Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
April 27 — The Pension Benefit Guaranty Corporation is proposing to lower the penalty for late premiums in an effort to reduce the financial burden, the agency announced in a proposed rule.
The proposed rule, issued April 27, would cut the current penalty level rates and caps in half, the PBGC said. Currently, there are two penalty levels: 1 percent per month with a 50 percent cap and 5 percent per month with a 100 percent cap. The lower rate is for self-correction.
The floor on penalty assessments would also be eliminated under the proposed rules. There currently is a floor of $25, or the amount of the premium paid late, if it is less.
In addition, the PBGC is proposing to create a penalty waiver that would apply to underpayments from plans that have histories of good compliance. The agency is proposing to waive 80 percent of the penalty that would be otherwise applicable to those plans, the rule said.
There are two conditions that must be met in order to qualify for the waiver: the plan must have a five-year record of premium compliance and prompt correction of underpayments, the PBGC said.
Since Congress has increased PBGC premiums in recent years, the penalties for late payments have gone up. The PBGC said that while it's not “unfair” to impose larger penalties for late payments, the agency is aware that the higher penalties are being assessed on plans that haven't grown in size or had major changes in their unfunded vested benefits.
“PBGC has good reason to believe that smaller penalties will provide an adequate incentive for compliance by premium payers,” the agency said in the rule.
Comments are due 60 days after the proposed rule is published in the Federal Register, which is scheduled for April 28.
To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
The proposed rule is at http://src.bna.com/esr.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)