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PBGC Form 4010 Proposals Could Result in Increased Filings for 2016

Will more corporations need to file Form 4010 with the Pension Benefit Guaranty Corporation (PBGC) for their pension plans for federal fiscal year (FY) 2016? Jeffrey Kamenir, Principal and Consulting Actuary in the Chicago Office of Milliman USA, Inc., addressed the possibility of increased reporting responsibilities for more companies in a recent Retirement Town Hall blog post.

The PBGC is responsible for monitoring poorly funded pension plans, Kamenir notes, and part of the way in which it exercises that duty is by requiring a special filing under ERISA Section 4010. Such filings require an employer to submit financial and actuarial information about the plan, as well as data about the company’s finances and generally are due three and a half months after the end of the fiscal year.
Kamenir outlines the current rules:

  • employers whose pension plans are less than 80% funded must report under Section 4010 unless they qualify for certain limited exemptions;
  • plans with less than 500 participants are exempt if they are underfunded by $15 million or less; and
  • companies that sponsor one or more pension plans with a combined participant count of 500 or more are exempt if their combined underfunding is no more than $15 million.

But the PBGC issued proposed guidance in July 2015, Kamenir notes, which Kamenir says likely would result in more companies having to file a Form 4010 for FY 2016 and beyond. This, he says, is because under the proposals, the underfunding exemption for plans with more than 500 participants would be eliminated beginning with FY 2016.

Kamenir suggests that companies that could be affected by that elimination strive to achieve funding levels of at least 80% — or face the filing consequences.