The Employee Benefits Security Administration has published a batch of advice aimed at sponsors and administrators of defined benefit pension plans.
The advice, contained in EBSA Field Assistance Bulletin 2009-01, could help plans implement the defined benefit plan annual funding notice requirements included in the Pension Protection Act of 2006.
The PPA changes apply to plan years beginning after Dec. 31, 2007.
EBSA’s parent, the U.S. Labor Department, has not yet written regulations regarding compliance with the new PPA notice rules.
Many employers and administrators have expressed concerns “about the imminent compliance date of the new annual funding notice requirements, the absence of regulatory guidance from the [Labor] Department, and the cost and burdens attendant to annual funding notice compliance efforts prior to the adoption of annual funding notice regulations and the issuance of a model annual funding notice by the department,” Robert Doyle, an EBSA director, writes in the bulletin.
EBSA has decided to provide guidance concerning “good faith compliance” with the new rules, Doyle writes.
“Pending further guidance, the department will, as a matter of enforcement policy, treat a plan administrator as satisfying the requirements … if the administrator has complied with the guidance contained in this memorandum and has acted in accordance with a good faith, reasonable interpretation of those requirements with respect to matters not specifically addressed in this memorandum,” Doyle writes.
The bulletin includes one model notice designed for single-employer defined benefit plans and a second model notice designed for multiemployer defined benefit plans.
“Use of the models is not mandatory, and plans may use other notice forms to satisfy the new annual funding notice content requirements,” Doyle writes. “However, pending further guidance, use of an appropriately completed model notice will, as a matter of department enforcement policy, satisfy the content requirements of [the new notice rules].”
In the questions-and-answers section, Doyle notes that a defined benefit plan administrator must send an annual funding notice to the Pension Benefit Guaranty Corp., the agency that insures pension benefits.
“However, pending further guidance, the department will not take any enforcement action regarding the failure to furnish an annual funding notice to the PBGC for a single-employer plan with liabilities that do not exceed plan assets by more than $50 million, provided that the administrator furnishes the latest available annual funding notice to the PBGC within 30 days of receiving a written request from the PBGC,” Doyle writes.