Seyfarth Synopsis: With the background of the COVID-19 pandemic, the PBGC published unofficial guidance for plan sponsors of single-employer plans on certain reportable events, PBGC premium payments and plan termination issues. The Q&As (found here) provide detail on when and how to report a failure to make required minimum contributions in light of the new CARES Act deadline. The PBGC also states that it will process distress termination applications during this time and that PBGC-initiated terminations of single-employer pension plans will continue to occur.

Under the CARES Act, a company that sponsors a tax-qualified defined benefit pension plan can delay until January 1, 2021, any required contributions to the plan otherwise due in 2020. The PBGC clarifies that because the due date was extended, companies will not need to report a failure to make a minimum required contribution to the PBGC if the contribution is made by January 1, 2021. Should a contribution not be made by January 1, 2021, and the accumulated amount of missed contributions is over $1M, the Form 200 reporting the missed contributions is due on January 11, 2021. If the amount not contributed by January 1, 2021, is $1M or less, the Form 10 is due on February 1, 2021, unless a wavier applies.

The Q&As also include two items related to the calculation of variable rate premiums in light of the extended due date of January 1, 2021, for contributions under the CARES Act.

As noted in the Q&As, during the pandemic, the PBGC will continue to review distress termination applications for single-employer pension plans. The PBGC understands that plan sponsors may have difficulty with financial projections during the pandemic and encourages plan sponsors to consider a pre-filing consultation with the PBGC. Additionally, the PBGC will continue to initiate pension plan terminations if the requirements in the statute are met, based on the facts and circumstances. According to the PBGC, its initiation of plan terminations most often happens when a plan sponsor goes out of business. Fortunately, the PBGC will continue to work with plan sponsors to pay termination liabilities due. Also, during the pandemic, it will not suspend its early warning program (i.e., the PBGC will continue to review transactions and other events that could cause an increased risk to plans and the PBGC).