Who Furnishes the Notice? The administrator of an PBGC covered defined benefit plan (single employer, multiple employer or multiemployer).
To Whom do they Furnish the Notice? The PBGC, each plan participant and beneficiary, each labor organization representing any of those participants or beneficiaries, and for multiemployer plans to each sponsoring organization with an obligation to contribute.
Who will find the Notice useful? No one that I can discern. This is another example of Congress adding stuff to an already overburdened statute known as ERISA largely for show. Perhaps the PBGC will find value in this, but I expect that for Notices that are distributed in the workplace on paper that the trash and recycle bins will be particularly filled on the days of distribution. Participants just don't know what this stuff means, and generally, they just don't care.
What goes in the Notice? A lot of stuff like:
- Name of the plan
- Name, address and telephone number of the administrator and the principal administrative officer if different
- Each plan sponsor's name and EIN and the plan number
- Whether the plan's FTAP (funding target attainment percentage) (single-employer plans only) is at least 100% for the plan year and for each of the two preceding plan years, and to the extent that it is not, the actual FTAP for those years.
- Multiemployer plans must do the same thing for funded percentage
- Single employer plans must specify for the current plan year and each of the two preceding plan years
- plan assets separating out and prefunding balance and any carryover balance
- plan liabilities under PPA (at risk measure if the plan is at risk)
- Single employer plans must also specify assets and liabilities as of the last day of the plan year
- Multiemployer plans must similarly specify the assets and liabilities for the current plan year as well as the two immediately preceding plan years and as of the last day of the current plan year
- Certain demographic information, mostly counts by active, retired, term vested, etc
- Statements of the plan's funding policy, investment policy and asset allocation
- Multiemployer plans must disclose whether they were in endangered or critical status
- A disclosure of the nature of and the effect of any material events (e.g., plan amendments or assumption changes) that could materially change the plan's funded status by the end of the year following the plan year
- A summary of the rules governing plan termination (single employer) and reorganization (multiemployer)
- A general explanantion of PBGC guarantees
- If applicable, a notice that a 4010 filing was required
- Any other information that the administrator thinks would be helpful in understanding the rest of the notice
Plans that had more than 100 participants on any day of the plan year must furnish the notice within 120 days after the end of the plan year. Smaller plans have until the extended due date for filing the Form 5500 for the plan.
There are limited exceptions to the filing requirement for particularly well-funded plans or plans without significant unfunded liabilities, as well as certain special cases like commercial passenger airlines and airline caterers.
So, I must ask: are these notices useful? In my opinion, they are not. Do they create significant burden for plan administrators? Of course, they do. Is this just another example of how the Pension Protection Act only served as an additional nail in the coffin for private pension plans? Do I really need to answer that question?