The Pension Benefit Guaranty Corporation (PBGC) – the federal agency created by the Employee Retirement Income Security Act of 1974 (ERISA) to insure certain defined benefit pension plans offered by private-sector employers – has announced that it will extend deadlines for upcoming premium payments and certain other required plan filings under Title IV of ERISA to July 15, 2020, as a result of the COVID-19 pandemic.
PBGC’s announcement comes shortly after the Internal Revenue Service (the “IRS”) issued Notice 2020-23, which extends certain deadlines, including filing extensions for the Annual Return/Report of Employee Benefit Plan Form 5500 Series, to July 15, 2020 due to the pandemic. Click here to read our client alert on IRS Notice 2020-23. Under PBGC’s disaster relief policy when IRS grants disaster relief because of a major disaster that includes a filing extension for Form 5500 returns, PBGC will automatically grant disaster relief extending deadlines for certain required PBGC filings, premium payments or other actions.
Requirements for PBGC Disaster Relief
PBGC disaster relief applies only if all the following requirements are met:
- The person responsible for a filing, payment, or other action under PBGC regulations, e.g., a plan administrator or contributing plan sponsor, is located in the disaster area. Or, a person responsible for providing information or other assistance needed for the filing, payment, or other action, e.g., a service provider (such as the plan’s enrolled actuary) or bank, is located in the disaster area.
- The due date of the filing, payment, or other action falls within the relief period.
- The filer notifies PBGC of the filer’s eligibility for disaster relief on or before the last day of the relief period.
- The filing or action is not described in the PBGC’s Exceptions List.
Disaster Relief Granted
If the requirements for relief listed are met, the due date for the filing, payment, or other action is extended to the last day of the relief period. Accordingly:
- A filing will not be subject to a late filing penalty under ERISA sections 4071 or 4302 for the relief period.
- A premium payment will not be subject to late payment penalty or interest charges under ERISA section 4007 for the relief period.
- The extended due date for a filing or other action will apply for purposes of calculating any other due date that is based on the due date of the filing or other action.
PBGC COVID-19 Pandemic Disaster Relief
On April 10, PBGC issued an Announcement providing relief to mitigate the effects of the COVID-19 pandemic by allowing additional time to pay PBGC premiums and submit certain filings. The Announcement is keyed to IRS Notice 2020-23 which extends the deadlines for certain time-sensitive tax-related actions, including filing Forms 5500, related to employee benefits listed under Revenue Procedure 2018-58 to July 15, 2020. Both the PBGC Announcement and IRS Notice were precipitated by the President’s March 13 COVID-19 national emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Disaster Relief Act).
The PBGC disaster relief means that deadlines for certain PBGC filings, payments and other actions that would otherwise have been due on or after April 1, 2020, through July 14, 2020, are now extended to July 15, 2020 (or, if extended, the last day of the IRS disaster relief period). As a result, plan sponsors and administrators will not be subject to late filing penalties under ERISA sections 4071 or 4302, or late premium payment penalties under ERISA section 4007 for the disaster relief period.
PBGC’s disaster relief includes, among other things, extensions for:
- Financial and Actuarial Information Reporting (4010 filings) for certain underfunded pension plans. Ordinarily, the deadline to submit a 4010 filing is 105 days after the end of the “information year” which is generally the calendar year, or April 14. However, that deadline is now extended to July 15.
- Comprehensive Premium Filings which include the submission of required data and any required premium payment that were due on or after April 1 and through July 14.
- Certain reportable events such as an active participant reduction or a controlled group breakup for which a post-event notice is due between April 1 and July 14.
- Filing/reporting deadlines which are calculated based on the due date of another filing/reporting that is subject to disaster relief, in which case the deadline is calculated based on the end of the relief period. For instance, the deadline to file certain actuarial information 15 days after the filing of a Form 5500 would now be calculated based on the extended deadline for Forms 5500 in accordance with IRS Notice 2020-23.
However, the deadline extensions do not apply to the following filings and actions:
- Advance notices of reportable events (PBGC Form 10-Advance).
- Notices of missed contributions over $1 million (PBGC Form 200).
- Post-event notices for the following five reportable events (PBGC Form 10)
- Failure to make required contributions under $1 million
- Inability to pay benefits when due
- Loan default
- Insolvency or similar settlement
- Actions related to distress terminations for which PBGC has issued a distribution notice.
Notifying PBGC of Your Eligibility for Disaster Relief
In order to take advantage of this disaster relief, the plan sponsor or administrator must notify PBGC of its eligibility for relief as soon as reasonably practicable but no later than the last day of the disaster relief period. For most filings, unless PBGC instructs otherwise, the filer should send an email to PBGC notifying the agency of the filer’s eligibility for relief, which contains (1) the number of the applicable IRS news release announcing the disaster relief (Notice 2020-23), (2) plan information (i.e., plan name, plan number and EIN), and (3) the name and address of the plan sponsor, administrator, or service provider (such as the plan’s enrolled actuary) affected by the disaster.
If PBGC’s disaster relief does not automatically extend a particular deadline, the PBGC may grant relief on a case-by-case basis. Interested filers may request relief by following the instructions for requesting an extension or waiver in the regulations or instructions for a filing. If no such guidance is available, the filer should contact PBGC as soon as reasonably practicable by phone or email.
Key Considerations to Take Away
The PBGC’s pandemic disaster relief provides much-needed assistance for plan sponsors, administrators, and service providers during the national COVID-19 crisis. Extensions for PBGC premium filing and payments, in particular, will likely provide financial relief to plan sponsors who may be facing liquidity issues due to the current business environment. Plan sponsors and administrators seeking to take advantage of this relief should provide timely notice prior to the end of the relief period (July 15) to PBGC in order to fulfil their obligations under ERISA.