DOL Issues Final Rules on Annual Funding Notice for Defined Benefit Plans

Anne M. Meyer • February 13, 2015

The Department of Labor recently issued final regulations implementing the annual funding notice that defined benefit plans are required to provide under Section 101(f) of ERISA.  The final regulations are similar to the proposed regulations and the guidance issued in Field Assistance Bulletin 2009-01 and Field Assistance Bulletin 2013-01.

Generally, administrators of defined benefit plans must furnish a funding notice each year to the Pension Benefit Guaranty Corporation (“PBGC”), each participant and beneficiary, each labor organization representing such participants or beneficiaries, and, in the case of a multiemployer plan, each employer that has an obligation to contribute to the multiemployer plan.  Large plans must furnish this notice no later than 120 days after the end of the plan year.  Small plans (plans with 100 or fewer participants) must furnish the notice no later than the filing of the plan’s annual report, including filing extensions.

The annual funding notice must contain:

•  the Plan’s funding percentage, expressed as the “funding target attainment percentage;”

•  the assets and liabilities that determine the funding percentage;

•  the fair market value of the plan’s assets on the last day of the plan year;

•  the plan’s funding and investment policies and allocation of assets;

•  known events that are projected to have a material effect on the plan’s funding;

•  other information including a general description of benefits under the plan that are eligible to be guaranteed by the PBGC and a summary of the rules governing plan termination.

The final rules are effective for notices relating to plan years beginning on or after January 1, 2015.  For calendar year plans, the first notice that complies with the final regulations must be issued by April 30, 2016. Until the final regulations take effect, plan administrators may continue to rely on previous guidance issued by the Department of Labor or they may elect to comply with the final regulations.

The final regulations also include model notices for both single employer and multiemployer plans to assist in complying with the final regulations.  The final regulations and model notices are available here.

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