EBSA issues guidance on changes to annual funding notice requirements under HATFA

The Employee Benefits Security Administration (EBSA) has issued guidance on compliance by single-employer defined benefit plan administrators with the annual funding notice requirements of ERISA §101(f), as amended by section 2003 of the Highway and Transportation Funding Act of 2014 (HATFA, P.L. 113-159). The guidance also provides a modified supplement to the model annual funding notice that plan administrators may use to comply with the requirements of ERISA §101(f)(2)(D).

Disclosure requirements

Moving Ahead for Progress in the 21st Century Act (MAP-21; P.L. 112-141) amended ERISA §101(f) to require plan administrators of single-employer defined benefit pension plans to provide participants and others additional information regarding the impact of MAP-21’s interest rate stabilization rules on the plan’s funding status. Specifically, MAP-21 added ERISA §101(f)(2)(D), which requires plan administrators of single-employer defined benefit plans to disclose additional information in the annual funding notice for a plan year beginning after December 31, 2011, and before January 1, 2015, if such plan year is an “applicable plan year” under ERISA. In March 2013, EBSA issued Field Assistance Bulletin (FAB) No. 2013-01 to provide guidance on the annual funding notice requirements under MAP-21.

Section 2003(b)(2)(A) of HATFA amended ERISA §101(f)(2)(D)(ii) by extending the period for which such additional information must be furnished through applicable plan years beginning before January 1, 2020. It also modified the statements required by ERISA §101(f)(2)(D)(i)(I) and (II). The amendments to both the funding rules and the annual funding notice are effective for plan years beginning after December 31, 2012, unless the plan sponsor elects out of the new rules for a plan year beginning in 2013.

EBSA stated that, due to the extension of the applicability of ERISA §101(f)(2)(D) to plan years ending before January 1, 2020, the Department of Labor reviewed the guidance in FAB 2013-01, taking into account questions and other feedback from practitioners. As the result of that review, the DOL has decided to modify its answer to Question 14 of FAB 2013-01. Thus, in FAB 2015-01, the DOL will no longer require the Model Supplement (or the MAP-21 Supplement) to state the value of plan assets, determined without regard to the adjusted interest rates (i.e., as if MAP-21 and HATFA had not been enacted), or to include an accompanying explanation for any funding notice due after January 14, 2015. EBSA also addresses how the DOL will enforce the retroactive application of HATFA to the 2013 plan year as well as changes to the definition of “applicable plan year” and changes to the content requirements of ERISA §101(f)(2)(D)(i) disclosures, the model supplement, and the funding target attainment percentage chart of the model notice. Except as stated in FAB 2015-01, FAB 2013-01 remains in effect, according to EBSA.

Supplement to model notice

The appendix to FAB 2015-01 contains a supplement to the single-employer defined benefit plan model annual funding notice. This model supplement replaces the MAP-21 supplement in FAB 2013-01 for applicable plan years beginning on or after January 1, 2014. For a 2013 applicable plan year, the model supplement replaces the MAP-21 supplement only if the funding notice reflects the use of the HATFA segment rates. Pending further guidance, use of an appropriately completed model supplement, together with the model annual funding notice, will, as a matter of DOL enforcement policy, satisfy the content requirements of ERISA §101(f)(2)(B) and (D).

Good faith compliance

Pending further guidance, the DOL, as a matter of enforcement policy, will treat a plan administrator of a single-employer defined benefit plan as satisfying ERISA §101(f)(2)(D), as amended by HATFA, if the plan administrator complies with the guidance in FAB 2013-01 and FAB 2015-01, and “has acted in accordance with a good faith, reasonable interpretation of section 101(f)(2)(D) with respect to matters not specifically addressed in” FAB 2013-01 and FAB 2015-01. The DOL will treat a funding notice for a plan year beginning after December 31, 2012, that was issued before the issuance of FAB 2015-01 as satisfying the HATFA amendments to ERISA §101(f)(2)(D), if it reflects a good faith, reasonable interpretation of the amendments to that section.

Source: Field Assistance Bulletin 2015-01,

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