The Pension Benefit Guaranty Corporation (the “PBGC”) recently published guidance significantly simplifying its program that grants (to defined benefit plans) relief from certain legal requirements in the event of a natural disaster. As background, the PBGC collects premium payments from defined benefit plan sponsors, which the PBGC uses to pay monthly retirement benefits (up to a guaranteed maximum) to certain plan participants after their plan terminates. As further background, in the event of a “federally declared disaster” under the Internal Revenue Code (the “Code”), affected retirement plan sponsors can obtain temporary relief from certain legal requirements (e.g., the requirement to pay PBGC premiums by a certain date).
Under previous PBGC procedures, the PBGC posted a disaster relief announcement on its website each time the IRS published a disaster relief news release that included filing extensions for the Form 5500 Series of tax returns. Each PBGC disaster relief announcement copied the disaster, disaster area, and relief period from the relevant IRS news release. Thus, because those PBGC announcements relied on data from IRS news releases, those PBGC announcements were always issued later than IRS news releases. As a result, PBGC filers had to wait for the PBGC to respond to each IRS disaster relief news release before they could be certain that the PBGC was providing disaster relief applicable to their situation.
Under the new procedures, the PBGC will simply refer plans that are subject to its requirements directly to IRS disaster relief news releases. That means PBGC filers will no longer have to wait for the PBGC to act, because PBGC disaster relief will now be tied to IRS news releases. Also, instead of former PBGC relief in this regard, which was described separately for various legal provisions (e.g., premiums, single-employer plan terminations, reportable events notices, annual employer reporting), the new simpler approach addresses the fact that deadline extensions are the end of the IRS relief period for due dates that fall within that period.
In short, under this new guidance, “unless a filing is on the ‘‘Exceptions List’’…filers can be assured that PBGC grants disaster relief when, where, and for the same relief period that IRS grants relief for taxpayers affected by a disaster. Filers will not have to wait for PBGC to issue a separate announcement.” The “Exceptions List” is comprised of filings that involve particularly important or time-sensitive information where there might be “a high risk of substantial harm to participants or PBGC’s insurance program,” such as notices of large missed contributions under ERISA. However, this new guidance points out that even in those cases, plan sponsors can request relief on a case-by-case basis.
Here is a link to this PBGC guidance: https://www.federalregister.gov/documents/2018/07/02/2018-14125/pension-benefit-guaranty-corporation-disaster-relief