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The Internal Revenue Service has posted on its Web site a sample
notice to aid plan sponsors in satisfying the
requirements of the IRS's proposed regulations on new
safe-harbor qualified automatic contribution arrangements (QACAs) and on
eligible automatic contribution arrangements (EACAs). Use
of this sample notice also satisfies the notice requirements
under ERISA sections 404(c)(5) and 514(e)(3) and DOL’s final
rule relating to Default Investment Alternatives Under
Participant Directed Individual Account Plans.
The Internal Revenue Service has posted on its Web site a sample
notice to aid plan sponsors in satisfying the requirements of the IRS's proposed regulations on new
safe-harbor qualified automatic contribution arrangements (QACAs) and on eligible automatic contribution arrangements ( EACAs). Use
of this sample notice also satisfies the notice requirements under ERISA sections 404(c)(5) and 514(e)(3) and DOL’s final
rule relating to Default Investment Alternatives Under Participant Directed Individual Account Plans.
Multi-employer Plan Elections under Section 1106 of PPA: On June 15, 2007, PBGC published a Notice under the Paperwork Reduction Act informing the public that it is requesting that the Office of Management and Budget (OMB) approve procedures on multi-employer plan elections under section 1106 of the Pension Protection Act of 2006. Section 1106, which was modified by an amendment in the May 25, 2007, supplemental spending legislation (Pub L. 110-028), allows certain single-employer plans to elect to be multi-employer plans pursuant to procedures prescribed by PBGC. The procedures were revised to take into account the recent statutory changes and the four comments received in response to the PBGC's April 13, 2007, Paperwork Reduction Act Notice. To obtain a copy of the request for approval, including the revised procedures, you may fax a request to the Disclosure Division of the Office of the General Counsel at 202.326.4042 or call them at 202.326.4040. The Disclosure Division will e-mail, fax, or mail the procedures and other information to you, as you request. Comments to OMB on the draft procedures are due by July 16, 2007.
Variable rate premium proposed rule: On May 31, 2007, PBGC published a proposed rule to amend PBGC's regulations on Premium Rates and Payment of Premiums. The amendments would implement provisions of the Pension Protection Act of 2006 that change the variable-rate premium for plan years beginning on or after January 1, 2008, and make other changes to the regulations. Public comments on the proposed rule are due by July 30.
Premium proposed rule: On February 20, 2007, PBGC published a proposed rule to amend PBGC's premium regulations to implement certain provisions of the Deficit Reduction Act of 2005 and the Pension Protection Act of 2006 that are effective beginning in 2006 or 2007. The provisions that would be implemented by this rule change the flat premium rate, cap the variable-rate premium for plans of certain small employers, and create a new "termination premium" that is payable in connection with certain distress and involuntary plan terminations. Public comments on the proposed rule are due by April 23.
Revisions to Technical Update 06-4: On August 30, 2006, PBGC issued Technical Update 06-4, Use of Corporate Bond Rate for Certain PBGC Purposes, which explains how the provisions of the Pension Protection Act of 2006 (“PPA”) relating to PBGC’s required interest rate for determining variable-rate premiums apply to certain PBGC requirements (in particular, reporting and disclosure requirements). The PBGC has revised this Technical Update: (1) to make some minor clarifying changes, and (2) to provide guidance on how the PBGC will apply Technical Update 96-7, Waiver for Small Employer Reporting of Missed Quarterly Contributions in light of PPA’s repeal of ERISA section 4011 (Notice to Participants) for plan years beginning after December 31, 2006.
Small Employer Variable-Rate Premium Cap: The Pension Protection Act of 2006 caps the variable-rate premium for certain plans maintained by small employers, effective for plan years beginning in 2007 and later. The cap applies to a plan if the aggregate number of employees of the contributing sponsors of the plan and all members of their controlled groups is 25 or fewer. For these plans, the variable-rate premium is capped at a per-participant rate of $5 multiplied by the number of plan participants. Thus, a qualifying small-employer plan would pay, at most, a total variable-rate premium calculated by multiplying the capped per-participant rate ($5 times the number of plan participants) by the number of plan participants, or $5 times the square of the participant count. For example, if the participant count is 20, the cap on the variable-rate premium is $2,000 [($5 x 20) x 20, or $5 x 202 = $2,000].
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