In a big win for ACOPA and the lobbying efforts of its members, the Pension Benefit Guaranty Corporation (PBGC) is looking for comments on a proposal that would allow employers to request coverage determinations prior to establishment of a plan, as part of a new formal process where the PBGC would accept requests for coverage determinations for defined benefit pension plans.
The PBGC has submitted to the Office of Management and Budget (OMB) for review under the Paperwork Reduction Act draft forms and instructions to be used for coverage determinations, including a supporting statement addressing public comments on the proposed forms and instructions, and noting specifically the comment requesting that employers be allowed to request coverage determinations before creating and sponsoring pension plans.
The American Retirement Association (ARA) submitted a comment letter to the PBGC in February on this topic. In that letter, the ARA/ACOPA explained that “…whether or not a plan is covered by the PBGC is often a question raised before the decision to create a plan has been made, and this question can impact the decision itself to create a plan as well as its design.” As the PBGC notice acknowledges, the letter recommended the flexibility to allow prospective coverage determinations before a plan is fully established, that can be requested at the option of the plan sponsor filing for the coverage determination.
The letter recommended that the PBGC indicate in the instructions whether the form is required to be used when the plan sponsor wants to request a coverage determination, and if so that the instructions indicate that the plan sponsor should not request a coverage determination using a method other than the proposed form, such as an email request. The ARA also recommended that the PBGC make its coverage determinations public, either on an individual plan basis or through periodic reporting. “Because the redaction process is lengthy and complex, ARA recommends that the PBGC issue a periodic report summarizing their findings on coverage determinations, perhaps on a quarterly or semiannual basis.”
The ARA comment letter also made a number of general comments.
According to a press release, although PBGC cannot provide coverage determinations for plans that do not exist, the supporting statement explains that, in limited situations, employers will be able to use the soon-to-be issued coverage forms to request an Opinion Letter about whether a plan in the process of being created is likely to be covered by PBGC.
Comments are due to OMB by June 7, 2019.
Information on how to comment is included in the related Federal Register notice.
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