[Federal Register Volume 61, Number 10 (Tuesday, January 16, 1996)]
[Rules and Regulations]
[Pages 1126-1127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-427]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Parts 2610 and 2622
Late Premium Payments and Employer Liability Underpayments and
Overpayments; Interest Rate for Determining Variable Rate Premium;
Amendments to Interest Rates
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
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SUMMARY: This document notifies the public of the interest rate
applicable to late premium payments and employer liability
underpayments and overpayments for the calendar quarter beginning
January 1, 1996. This interest rate is established quarterly by the
Internal Revenue Service. This document also sets forth the interest
rates for valuing unfunded vested benefits for premium purposes for
plan years beginning in November 1995 through January 1996. These
interest rates are established pursuant to section 4006 of the Employee
Retirement Income Security Act of 1974, as amended. The effect of these
amendments is to advise plan sponsors and pension practitioners of
these new interest rates.
EFFECTIVE DATE: January 1, 1996.
FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General
Counsel, Office of the General Counsel, Pension Benefit Guaranty
Corporation, 1200 K Street, NW., Washington, DC 20005-4026; telephone
202-326-4024 (202-326-4179 for TTY and TTD). These are not toll-free
numbers.
SUPPLEMENTARY INFORMATION: As part of title IV of the Employee
Retirement Income Security Act of 1974, as amended, the Pension Benefit
Guaranty Corporation collects premiums from ongoing plans to support
the single-employer and multiemployer insurance programs. Under the
single-employer program, the PBGC also collects employer liability from
those persons described in ERISA section 4062(a). Under ERISA section
4007 and 29 CFR Sec. 2610.7, the interest rate to be charged on unpaid
premiums is the rate established under section 6601 of the Internal
Revenue Code (``Code''). Similarly, under 29 CFR Sec. 2622.7, the
interest rate to be credited or charged with respect to overpayments or
underpayments of employer liability is the section 6601 rate. These
interest rates are published by the PBGC in appendix A to the premium
regulation and appendix A to the employer liability regulation.
The Internal Revenue Service has announced that for the quarter
beginning January 1, 1996, the interest charged on the underpayment of
taxes will be at a rate of 9 percent. Accordingly, the PBGC is amending
appendix A to 29 CFR part 2610 and appendix A to 29 CFR part 2622 to
set forth this rate for the January 1, 1996, through March 31, 1996,
quarter.
Under ERISA section 4006(a)(3)(E)(iii)(II), in determining a
single-employer plan's unfunded vested benefits for premium computation
purposes, plans must use an interest rate equal to 80% of the annual
yield on 30-year Treasury securities for the month preceding the
beginning of the plan year for which premiums are being paid. Under
Sec. 2610.23(b)(1) of the premium regulation, this value is determined
by reference to 30-year Treasury constant maturities as reported in
Federal Reserve Statistical Releases G.13 and H.15. The PBGC publishes
these rates in appendix B to the regulation.
The PBGC publishes these monthly interest rates in appendix B on a
quarterly basis to coincide with the publication of the late payment
interest rate set forth in appendix A. (The PBGC publishes the appendix
A rates every quarter, regardless of whether the rate has changed.)
Unlike the appendix A rate, which is determined prospectively, the
appendix B rate is not known until a short time after the first of the
month for which it applies. Accordingly, the PBGC is hereby amending
appendix B to part 2610 to add the vested benefits valuation rates for
plan years beginning in November of 1995 through January of 1996.
The appendices to 29 CFR parts 2610 and 2622 do not prescribe the
interest rates under these regulations. Under both regulations, the
appendix A rates are the rates determined under section 6601(a) of the
Code. The interest rates in appendix B to part 2610 are prescribed by
ERISA section 4006(a)(3)(E)(iii)(II) and Sec. 2610.23(b)(1) of the
regulation. These appendices merely collect and republish the interest
rates in a convenient place. Thus, the interest rates in the appendices
are informational only. Accordingly, the PBGC finds that notice of and
public comment on these amendments would be unnecessary and contrary to
the public interest. For the above reasons, the PBGC also believes that
good cause exists for making these amendments effective immediately.
The PBGC has determined that none of these actions is a
``significant regulatory action'' under the criteria set forth in
Executive Order 12866.
Because no general notice of proposed rulemaking is required for
these amendments, the Regulatory Flexibility Act of 1980 does not
apply. See 5 U.S.C. 601(2).
List of Subjects
29 CFR Part 2610
Employee benefit plans, Penalties, Pension insurance, Pensions, and
Reporting and recordkeeping requirements.
29 CFR Part 2622
Business and industry, Employee benefit plans, Pension insurance,
Pensions, Reporting and recordkeeping requirements, and Small
businesses.
In consideration of the foregoing, part 2610 and part 2622 of
chapter XXVI of title 29, Code of Federal Regulations, are hereby
amended as follows:
PART 2610--PAYMENT OF PREMIUMS
1. The authority citation for part 2610 continues to read as
follows:
Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
2. Appendix A to part 2610 is amended by adding a new entry for the
quarter beginning January 1, 1996, to read as follows. The introductory
text is republished for the convenience of the reader and remains
unchanged.
Appendix A to Part 2610--Late Payment Interest Rates
The following table lists the late payment interest rates under
Sec. 2610.7(a) for the specified time periods:
------------------------------------------------------------------------
Interest
From-- Through-- rate
(percent)
------------------------------------------------------------------------
* * * * *
January 1, 1996..................... March 31, 1996......... 9.00
------------------------------------------------------------------------
3. Appendix B to part 2610 is amended by adding to the table of
interest rates new entries for premium payment years beginning in
November of 1995 through January of 1996, to read as follows. The
introductory text is republished for the convenience of the reader and
remains unchanged.
[[Page 1127]]
Appendix B to Part 2610--Interest Rates for Valuing Vested Benefits
The following table lists the required interest rates to be used
in valuing a plan's vested benefits under Sec. 2610.23(b) and in
calculating a plan's adjusted vested benefits under
Sec. 2610.23(c)(1):
------------------------------------------------------------------------
Required
For premium payment years beginning in-- interest
rate \1\
------------------------------------------------------------------------
* * * * *
November 1995................................................ 5.10
December 1995................................................ 5.01
January 1996................................................. 4.85
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\1\ The required interest rate listed above is equal to 80% of the
annual yield for 30-year Treasury constant maturities, as reported in
Federal Reserve Statistical Release G.13 and H.15 for the calendar
month preceding the calendar month in which the premium payment year
begins.
PART 2622--EMPLOYER LIABILITY FOR WITHDRAWALS FROM AND TERMINATIONS
OF SINGLE-EMPLOYER PLANS
4. The authority citation for part 2622 continues to read as
follows:
Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367-68.
5. Appendix A to part 2622 is amended by adding a new entry for the
quarter beginning January 1, 1996, to read as follows. The introductory
text is republished for the convenience of the reader and remains
unchanged.
Appendix A to Part 2622--Late Payment and Overpayment Interest
Rates
The following table lists the late payment and overpayment
interest rates under Sec. 2622.7 for the specified time periods:
------------------------------------------------------------------------
Interest
From-- Through-- rate
(percent)
------------------------------------------------------------------------
* * * * *
January 1, 1996..................... March 31, 1996......... 9.00
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Issued in Washington, DC, this 5th day of January 1996.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 96-427 Filed 1-11-96; 12:31 pm]
BILLING CODE 7708-01-P
