Premium-Related Legislation: On February 8, 2006, President Bush
signed omnibus budget legislation that increased the per-participant flat-rate
premium to $30 for single-employer plans and to $8 for multiemployer plans,
effective for plan years beginning on or after January 1, 2006. PBGC will now
proceed with issuance of the 2006 final filing forms and instructions (Form
1-EZ, Form 1, Schedule A) and roll-out of premium e-filing for plan year 2006.
(See next two items in Whatfs New for related news).
Also note two additional parts of the legislation: (1) the premium rates will
automatically increase each year to track increases in the national average wage
index; and (2) there will be a charge of $1,250 per participant per year for
three years after plan termination for certain underfunded terminating plans.
When we determine how these will be handled, we will provide additional
information in this What's New section. In the meantime, if this new $1,250
charge applies to you, please contact Deborah Murphy (1-800-736-2444, extension
3451) for guidance.
In related news, separate, broader pension reform legislation (S. 1783 and
H.R. 2830) is under consideration in Congress that could result in further
premium changes (e.g., changing how liabilities are calculated for the
variable-rate premium). Please note: Unless legislation is enacted to change the
rules for determining the Required Interest Rate for the variable-rate premium
for the 2006 plan year, that rate will be 85 percent of the annual yield on
30-year Treasury securities for the month preceding the month in which a plan's
2006 plan year begins. ( 02/08/06 )
2006 Premium Forms and Instructions: Now that the new premium
rates are law, large calendar year plans have sufficient time to file their
estimated premiums at the new rates before the February 28, 2006, due date.
Please note that if you filed your estimated premiums at the old rate, you will
need to submit an amended filing. The amended filing will be treated as timely
if made by the estimated premium due date (e.g., February 28, 2006 for calendar
year plans). If you use the paper 2006 1-ES (which can be downloaded from our
Web site), simply cross out the old rate and write in the new rate. PBGC has
begun the process of issuing the paper 2006 final filing forms and instructions
(Form 1-EZ, Form 1, Schedule A), and we will post them on our Web site and mail
them soon. We encourage you to e-file your 2006 filings (whether original or
amended) via My
Plan Administration Account (My PAA), which will be updated with the new
rates shortly (see below). ( 02/08/06 )
Premium E-Filing with My PAA: Pending approval of changes to My
PAA to reflect the new premium rates, you will soon be able to submit your
premium e-filings (whether original or amended) for plan year 2006 via this
system. You may also use My PAA to create new or amended premium filings for the
2004 and 2005 plan years. ( 02/08/06 )
Mandatory Premium E-Filing: PBGC expects to begin implementing
mandatory electronic filing of premiums during 2006. For plans with 500 or more
participants for the prior plan year, the requirement to file electronically via
My PAA is expected to apply to filings that are made on and after July 1, 2006,
for 2006 and future plan years. Electronic filing is expected to be required for
all plans beginning with the 2007 plan year. The effective date and
applicability will not be definite until PBGC publishes the final rule in the
Federal Register, which we anticipate doing by Spring 2006. The final rule on
mandatory electronic filing will be posted on our Web site. We urge you to
prepare now for mandatory premium e-filing by setting up your My
PAA account (your user ID and password) as soon as possible. ( 02/08/06 )