PBGC final regs streamline certain multiemployer plan reporting rules

The Pension Benefit Guaranty Corporation (PBGC) has finalized amendments to its multiemployer plan regulations designed to make the disclosure of information to the PBGC and to plan participants more efficient and effective and to reduce the administrative burden on plan sponsors. The final regulations reduce certain requirements for multiemployer plans that are terminated by mass withdrawal and mergers and transfers among multiemployer plans.

The final regulations reduce the number of actuarial valuations required for certain small terminated but not insolvent plans, shorten the advance notice filing requirements for mergers in situations that do not involve a compliance determination, and remove certain insolvency notice and update requirements. The final regulations, which are unchanged from the proposed regulations, are effective June 27, 2014.

Annual valuations

When a multiemployer plan terminates, the plan must perform an annual valuation of the plan’s assets and benefits. The final regulations allow valuations for plans that were terminated by mass withdrawal, but are not insolvent, where the value of nonforfeitable benefits is $25 million or less to be performed every three years instead of annually as required under the current rules.

Plans can move in and out of the three-year or annual valuation cycle, as applicable, as the value of nonforfeitable benefits changes. Thus, a plan that had been performing new valuations every three years will be required to perform valuations annually if the next valuation indicates that the value of nonforfeitable benefits exceeds $25 million. Similarly, a plan that had been performing the valuation annually will only have to do the next valuation in three years if the most recent valuation shows the value of nonforfeitable benefits to be $25 million or less. According to the PBGC, this change would target the plans that expose the Agency to larger liability, while reducing the burden on plans that present smaller exposure.


Under the current rules, a merger or a transfer of assets and liabilities between multiemployer plans must satisfy certain requirements, including a requirement that plan sponsors of all plans involved in a merger or transfer must jointly file a notice with the PBGC 120 days before the transaction. The final regulations shorten the notice period to 45 days where no compliance determination is requested.

Many merger requests are received by the PBGC with less than 120 days notice and ask for a waiver of the notice requirement so that the merger can proceed as of the end of the plan year. The change to 45 days would avoid the need for a waiver and still allow the PBGC enough time to review these later filed requests.

Insolvency notices

Prior to the final regulations, terminated multiemployer plans that determined that they would be insolvent for a plan year were required to provide a series of notices and updates to notices to the PBGC and participants and beneficiaries, including a notice of insolvency. The PBGC’s experience has been that once a multiemployer plan becomes insolvent, it will remain so. Thus, once a plan has made the initial notices, there is little need to require similar subsequent notices. In addition, the notice requirements can be detrimental to plan participants because the costs of compliance may deplete assets that otherwise would be available to pay plan benefits. Thus, the final regulations eliminate the requirement to provide annual updates to the notice of insolvency.


The amendment that changes the annual valuation requirement for terminated but not insolvent plans where the value of nonforfeitable benefits is $25 million or less is applicable to the first post-termination valuation after June 27, 2014. The amendment that changes the notification requirements for a proposed merger is applicable to mergers planned to be consummated on or after the 45th day after June 27, 2014. The amendment that eliminates the annual update notices to the PBGC and participants and beneficiaries is applicable as of June 27, 2014.

Source: 79 FR 30459, 5/28/14.

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