The Pension Benefit Guaranty Corporation (PBGC) on Nov. 16 announced that it has revised its guidance related to the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act extended contribution due date to incorporate the IRS’ treatment of prior year contributions made by Jan. 4, 2021 as provided in IRS Notice 2020-82.
The IRS had announced in Notice 2020-82 that it has extended the deadline by which contributions to a single-employer pension plan can be made under the CARES Act. The IRS issued Notice 2020-82 on Nov. 16.
The PBGC update includes revisions on its Practitioner FAQs page, which includes guidance concerning missed contribution reporting requirements:
How does this delay impact the requirement to report a failure to make a minimum required contribution provided in section 4043.25 of PBGC’s Reportable Events regulation (29 CFR part 4043)?
Because the due date for contributions that would otherwise have been due in 2020 has been extended until January 1, 2021, the event cannot be triggered before then. If required contributions are made by that date, there is no event and no need to notify PBGC.
Note re: impact of IRS Notice 2020-82. On November 16, 2020, IRS announced that contributions subject to the CARES Act extended due date of January 1, 2021 are considered timely if made by January 4, 2021. As a result, whether the event is triggered on January 1 is dependent on whether the required contribution (including the interest adjustment specified in IRS Notice 2020-82) is made by January 4th.
If a required contribution that would otherwise have been due during 2020 is not made by January 4, 2021, when is reporting due and which form should be used?
If the accumulated value of missed contributions exceeds $1 million, a Form 200 is due on January 11, 2021 (i.e., 10 days after the January 1st due date, not 10 days after January 4th). Otherwise, unless one of the waivers provided in section 4043.25(c) of PBGC’s Reportable Events regulation (29 CFR part 4043) applies, a Form 10 must be submitted. In general, the Form 10 is due 30 days after the due date for the missed contribution, but because January 31 is a Sunday, the due date moves to the next business day, February 1, 2021. As always, PBGC encourages filers to use the e-filing portal to prepare and submit all reportable event filings.
The PBGC also has revised Technical Update 2020-20, which concerns the extended due date for inclusion of prior year contributions. The PBGC issued the Technical Update on Sept. 23, 2020 to provide guidance and relief related to the timing of contribution receipts includable in the asset value used to determine variable rate premiums due in 2020. The relief in the Technical Update generally enables plan sponsors to take advantage of the CARES Act extension and still ultimately pay the same variable-rate premium they would have owed if the plan received all prior year contributions by the regular contribution due date.
For premium filings due on or after March 1, 2020 and before Jan. 1, 2021, the date by which prior year contributions must be received by the plan to be included in plan assets under Section?4006.4(c) of the PBGC’s premium rates regulation now is extended to Jan. 4, 2021.
Because of this relief, the discounted value of a prior year contribution received after the premium is filed and on or before Jan. 4, 2021, may be included in the asset value used to determine the variable-rate premium. Thus, if such a contribution is made, the premium filing may be amended to revise the originally reported asset value and resulting variable-rate premium.
The PBGC says that this relief has no effect on premium due dates (e.g., for calendar year plans, the 2020 premium is due Oct. 15, 2020) and does not permit a premium filing to reflect a contribution that has not yet been made.
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