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PBGC Officials Focus on Filing Issues, Missing Participants

At an April 11 session of the Enrolled Agents Meeting held by the Conference of Consulting Actuaries and the American Academy of Actuaries in Washington, DC, a panel of PBGC officials discussed compliance issues regarding single-employer plans, with a focus on late filings and missing participants.

PBGC panelists included Senior Advisor for External Affairs Anne Henderson; Senior Advisor, Corporate Finance and Restructuring Kristina Archeval; and Acting Chief Policy Actuary Amy Vierner.

Filing Issues

Filings in calendar year 2017 continued the decline they showed in 2016. While the PBGC has seen an increase in filings concerning active participant reductions, it also reports fewer filings for failure to make required contributions and changes in contributing sponsors or controlled groups. And it says it has received very few filings for:

  • the inability to pay benefits when they are due;

  • distributions to a substantial owner;

  • liquidations; and

  • applications for a minimum funding waiver.

But making a filing doesn’t necessarily mean it’s done correctly. Archeval said that approximately one-third of the filings the PBGC receives are filed late, and the percentage is even higher — almost half — for missed contribution filings. And small plans account for most late filings, the PBGC has found. The most common reason for late filings, Archeval reported, is that the party that filed late doesn’t file often, and consequently did not leave enough time to do so.

And some filings simply are not made. Archeval said that checking Forms 5500 is one way that the PBGC discovers this failure. And she reminded attendees that filings are due until the plan actually terminates, even if it has been in contact with the PBGC.

There are steps that can be taken to prevent filing errors, Archeval noted. She suggested the following.

  • Have a conversation with an employer and a plan sponsor about reportable events.

  • Use the quick reference sheets the PBGC provides (note: the PBGC says they are not yet available yet but will be soon).

  • Encourage sponsors to provide notice to third party administrators and retirement plan professionals about corporate events and plan events.

  • Use the new waivers the PBGC provides in order to alleviate the need to constantly monitor for certain events.

  • Stress the importance of filing on time.

Missing Participants

Guidance on missing participants is on the IRS and Treasury “to do” list, and a Treasury official has alluded to work to be done on the matter with the Department of Labor. But not to be outdone, the PBGC is a part of the effort, too. Its Missing Participant Program had covered only PBGC-insured single-employer plans that were terminating. But the program has since been expanded, and now it also covers the following plans that end on or before Jan. 1, 2018:

  • defined contribution plans;

  • small professional services DB plans that aren’t insured by the PBGC; and

  • multiemployer DB plans.

But the simple fact that the program now encompasses both DB and DC plans should not lead one to assume that its terms are uniform for both kinds of plans.

For both kinds of plans, a distributee is considered to be “missing” if he or she cannot be located or is unresponsive. That includes those who fail to turn in necessary paperwork or who do not cash checks sent to their last known address. But Vierner observed that while both kinds of plans must conduct a diligent search to locate a missing distribute, what that entails is not the same for both.


                          Diligent Search, DB vs. DC Plans

Type of Plan     Unlocatable
   Follow EBSA
   Follow PBGC Rules
   Regulations Dictate
 DB Plans    required         no                 yes
 DC Plans    required         yes                 no

Vierner also balanced the discussion of compliance and enforcement with an observation that the PBGC intends to be helpful as well. “There are lots of filing options because we want to make it easy for people,” she remarked.