OMB Approves Revisions to PBGC Termination, Missing Participant Forms and Instructions

The Office of Management and Budget has approved revisions to the Pension Benefit Guaranty Corporation’s standard termination, distress termination and missing participants forms and instructions. The new forms and instructions can be found on the Plan Terminations page of PBGC’s website. 

These new forms, which cover standard termination of fully funded plans, distress termination of underfunded plans and distribution of benefits to participants who cannot be located, must be used for terminations for which the first Notice of Intent to Terminate is issued on or after June 1, 2014. If the first Notice of Intent to Terminate is issued before June 1, 2014, either the new or old forms may be used. 

PBGC is requiring plan administrators to attach copies of Notice of Intent to Terminate and sample Notices of Participant Benefits to the Standard Termination Notice (Form 500) they submit. PGBC is requiring this because during post-termination audits, it periodically finds that some notices to participants or beneficiaries are not provided, or that notices that are do not comply with regulatory requirements. PBGC says that this is not an additional burden on plan administrators, since they will simply be required to send the agency copies of notices they already must provide to affected parties. 

PBGC is reorganizing the distress termination forms and instructions in the following ways:

• removing information items that it no longer needs or can gather in other ways; 

• adding information items that PBGC typically has been requesting as additional information under 29 CFR §4041.45(c); and 

• moving some information items from one form to another. 

PBGC is revising the Form 600 and its attached schedules to focus on providing information and documents that address whether each contributing sponsor, and each member of each contributing sponsor’s controlled group, meets one of the statutory distress criteria.

The revised Form 600 will collect information on the plan administrator, remind plan administrators of their duties during the termination process and collect the plan administrator’s certification that it has complied. 

PBGC is making the following changes to schedules to Form 600:

• a new Schedule P will gather plan information and documents regarding the plan; 

• a new Schedule F will collect financial information on each contributing sponsor and each member of  its controlled group so that PBGC can determine whether each entity meets one of the distress criteria under 29 CFR §4041.41(c)(1)-(4); and 

• elimination of the current Schedule REP-D (designation of a representative to act on plan administrator’s behalf with respect to the termination); the designation will be captured on the revised Form 600 (Section D).

After PBGC reviews a Form 600, in virtually all cases it contacts the plan administrator to request additional information and documents needed to determine if a distress termination can go forward. In addition, under PBGC’s current instructions, although PBGC requests that information and documents related to documenting the satisfaction of distress criteria be submitted when the Form 600 (and attachments) is submitted, that information may be filed separately within 60 days of filing the Form 600.

In either situation, there may be a delay in the time when PBGC can decide whether a distress termination may proceed. To expedite the process, PBGC is requiring that all of the information and documents currently requested as part of PBGC’s follow-up letter to the Form 600 be collected as part of the Form 600 (and its attached schedules), eliminating the 60-day time lag. These changes do not require that the plan administrator provide additional information or documents. They do require that plan administrators be ready to support the assertion that each contributing sponsor and each member of each contributing sponsor’s controlled group meets one of the statutory distress tests at the time they file the Form 600.

Finally, to enable PBGC to separately account for interest paid, PBGC is modifying the Missing Participant Payment Voucher to include a box indicating, where applicable, that the amount being paid to PBGC is solely interest on the late payment of designated benefits. 

John Iekel is Senior Writer and Editor of the ASPPA Net and NTSA Net.