PBGC Grants One-Time 4010 Filing Waiver

The Pension Benefit Guaranty Corporation (PBGC) on Aug. 7 announced that it is granting a one-time waiver of filing requirements under ERISA Section 4010 for certain filers. 

The PBGC issued the relief in PBGC Technical Update 23-1. It provides a one-time waiver of the reporting requirement in light of what it terms “atypical market conditions” in late 2022 and early 2023 that affect assets and liabilities for purposes of determining whether such a filing is required. 

The Filing Requirement 

ERISA Section 4010 requires a contributing sponsor of certain underfunded single-employer plans, and members of the contributing sponsor’s controlled group, to report identifying financial and actuarial information to the PBGC. They generally must do so if one or more plans sponsored by a member of the controlled group has a funding target attainment percentage (4010 FTAP) below 80%.

For a given plan year, the 4010 FTAP is determined the same way that the funding target attainment percentage provided under ERISA Section 303(d)(2) and Internal Revenue Code Section 430(d)(2) is determined unless: 

• the interest rate stabilization provisions of ERISA Section 303(h)(2)(C)(iv) and IRC Section 430(h)(2)(C)(iv) are disregarded; 
• the value of plan assets determined under ERISA Section 303(g)(3) and IRC Section 430(g)(3) may (but need not) be substituted for the asset value determined without regard to the interest rate stabilization provisions; and
• any elections (or deemed elections) under RISA Section 303(f) and IRC Section 430(f) that affect the value of such balances as of the beginning of the plan year must be reflected, regardless of when the elections (or deemed elections) are made.

The PBGC waives the reporting requirement if the aggregate 4010 funding shortfall1 does not exceed $15 million. 

Atypical Market Conditions

The PBGC says that given what it calls “the atypical and almost unprecedented interaction of market conditions of late 2022/early 2023,” as well as the way those conditions affect the liability and asset measures used to determine the 4010 FTAP, it expects that:

• many plans with valuation dates during that time will have a 4010 FTAP “well below 80%,” and
• the 4010 FTAP for many of those plans would be “significantly higher” if the 4010 FTAP had to be determined without regard to asset or discount rate smoothing.

The One-Time Waiver

In recognition of these conditions, the PBGC is providing a one-time waiver of the 4010 filing requirement for filers meeting specified criteria.

It is waiving the requirement for filers for an applicable information year if all of the following criteria are satisfied:

• The 4010 filing requirement did not apply for the five consecutive information years immediately preceding the applicable information year.
• Either:
  • none of the includable plans has a market-based 4010 FTAP below 85%, or
  • the market-based aggregate 4010 funding shortfall does not exceed $15 million.
• Every includable plan with a 4010 FTAP below 80% (i.e., a plan that would trigger the 4010 filing requirement if not for this waiver) has a valuation date on or after Oct. 1, 2022 and on or before March 1, 2023.

Entities using this waiver must notify the PBGC no later than 15 days before the date the 4010 filing would have been due if not for the waiver.