2023 Tax Calendar
VIEWpoint Issue 2 | 2022
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Defined-benefit retirement plans, commonly referred to as pensions, aren’t as popular as they used to be — and for good reason. Many such plans are underfunded and in danger of failure.
The Pension Benefit Guaranty Corporation (PBGC), a federal agency, recently published a final rule that sets forth requirements for special financial assistance applications, as well as related restrictions and conditions. These requirements come under the PBGC’s Special Financial Assistance (SFA) Program.
The SFA Program was enacted as part of the American Rescue Plan Act (ARPA) of 2021. The program provides funding to severely underfunded multiemployer pension plans.
To qualify for the SFA Program, plans must demonstrate eligibility for assistance and calculate an assistance amount pursuant to ARPA and PBGC regulations. SFA and earnings must then be segregated from other plan assets. Plans aren’t obligated to repay SFA to the PBGC.
Pensions receiving SFA are also subject to certain terms, conditions and reporting requirements. This includes a requirement to provide an annual statement documenting compliance with those terms and conditions. The PBGC is authorized to conduct periodic audits of multiemployer plans that receive SFA.
On July 9, 2021, the PBGC issued an interim final rule setting forth the requirements for special financial assistance applications, as well as related restrictions and conditions, pursuant to the ARPA. In response to public comments received, the PBGC revised the interim final rule, which it has now released in final form. Significant revisions include changes to:
The final rule is effective Aug. 8, 2022. Generally, the final rule’s provisions apply to new applications and are available to plans that previously submitted SFA applications under the interim rule if the plan submits a revised or supplemented application under the final rule.
Plans not approved for SFA under the interim final rule can withdraw and revise their applications under the final rule’s terms. If denied, plans may also revise their applications. The final rule describes how plans that filed applications under the interim final rule may supplement or revise their applications.
The PBGC has included a 30-day public comment period solely on the change to the withdrawal liability condition requiring a phased-in recognition of SFA assets for purposes of calculating employer withdrawal liability. Contact Doeren Mayhew’s advisors for more information on the final rule, as well as for any assistance you might need in managing the financial challenges of your organization’s pension.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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