DOL Issues Funding Notice Final Rule for Defined Benefit, Insurance Plans


The Department of Labor issued a final rule implementing the annual funding notice requirements for defined benefit pension plans under ERISA Section 101(f), and individual insurance contract plans under tax code Section 412(e)(3).
The final rule (RIN 1210-AB18), issued Jan. 30, requires the administrators of both single-employer and multiemployer defined benefit plans to furnish an annual funding notice to participants, beneficiaries, the Pension Benefit Guaranty Corporation and others. According to the DOL's summary, the final rule “enhances retirement security and increases pension plan transparency by ensuring that workers receive timely and accurate notification annually of the funded status of their defined benefit pension plans.”
Large plans must provide the notice generally no later than 120 days after the end of the plan year, the DOL said. Small plans may furnish a funding notice on or before the due date, with extensions, of the plan's Form 5500, Annual Return/Report of Employee Benefit Plan, filed with the DOL, the department said.
The rule is applicable to notices for plan years beginning on or after Jan. 1, 2015, and takes effect March 4.
Prior to the applicability date, plan administrators may elect to comply with the final rule, and as a matter of enforcement, the DOL will consider such compliance as satisfying the requirements under   Section 101 of the Employee Retirement Income Security Act.
The rule was published in the Federal Register on Feb. 2 (80 Fed. Reg. 5,626, 2/2/15).
Major Provisions
The rule is substantially the same as the proposed rule, which was issued in November 2010, with respect to specific funding information disclosed in the notice, the DOL said.
The department said key differences from the proposal include:

  • exempting certain terminating single-employer plans from furnishing their funding notices;

  • establishing alternative methods of compliance for multiemployer pension plans that have terminated by mass withdrawal and for individual insurance contract plans under Section 412(e)(3) of the tax code; and

  • including a rule of administrative convenience that if an otherwise disclosable material event first becomes known to the plan administrator 120 days or less before the due date of the funding notice, the event is not required to be disclosed in the notice. 

Excerpted from a story that ran in Pension & Benefits Daily (02/03/2015).


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