PBGC Proposes Modifications to Form 5500, Schedule R

The Pension Benefit Guaranty Corporation (PBGC) has proposed modifications to the Form 5500 and also to its Schedule R (Retirement Plan Information) for reporting about the 2020 plan year.

Form 5500

The PBGC is proposing minor modifications to the Form 5500 Series to improve the accuracy of reported information.

These include:

Form 5500-SF Instructions. Because plans that file Form 5500-SF are not required to complete Schedule R, the PBGC is proposing to revise line 11 of the 2019 Form 5500-SF to obtain the same information from PBGC-covered single-employer plans that do not have to complete Schedule R.

Form 5500, Schedule SB and its Instructions. On line 23 of Schedule SB, plans indicate which mortality table was used to determine the funding target and target normal cost by checking the applicable box. The PBGC is proposing to revise line 23 to eliminate the mortality table options that are not available for plan years after 2018.

Form 5500, Line 2d. For the 2019 Form 5500, line 2d, the PBGC is proposing revisions to the instructions to clarify the requested business code description. It is proposing modifications to the instructions for line 2d to better explain which code should be entered.

Form 5500, Schedule MB, Line 2b. The PBGC is proposing to revisions to the instructions for Schedule MB’s line 2b to better explain the data that needs to be reported regarding the number of participants and beneficiaries per category and the current liability. The PBGC says that it has found several filings where a filer failed to report data of part of item 2 (that is, left an item blank) when other data reported makes it clear that this entry should have been completed. The revised language is intended to result in filers being more likely to report the correct data.

Schedule R

The PBGC has proposed modifications to Schedule R and its related instructions that would affect multiemployer defined benefit plans covered by Title IV of ERISA.

PBGC is proposing to modify Schedule R to provide multiemployer plans with a choice of the last contributing employer counting method and two other proposed counting methods:

1. the alternative method
2. the reasonable approximation method

PBGC anticipates that providing plans with three available counting methods will allow each plan to choose one that will be most accurate and least burdensome for the plan to count its inactive participants.

The Alternative Method. Under the alternative method, a plan would count only inactive participants whose last contributing employer and all prior contributing employers had withdrawn from the plan by the beginning of the relevant plan year. Under this method, the plan would review the list of all contributing employers (employers that had not withdrawn from the plan by the beginning of the relevant plan year) and include on Line 14 only the inactive participants who had no covered service with any of these employers.

The Reasonable Approximation Method. Under the reasonable approximation method, a plan that is unable to use the other two counting methods must make a reasonable, good faith effort to count inactive participants to satisfy the requirements of Section 103(f)(2)(C) of ERISA. The plan would also be required to provide an attachment that explains the plan’s approximation method, including a description of the data and a breakdown describing the number of clearly identified inactive participants and the number of estimated inactive participants.

The PBGC also is proposing that when a plan reports a number on line 14b or 14c that differs from the number it reported for the plan year immediately preceding the current plan year, it would be required to submit an attachment with an explanation of the reason for the change.

Comments Welcome

The PBGC will accept comments from the public on these proposals. Comments must be submitted by Dec. 13, 2019.

Comments should be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Pension Benefit Guaranty Corporation, via electronic mail at [email protected] or by fax to (202) 395-6974.