[Federal Register Volume 61, Number 232 (Monday, December 2, 1996)]
[Notices]
[Page 63874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30778]
[[Page 63874]]
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PENSION BENEFIT GUARANTY CORPORATION
Payment of Premiums; Late Payment Penalty Charges
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Statement of Policy.
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SUMMARY: The Pension Benefit Guaranty Corporation is adopting a new
two-tiered policy on penalties for late payment of premiums due for
1996 and later plan years. The new policy, which lowers penalties from
5% per month to 1% per month if a premium payer corrects an
underpayment before being contacted by the PBGC, is designed to promote
voluntary compliance. The PBGC is also adopting a temporary voluntary
compliance program to provide penalty relief with respect to premiums
due for earlier plan years.
DATES: The new policy is effective with respect to premiums owed for
plan years beginning on or after January 1, 1996. The voluntary
compliance program applies with respect to premiums owed for pre-1996
plan years. To take advantage of the program, premium payers must take
action by April 30, 1997.
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; 202-326-
4024 (202-326-4179 for TTY and TDD). For questions about specific
premium filings under the voluntary compliance program, call 202-326-
4061 (202-326-4179 for TTY and TDD); for other questions about specific
premium filings, call 703-827-3676 (202-326-4179 for TTY and TDD).
SUPPLEMENTARY INFORMATION: Section 4007 of the Employee Retirement
Income Security Act of 1974 authorizes the PBGC to assess a late
payment penalty charge for underpayment or late payment of premiums.
The amount of the penalty may not exceed 100% of the premium that is
not timely paid.
The PBGC's premium payment regulation provides that the penalty
accrues at the rate of 5% of the unpaid amount each month, subject to a
floor of $25 on the total amount. The PBGC may grant a waiver of all or
a portion of the penalty upon a demonstration of good cause. The
regulation also requires the payment of interest on premium
underpayments.
The general guidelines in the new penalty policy and voluntary
compliance program discussed below affect only penalties. They do not
affect interest.
New Penalty Policy
The new penalty policy applies for plan years beginning on or after
January 1, 1996. The PBGC will assess a penalty of 1% per month if the
premium is paid on or before the date the PBGC issues a written notice
to the premium payer that there is or may be a premium delinquency. If
the premium is paid after the PBGC notification date, the penalty rate
will be 5% per month for all months. The minimum total penalty
continues to be $25. PBGC notification may take various forms,
including a premium bill, a letter initiating a premium compliance
review (i.e., audit), or a letter questioning a failure to make a
premium filing.
Voluntary Compliance Program
The PBGC is adopting a temporary voluntary compliance program for
premiums owed for pre-1996 plan years. The penalty rate will be 1% per
month (subject to the existing $25 minimum total penalty), rather than
the current 5% per month.
There are two ways to take advantage of the voluntary compliance
program:
Option 1: Pay the underpaid amount with an appropriate premium
filing by April 30, 1997.
Option 2: Notify the PBGC by April 30, 1997, of an intention to
participate in the voluntary compliance program, and pay the underpaid
amount with the appropriate premium filing by June 30, 1997. (Any
penalties and interest will continue to accrue until payment.) The
notification must be in writing and identify the plan.
To be eligible for the program, the payment under Option 1 or the
notification under Option 2 (as applicable) must precede the PBGC
notification date. All notices, original or amended premium forms, and
payments under the voluntary compliance program should be clearly
marked ``VCP PROGRAM'' and filed at the following address: Pension
Benefit Guaranty Corporation, ATTN: VCP PROGRAM, P.O. Box 64880,
Baltimore, MD 21264-4880 (if filing by mail) or First National Bank of
Maryland, ATTN: VCP PROGRAM, 110 South Paca Street, Mail Code: 109-320/
Lockbox #64880, Baltimore, MD 21201 (if filing by delivery service).
Assessment and Waiver of Penalties
The PBGC may waive all or part of a late payment penalty upon a
demonstration of good cause. The PBGC will evaluate each request for a
waiver to determine whether the responsible person exercised ordinary
business care and prudence and the late payment resulted from
circumstances beyond that person's control.
Issued in Washington, DC, this 27th day of November, 1996.
Robert B. Reich,
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
statement of policy.
James J. Keightley
Secretary, Board of Directors, Pension Benefit Guaranty Corporation.
[FR Doc. 96-30778 Filed 11-29-96; 8:45 am]
BILLING CODE 7708-01-P
