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How MAP-21 Relates to PBGC Reporting Requirements

Pension funding stabilization for single-employer defined benefit pension plans is the goal of special rules issued by the IRS in Notice 2012-61 dated September 11, 2012.

The IRS guidelines relate to amendments to the Internal Revenue Code (Code) and the Employee Retirement Income Security Act (ERISA) made by the Moving Ahead for Progress in the 21st Century Act (MAP-21), Pub. L. No.112-141. MAP-21 was enacted July 6, 2012, and contains a number of pension provisions in Division D (Finance).

This article examines some of the ways that MAP-21 relates to annual financial and actuarial reporting requirements under section 4010 of ERISA and part 4010 of Pension Benefit Guaranty Corporation (“PBGC”) regulations.

The PBGC reports that the first 2012 filings are due by April 15, 2013. Three situations that will trigger additional PBGC reporting requirements under ERISA 4010 are:

1. Large missed contribution (over $1 million)
2. Large outstanding funding waiver
3. FTAP for any plan in control group of less than 80%

The requirement to file a 4010 form is waived for a person for an information year if the following two conditions apply:

• Reporting is not required under ERISA sections 4010(b)(2) or (b)(3)4 for the person for that information year; and
• The FTAP (for the plan year ending within that information year) of each plan maintained by the person's controlled group, determined without regard to the MAP-21 stabilization rules, would be at least 80 percent if the value of plan assets used for minimum funding purposes were substituted for the value described in Q&A NA-3 of IRS Notice 2012-61.

MAP-21 did change the 80% FTAP (funding target attainment percentage) gateway test. The Pension Protection Act of 2006 uses FTAP to measure a plan’s financial health. Ratings under 80% may trigger the need for additional PBGC filings by the plan sponsor. For 4010 purposes, FTAP is determined without regard to the stabilization rules.

A waiver applies to the 80% FTAP reporting requirement if the aggregate underfunding for all plans is less than or equal to $15 million. This waiver is applicable only to the 80% FTAP gateway test.

MAP-21 did not change any rules regarding which plans need to report actuarial information. Furthermore, MAP-21 had only minor impact on actuarial information to be reported. Also, MAP-21 did not change the aggregate $15 million waiver.

December, 2012

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.For specific technical or legal advice on the information provided and related topics, please contact the author.

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