PBGC Allows Amendment to Premium Filing to Reflect Later Contributions

As discussed in our previous posts, earlier this summer the PBGC issued FAQs that gave plan sponsors until October 15, 2020, to make their 2019 contributions and have that contribution reflected in the calculation of the variable rate premium due on that date.  Under the FAQs, any contributions made for 2019 after the October 15, 2020 deadline could not be used in calculating the variable-rate portion of the sponsor’s PBGC premium, even if the contribution was made before the CARES Act deadline of January 1, 2021.  The FAQs specifically rejected the idea of making an amended premium filing to reflect the later contribution.

This week the PBGC reversed itself for premium filings that are due on or after March 1, 2020 and before January 1, 2021.  Under the new guidance, contributions may be included in plan assets for calculating the variable rate premium if received by January 1, 2021. However, the premium filing may not anticipate future contributions.  Instead, plans will be able to amend the premium filing to revise the originally reported asset value once all prior year contributions have been made, and receive a refund of the previously calculated premium.

The new guidance does not impact premium due dates (e.g., for calendar year plans, the 2020 premium is due October 15, 2020) and, as pointed out above, does not allow plan sponsors to reflect unmade contributions on their premium filings. For contributions made after October 15, 2020, plan sponsors will need to amend their premium filing and, if applicable, request a refund of any premium overpayment.  In addition, the plan will need to amend its Form 5500 to reflect the contributions made after the filing date.

If you have any questions about the due date for premium filings or making of contributions, please contact any of the Graydon benefits team.