PBGC Issues Final Rule on Withdrawal Liability and Annual Payments

The Pension Benefit Guaranty Corporation (PBGC) is issuing a final rule amending its regulations on Allocating Unfunded Vested Benefits to Withdrawing Employers (29 CFR part 4211) and Notice, Collection, and Redetermination of Withdrawal Liability (29 CFR part 4219). The rule provides simplified methods for determining withdrawal liability and annual payments a plan sponsor may adopt to satisfy these statutory requirements. 

The rule implements statutory changes affecting the determination of an employer’s withdrawal liability and annual withdrawal liability payment amount and provide simplified methods for a plan sponsor to disregard:

• reductions and suspensions of nonforfeitable benefits in determining the plan’s unfunded vested benefits for purposes of calculating withdrawal liability; 
• certain contribution increases if the plan is using the presumptive, modified presumptive, or rolling-5 method for purposes of determining the allocation of unfunded vested benefits to an employer; and
• certain contribution increases for purposes of determining an employer’s annual withdrawal liability payment.

Effective and Applicability Dates

The final rule is effective 30 after the day it is published in the Federal Register, which is scheduled for Jan. 8, 2021. It applies to employer withdrawals from multiemployer plans that occur in plan years beginning on or after that date.