[Federal Register Volume 63, Number 239 (Monday, December 14, 1998)]
[Rules and Regulations]
[Pages 68684-68685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33036]
=======================================================================
-----------------------------------------------------------------------
PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 4007
RIN 1212-AA79
Payment of Premiums
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment to the Pension Benefit Guaranty Corporation's
regulation on Payment of Premiums moves the final filing due date for
premium declarations to October 15th for calendar year plans (so that
it is the same as the extended Form 5500 due date) and makes parallel
changes for non-calendar year plans.
EFFECTIVE DATE: February 12, 1999. The amendment applies to premium
payment years beginning after 1998.
FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General
Counsel, or Deborah C. Murphy, Attorney, Office of the General Counsel,
Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington DC
20005-4026; 202-326-4024. (For TTY/TDD users, call the Federal relay
service toll-free at 1-800-877-8339 and ask to be connected to 202-326-
4024.)
SUPPLEMENTARY INFORMATION:
Background
Under the PBGC's regulation on Payment of Premiums (29 CFR Part
4007), final premium filings are generally due on the 15th day of the
eighth full calendar month following the month in which the premium
payment year begins (e.g., for calendar year plans, September 15th).
(Special rules apply to plans that change plan years and to new and
newly-covered plans.) On April 10, 1992, the PBGC published in the
Federal Register (at 57 FR 12666) a proposed amendment to its
regulations that would (among other things) have deferred the final
filing due date to the end of the ninth full calendar month of the
premium payment year (e.g., for calendar year plans, September 30th).
Seven commenters addressed this issue. Two indicated simple
approval. The other five urged a further deferral, to the middle of the
following month (e.g., for calendar year plans, October 15th). The
latter date is the due date (as often extended) for the Form 5500 and
Schedule B thereto, on which the Alternative Calculation Method in the
PBGC's regulation on Premium Rates (29 CFR part 4006) is based. Reasons
given for the further deferral included the avoidance of confusion and
administrative burdens caused by the premium form's not being
coordinated with the Form 5500 and Schedule B, and the consistency and
simplicity that would result if the filing due dates were coordinated.
The PBGC has concluded that the further deferral suggested by the
commenters is appropriate, and that the method of computing the premium
filing deadline for plans whose plan years do not begin on the first of
a month should match the method for computing the Form 5500 filing
deadline for such plans.
Accordingly, this final rule moves the final filing due date to the
15th day of the tenth full calendar month of the premium payment year,
subject to the existing special rules for plans that change plan years
and for new and newly-covered plans. Thus, the due date will now be
October 15th for calendar year plans. For non-calendar-year plans with
plan years beginning on the first day of the month, the extension is
one month. For example, the final premium filing date for a July 1 plan
moves from March 15 to April 15. A plan whose plan year begins on a
date other than the first of a month gets a two-month extension from
the due date under the old rule in order to parallel the Form 5500 due
date. Thus, for example, a plan whose plan year begins on January 2d
will now have until November 15 to file (compared to September 15 under
the old rule).
Compliance With Rulemaking Guidelines; Economic Impact Analysis
This action has been reviewed by the Office of Management and
Budget under Executive Order 12866 as an economically significant
regulatory action. The Office of Management and Budget has determined
that this action is a ``major rule'' as defined in 5 U.S.C. 804(2) for
purposes of Congressional review of agency rulemaking under subtitle E
of title II of the Small Business Regulatory Enforcement Fairness Act
of 1996.
PBGC premium payments are included as receipts in the Federal
budget. Moving the final premium due date will shift an estimated $350
million (representing primarily calendar year plans' final premium
payments) from the end of fiscal year 1999 to the beginning of fiscal
year 2000. Under the Congressional review provisions of the Small
Business Regulatory Enforcement Fairness Act of 1996, OMB treats a rule
with a Federal budget impact of over $100 million in one year as a
major rule. Thus, the movement of the final premium filing date--which
results only in deferral, not loss, of the approximately $350 million
in premium payments that would otherwise be
[[Page 68685]]
received on September 15--makes this a major rule.
The due date change will reduce the PBGC's interest income by about
$2 million per year (one month of lost interest income on most plans'
final premium payments), which represents less than one-quarter of one
percent of the PBGC's annual premium revenue. Because the PBGC's lost
interest income will be offset by an interest gain for premium payers,
this extension creates a transfer from the PBGC to premium payers of
approximately $2 million per year.
The rule, aimed at providing better customer service, will create
benefits for premium payers in the form of reduced administrative
burdens associated with PBGC premium filings. This is because plans
will be able to prepare their final premium filings at the same time as
their Form 5500 filings (including the Schedule B actuarial
information). No alternative final due date would achieve this result
more effectively or with less cost.
The PBGC certifies under section 605(b) of the Regulatory
Flexibility Act that this rule will not have a significant economic
impact on a substantial number of small entities. The effect of this
rule is simply to give most plan administrators one more month to file
premium declarations and pay premiums than under the existing
regulation. Premium payers that take advantage of the deferral will
have the opportunity to get an additional month's investment earnings
on the amount of their premium payments, and their service providers
may charge less because the premium forms can be prepared at the same
time as the Form 5500 filing. However, while the PBGC expects plans to
realize administrative cost savings from this rule, it does not expect
the economic impact to be significant for small entities. Accordingly,
sections 603 and 604 of the Regulatory Flexibility Act do not apply.
List of Subjects in 29 CFR Part 4007
Penalties, Pension insurance, Pensions, Reporting and recordkeeping
requirements.
In consideration of the foregoing, 29 CFR part 4007 is amended as
follows:
PART 4007--PAYMENT OF PREMIUMS
1. The authority citation for part 4007 continues to read as
follows:
Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
2. In Sec. 4007.11, paragraph (a)(1) is amended by removing the
words ``the fifteenth day of the eighth full calendar month following
the month in which the plan year began'' and adding in their place the
words ``the fifteenth day of the tenth full calendar month following
the end of the plan year preceding the premium payment year'';
paragraph (a)(2)(ii) is amended by removing the words ``the fifteenth
day of the eighth full calendar month following the month in which the
premium payment year begins'' and adding in their place the words ``the
fifteenth day of the tenth full calendar month following the end of the
plan year preceding the premium payment year''; and paragraph (c)(1) is
revised to read as follows:
Sec. 4007.11 Due dates.
* * * * *
(c) * * *
(1) The fifteenth day of the tenth full calendar month that began
on or after the later of--
(i) The first day of the premium payment year; or
(ii) The day on which the plan became effective for benefit
accruals for future service;
* * * * *
Issued in Washington, DC, this 7th day of December, 1998.
Alexis M. Herman,
Chairman, Board of Directors, Pension Benefit Guaranty Corporation.
Issued on the date set forth above pursuant to a resolution of
the Board of Directors authorizing its Chairman to issue this final
rule.
James J. Keightley,
Secretary, Board of Directors, Pension Benefit Guaranty Corporation.
[FR Doc. 98-33036 Filed 12-11-98; 8:45 am]
BILLING CODE 7708-01-P
