are PBGC Premiums due?
15th of the 10th month
When do you no longer need to file with the PBGC?
- Plan ceases to exist either through distributing assets or plan merger
- Trustee appointed after distress termination
- Plan no longer covered by PBGC
What are the late penalties for PBGC premiums?
- If you have received a notice from PBGC, then it is 2.5% per partial/full month, capped at 50% of unpaid premium
- If you fix it before you get a notice from PBGC, then it is 0.5% per partial/full month, capped at 25%
- There is also an interest charge at the rate for late payment of taxes
What are the two reasons a plan may have the PBGC late penalty waived?
- Paid within 7 days - waive 100% of premiums
- Waive 80% of penalty if paid within 30 days of initial notice and plan has not PAID a late penalty fee in the last 5 years. Note - this means 0.5% and 25%
How does an ESTIMATED variable rate premium work? When do you need to submit a final recon by?
If can’t get final VRP done, then can submit VRP based on FINAL assets and estimated FT.
Then you must submit a final recon by the end of the 6th month (April 30th for calendar plans)
If Oct. 15 is a Saturday, so the PBGC premium is due Oct. 18, but the plan doesn’t pay the premium timely - when does interest start accruing from?
Oct 15.
How is PBGC premiums handled for short plan years?
Count the full or partial months the plan was covered by the PBGC and divide by 12
