Workshop 13: PBGC / Reportable Events

Transcription

1 Workshop 13: PBGC / Reportable Events Lauren R. Okum, MSPA, ASA, EA, MAAA Premier Actuarial Solutions Kurt F. Piper, FSPA, ASA, EA, MAAA Piper Pension & Profit Sharing Background ERISA 4043 requires plan administrators and sponsors to notify the PBGC of certain events that may signal problems with a pension plan or business. Must notify PBGC within 30 days after plan administrator or contributing sponsor knows (or has reason to know) that a reportable event has occurred. Some exceptions apply. PBGC Form 10 (Post-Event Notice). 1 1

2 Background In some cases, advance reporting is required via PBGC Form 10-Advance: The contributing sponsor and the member of the plan s controlled group to which the event relates are non-public companies; and The contributing sponsor s controlled group maintains one or more plans that, in total (disregarding plans with no unfunded vested benefits), have unfunded vested benefits exceeding $50M and a funded vested benefit percentage of less than 90%. 29 CFR Background PPA changes (and implementing PBGC regulatory changes) to premium rules require changes to reportable events rules. Various PBGC Technical Updates provide guidance pending completion of reportable events rulemaking. 3 2

3 Unfunded Vested Benefits Prior to PPA, UVB was determined as of the testing date (generally, the last day of the plan year preceding the event year) using the VRP interest rate for the event year. PPA modified the calculation or the VRP to be determined as of the UVB valuation date (i.e., the funding valuation date for the premium payment year). As a result, the reportable events "testing date" no longer corresponds with the VRP determination date under the premium regulations. 4 Unfunded Vested Benefits Technical Updates provided guidance on how to handle this incongruity: 07-2: For 2008, plans should determine vested benefits and UVBs using the pre-ppa VRP rules. 09-4: For 2010, plans should determine vested benefits and UVBs in the same manner as the VRP for 2009 (i.e. 1- year look-back) and 11-1: Extended 09-4 for 2011 and 2012, respectively. 5 3

4 What to Report Reportable Event Form 10 Form 10-Advance Active participant reduction Failure to make required funding payments Inability to pay benefits when due Distribution to a substantial owner Change in contributing sponsor or controlled group 29 CFR CFR CFR CFR CFR CFR What to Report Reportable Event Form 10 Form 10-Advance Liquidation of contributing sponsor or controlled group Extraordinary dividend or stock redemption Transfer of benefit liabilities Application for minimum funding waiver 29 CFR CFR CFR CFR CFR CFR CFR CFR Loan default 29 CFR CFR Bankruptcy or similar settlement 29 CFR CFR

5 Who Should File Plan administrator and each contributing sponsor for which a reportable event has occurred must file a Form 10. If there s a change in plan administrator or contributing sponsor, the plan administrator or contributing sponsor on the date the post-even notice is due is required to file. An authorized representative (e.g. enrolled actuary) may file a Form 10 on behalf of the plan administrator and/or contributing sponsor. 8 How to File May file via: Commercial delivery service; Hand delivery; or Electronic transmission (e.g. or fax). If filing electronically, there are special instructions if it s larger than 10 MB. 9 5

6 Terminating Plans Terminating plans are still required to file a reportable events notice. Exception: notice is waived if the filing deadline is on or after: All benefits have been distributed (even if excess assets have not); or A trustee is appointed for the plan under ERISA 4042(c). 10 Failure to File Timely ERISA 4071 Penalty of up to $1,100 a day for each day the notice is overdue. 11 6

7 Active Participant Reduction 29 CFR Occurs when number of active participants is reduced to less than: 80% of the number at the beginning of the current plan year (or end of previous plan year); or 75% of the number at the beginning of the previous plan year. 12 Active Participant Reduction An active participant is a participant who: is receiving compensation for work performed; is on paid or unpaid leave granted for a reason other than a layoff; is laid off from work for a period of time that has lasted less than 30 days; or is absent from work due to a recurring reduction in employment that occurs at least annually. 13 7

8 Active Participant Reduction Waivers Small plan waiver: The plan has fewer than 100 participants at the beginning of either the current or the previous plan year Funding-based waiver: For the event year: No variable rate premium; Less than $1M in unfunded vested benefits; or The plan is at least 80% funded for vested benefits and the active participant reduction would not be reportable if only those participant reductions resulting from cessation of operations at one or more facilities were taken into account. 14 Active Participant Reduction Extension: For an event that is not waived the notice date is extended to the latest of: 30 days after the plan s premium filing due date, provided the plan would have satisfied one of the funding-based waivers for the preceding year; 30 days after the plan s Form 5500 due date, provided the event would not be reportable counting only those participant reductions resulting from cessation of operations at a single facility; or The due date for the Form 1-ES for the plan year following the event year (no longer applies). 15 8

9 Failure to Make Required Minimum Funding Payments 29 CFR Occurs when any of the following are missed: Minimum funding obligations; Quarterly contributions; Liquidity shortfall contributions; or Contributions associated with amortizing funding waivers. Waivers If payment is made by the 30 th day after the payment is due. Filing a Form 200 (Notice of Failure to Make Required Contributions Over $1M) within 10 days of the date of payment satisfies this notice requirement. 16 Failure to Make Required Minimum Funding Payments Waivers (continued) Technical Update 97-6: Reporting of missed quarterlies waived for plans with 100 or fewer participants. Technical Update 08-2: Continuation of 97-6 for the 2008 plan year. Technical Updates 09-3 (2009), 09-4 (2010), and 10-4 (2011): If small plan missed quarterlies due to a reason other than financial inability and prior year flat-rate premiums were payable, reporting is waived or simplified. Waiver if participant count is < 25. Simplified reporting if participant count is

10 Failure to Make Required Minimum Funding Payments Waivers (continued) 11/23/2009 Proposed Rule: Require reporting of a missed quarterly contribution without regard to plan size or the motivation for missing the contribution. Technical Updates 11-1 (2012) and 13-1 (2013+): If small plan missed quarterlies due to a reason other than financial inability and prior year flat-rate premiums were payable, reporting is waived or simplified. Waiver if participant count is < 25. Simplified reporting if participant count is No extensions. 18 Inability to Pay Benefits When Due Occurs when plan is currently unable or is projected to be unable to pay benefits. Currently unable means the plan doesn t pay the full benefits due to a participant at the time the benefit is due and in the form the benefit is due. Does not include administrative delays of less than 2 months. Projected to be unable means the plan s liquid assets are < 2x the amount of the distributions for the quarter as of the last day of that quarter. Waived unless the event occurs during a plan year for which the plan is exempt from the liquidity shortfall rules. No extensions

11 Distribution to Substantial Owner 29 CFR Occurs when: There is a distribution to a substantial owner of a contributing sponsor; The total of all distributions to the substantial owner within the past year exceeds $10,000; The distribution is for a reason other than the substantial owner s death; and Immediately after the distribution, the plan has unfunded nonforfeitable benefits. How is this possible with the Top 25 restrictions? (Maybe the guy wasn t in the Top 25?) 20 Distribution to Substantial Owner A substantial owner (see ERISA 4021(d)) is an individual who owns (or owned within the preceding 60 months): The entire interest in an unincorporated trade or business; Directly or indirectly, more than 10% of the capital or profits interest in a partnership; or Directly or indirectly, more than 10% of the voting stock or the total stock of a corporation. The determination of whether a participant is (or has been in the preceding 60 months) a substantial owner is made on the date when there has been a distribution that would be reportable

12 Distribution to Substantial Owner Waivers Distribution up to 415 limit waiver: The total of all distributions to the substantial owner within the one-year period ending with the date of the distribution does not exceed the limitation (as of the date the reportable event occurs). Funding-based waiver: For the event year: No variable rate premium; or 80% funded for vested benefits. Distribution up to 1% of assets waiver: The total distributions to the substantial owner within the past year are 1% of EOY assets (as reported on the 5500) for the 2 plan years immediately preceding the event year. 22 Distribution to Substantial Owner Extension: 30 days after the plan s premium filing due date, provided the plan would have satisfied one of the funding-based waivers for the preceding year

13 Change in Contributing Sponsor or Controlled Group 29 CFR Occurs when there is a transaction that results in one or more persons ceasing to be members of the plan s controlled group. Controlled group breakup Change in contributing sponsor Merger/consolidation within controlled group See examples in Form 10 instructions. 24 Change in Contributing Sponsor or Controlled Group A transaction includes, but is not limited to, a legally binding agreement, whether or not written, to transfer ownership, an actual transfer of ownership, and an actual change in ownership that occurs as a matter of law or through the exercise or lapse of pre-existing rights. A person is an individual, partnership, joint venture, corporation, mutual company, jointstock company, trust, estate, unincorporated organization, association, or employee organization

14 Change in Contributing Sponsor or Controlled Group Waivers De minimis 10% segment waiver: The person or persons that will cease to be members of the plan s controlled group represent a de minimis 10% segment of the plan s old controlled group for the most recent fiscal year(s) ending on or before the date the reportable event occurs. Foreign entity waiver: Each person that will cease to be a member of the plan s controlled group is a foreign entity other than a foreign parent. Funding-based waiver: For the event year: No variable rate premium; Less than $1M in unfunded vested benefits; or At least 80% funded for vested benefits and the plan s contributing sponsor before the effective date of the transaction is a public company. 26 Change in Contributing Sponsor or Controlled Group De minimis 10% segment means, in connection with a plan s controlled group, one or more entities that in the aggregate have for a fiscal year: Revenue not exceeding 10% of the controlled group s revenue; Annual operating income not exceeding the greatest of: 10% of the controlled group s annual operating income, 5% of the controlled group s first $200 million in net tangible assets at the end of the fiscal year(s),or $5 million; and Net tangible assets at the end of the fiscal year(s) not exceeding the greater of: 10% of the controlled group s net tangible assets at the end of the fiscal year(s), or $5 million

15 Change in Contributing Sponsor or Controlled Group Extension: For an event that is not waived the notice date is extended to the latest of: 30 days after the plan s premium filing due date, provided the plan would have satisfied one of the funding-based waivers for the preceding year; If the only persons ceasing to be members of the plan s controlled group are foreign parents or foreign-linked entities, 30 days after the plan s first Form 5500 due date after the person required to notify PBGC has actual knowledge of the transaction and of the controlled group relationship; and If the plan s contributing sponsor before the effective date of the transaction is a public company, 30 days after the earlier of (1) the first Form 10Q filing deadline that occurs after the transaction, or (2) the date (if any) when a press release with respect to the transaction is issued. 28 Liquidation 29 CFR Occurs for a plan when a member of the plan s controlled group: Is involved in any transaction to implement its complete liquidation (including liquidation into another controlled group member); Institutes or has instituted against it a proceeding to be dissolved or is dissolved, whichever occurs first; or Liquidates in a case under the Bankruptcy Code, or under any similar law

16 Liquidation Waivers De minimis 10% segment waiver: The person or persons that liquidate represent a de minimis 10% segment of the plan s controlled group for the most recent fiscal year(s) ending on or before the date the reportable event occurs and each plan that was maintained by the liquidating member is maintained by another member of the plan s controlled group after the liquidation. Foreign entity waiver: Each person that liquidates is a foreign entity other than a foreign parent. 30 Liquidation Waivers (continued) Funding-based waiver: Each plan that was maintained by the liquidating member is maintained by another member of the plan s controlled group and, for the event year: No variable rate premium; Less than $1M in unfunded vested benefits; or The plan s contributing sponsor is a public company; the plan is at least 80% funded for vested benefits; and each plan that was maintained by the liquidating member is maintained by another member of the plan s controlled group after the liquidation

17 Liquidation Extension: For an event that is not waived the notice date is extended to the latest of: 30 days after the plan s premium filing due date, provided the plan would have satisfied one of the funding-based waivers for the preceding year; If the only person liquidating is a foreign parent or foreign-linked entity, 30 days after the plan s first Form 5500 due date after the person required to notify PBGC has actual knowledge of the transaction and of the controlled group relationship; and If the plan s contributing sponsor is a public company, 30 days after the earlier of (1) the first Form 10Q filing deadline that occurs after the transaction, or (2) the date (if any) when a press release with respect to the transaction is issued. 32 Extraordinary Dividend or Stock Redemption 29 CFR Occurs for a plan when any member of the plan s controlled group declares a dividend or redeems its own stock, if the resulting distribution is a reportable: Cash distribution, Non-cash distribution, or Combined distribution

18 Extraordinary Dividend or Stock Redemption A cash distribution is reportable if: The distribution, when combined with any other cash distributions to shareholders previously made during the fiscal year, exceeds the adjusted net income of the person making the distribution for the preceding fiscal year; and The distribution, when combined with any other cash distributions to shareholders previously made during the fiscal year or during the three prior fiscal years, exceeds the adjusted net income of the person making the distribution for the four preceding fiscal years. 34 Extraordinary Dividend or Stock Redemption A non-cash distribution is reportable if its net value, when combined with the net value of any other noncash distributions to shareholders previously made during the fiscal year, exceeds 10% of the total net assets of the person making the distribution. To determine whether a distribution is reportable, both assets and liabilities must be valued at fair market value. If both cash and non-cash distributions to shareholders are made during a fiscal year, a combined distribution is reportable when the sum of the cash distribution percentage and the non-cash distribution percentages for the fiscal year exceeds 100%

19 Extraordinary Dividend or Stock Redemption Waivers De minimis 5% segment waiver: The person making the distribution is a de minimis 5% segment of the plan s controlled group for the most recent fiscal year(s) ending on or before the date the reportable event occurs. Foreign entity waiver: The person making the distribution is a foreign entity other than a foreign parent. Funding-based waiver: For the event year: No variable rate premium; Less than $1M in unfunded vested benefits; or The plan is at least 80% funded for vested benefits. 36 Extraordinary Dividend or Stock Redemption Extensions: For an event that is not waived, the notice date is extended to the latest of: 30 days after the plan s premium filing due date, provided the plan would have satisfied one of the funding-based waivers for the preceding year; If the person making the distribution is a foreign parent or foreign linked entity, 30 days after the plan s first Form 5500 due date after the person required to notify PBGC has actual knowledge of the distribution and of the controlled group relationship; and If the plan s contributing sponsor is a public company, 30 days after the earlier of (1) the first Form 10Q filing deadline that occurs after the distribution, or (2) the date (if any) when a press release with respect to the distribution is issued

20 Transfer of Benefit Liabilities 29 CFR Occurs for a plan when: The plan or any other plan maintained by any member of the plan s controlled group makes a transfer of benefit liabilities to a person, or to a plan or plans maintained by a person or persons, that are not members of the transferor plan s controlled group; and The amount of benefit liabilities transferred, in conjunction with other benefit liabilities transferred during the 12- month period ending on the date of the transfer, is 3% or more of the plan s total benefit liabilities. 38 Transfer of Benefit Liabilities Waivers Complete plan transfer waiver: All of the transferor plan s benefit liabilities and assets are transferred to one other plan. De minimis transfer waiver: The value of assets being transferred: Equals the present value of the accrued benefits (whether or not vested) being transferred, using actuarial assumptions that comply with Code 414(l), and In conjunction with other assets transferred during the same plan year, is less than 3% of the assets of the transferor plan as of at least one day in that year

21 Transfer of Benefit Liabilities Waivers (continued) 414(l) safe harbor waiver: The transfer complies with Code 414(l) using the actuarial assumptions prescribed for valuing benefits in terminated PBGCtrusteed plans under 29 CFR Fully-funded plan waiver: The transfer complies with Code 414(l) and, after the transfer, the transferor and transferee plans are fully funded (using the actuarial assumptions prescribed for valuing benefits in terminated PBGC-trusteed plans under 29 CFR ). No extensions. 40 Application for Minimum Funding Waiver 29 CFR Occurs when an application for a minimum funding waiver is submitted. for a plan. No waivers. No extensions

22 Loan Default 29 CFR Occurs whenever there is a default under a loan agreement by a member of a plan s controlled group with respect to a loan with an outstanding balance of $10M or more if: The default results from the debtor s failure to make a required payment when due (unless the payment is made within 30 days after the due date); The lender accelerates the loan; or The debtor receives a written notice of default from the lender (and does not establish that the notice was issued in error) on account of: A drop in the debtor s cash reserves below an agreed-upon level, An unusual or catastrophic event experienced by the debtor, or A persisting failure by the debtor to attain agreed upon financial performance levels. 42 Loan Default Waivers Default cured waiver: The default is cured, or waived by the lender, within 30 days or, if later, by the end of any cure period provided by the loan agreement. Foreign entity waiver: The debtor is a foreign entity other than a foreign parent. Funding-based waiver: For the event year: No variable rate premium; Less than $1M in unfunded vested benefits; or The plan is at least 80% funded for vested benefits

23 Loan Default Extensions: For an event that is not waived, the notice date is extended to the latest of: One day after: The applicable cure period provided in the loan agreement, The date the loan is accelerated, or The date the debtor receives written notice of the default; and 30 days after the plan s variable rate premium filing due date for the event year, provided the plan would have satisfied one of the funding-based waivers for the preceding year; and With respect to a loan default involving only a foreign parent or a foreign-linked entity, 30 days after the plan s first Form 5500 due date after the person required to notify PBGC has actual knowledge of the default and of the controlled group relationship. 44 Bankruptcy or Similar Settlement 29 CFR Occurs with respect to a plan when any member of the plan s controlled group: Commences a bankruptcy case (under the Bankruptcy Code) or has a bankruptcy case commenced against it; Commences, or has commenced against it, any other type of insolvency proceeding (including, but not limited to, the appointment of a receiver); Commences, or has commenced against it, a proceeding to effect a composition, extension, or settlement with creditors; Executes a general assignment for the benefit of creditors; or Undertakes to effect any other nonjudicial composition, extension, or settlement with substantially all its creditors

24 Bankruptcy or Similar Settlement Waived if the controlled group member described above is a foreign entity other than a foreign parent. If the controlled group member is not a contributing sponsor, the notice date is extended until 30 days after a person required to notify PBGC has actual knowledge of the reportable event. 46 Recent Changes On November 23, 2009, the PBGC published proposed rules to amend the reportable events regulation. The proposed changes to the existing rules on reportable events were expected to have been finalized by now. They have not. So, we will look at the proposed rules

25 PBGC Technical Update 13-1 Applies to post-2012 plan years. Extends ability to use look-back variable rate premium numbers for reporting waivers (1-year lookback) and extensions (2-year look-back). Extends reporting relief regarding missed quarterly contributions for small plans if not based on financial inability. Waiver if prior-year flat-rate participant count < 25. Simplified reporting if count is Proposed Rule (4/3/2013) 78 Fed. Reg Substantial revisions from 2009 proposed rules. Hearing on proposal (first ever for PBGC rulemaking) held on 6/18/

26 Proposed Rule (4/3/2013) For those in safe harbor, post-event reporting would not be required for most events to which fundingbased waivers currently apply: Active participant reduction Distribution to substantial owner Controlled group change Extraordinary dividend or stock redemption Transfer of benefit liabilities 50 Proposed Rule (4/3/2013) Financial soundness safe harbor test applies (with different standards) to: Sponsor (or, if sponsor is member of controlled group, highest-level U.S. parent in controlled group), or Plan

27 Proposed Rule (4/3/2013) Sponsor (or parent) must meet each of five criteria to be financially sound: Credit score that indicates low likelihood that the company would default on its obligations ; Must be from D&B or other commercial credit reporting company commonly used in business community PBGC would provide/update scores needed to qualify Example: D&B Financial Stress Score 1477 for 2011 Positive net income for past two years; No secured debt (with some exceptions); No loan default reportable event in past two years (even if waiver applied); and No missed contribution reportable event in past two years (unless quarterly waiver applied). 52 Proposed Rule (4/3/2013) Plan must meet either of two criteria to be financially sound: 100% funded on PBGC termination basis as of last day of prior year; or 120% funded on PBGC VRP basis for the prior year

28 Proposed Rule (4/3/2013) Small plan post-event reporting extensions Applies to plans covering < 100 participants at the end of the 3 rd preceding year. Applies to reportable events eligible for the plan-based financial soundness safe harbors. Reporting due date is 1 month after the prior year s premium filing due date. 54 Proposed Rule (4/3/2013) Foreign or foreign-linked entity waivers and extensions Foreign non-parent post-event waivers would be preserved. Foreign parent post-event reporting waiver for intracontrolled group extraordinary dividend would be dropped. Foreign parent and foreign-linked entity post-event reporting extensions (tied to actual knowledge) would be dropped

29 Proposed Rule (4/3/2013) De minimis waivers Would eliminate net tangible assets prong for post-event and advance reporting de minimis waivers. Would use 10% test for all post-event waivers. Would apply (for post-event reporting) to same 3 events as under existing regulation: Controlled group change; Liquidation; and Extraordinary dividend (existing waiver uses 5% test). 56 Proposed Rule (4/3/2013) De minimis waivers (continued) Would add waivers to 2 new reportable events: Non-bankruptcy insolvency; and Loan defaults. 5% test would continue to apply to 3 advance reporting events: Controlled group change; Liquidation; and Extraordinary dividend

30 Proposed Rule (4/3/2013) Advance reporting threshold would be updated Threshold (applicable only where neither sponsor nor member to which event relates is public company) tied to VRP Reporting required where aggregate controlled group UVB > $50M and funded vested benefit % < 90% VRP rules changed by PPA and implementing PBGC regulations Proposal would update reportable events regulations to reflect VRP rule changes (i.e. 1-year look-back) 58 Proposed Changes to Particular Events Active participant reduction Small plan waiver: Reporting not required for plans with < 100 participants at the end of the 2 nd preceding plan year (the count that determines small plan status for premium payment purposes). Larger plan reporting required in 3 situations: Due to a single-cause event (e.g. reorganization, discontinuance of an operation, a natural disaster a mass layoff, or an early retirement window); Due to a short period event over a 30-day period; or 59 30

31 Proposed Changes to Particular Events Larger plan reporting required in 3 situations (continued): Due to an attrition event. Measured only as of last day of current year or 1 st day of next year. Considered to occur on the last date of the plan year. Reporting not required until 120 days after the end of the event year. Reductions tied to timely reported 4062(e) event would be disregarded for single-cause or short period event. 60 Proposed Changes to Particular Events Missed contributions Retains pre-11/23/2009 waiver where missed contribution paid within 30 days. Expands Technical Update 13-1 reporting relief for missed quarterlies. Would drop requirement that failure not have been due to financial inability to make the contribution. Would expand availability of waiver from plans with < 25 participants to plans with < 100 participants at the end of the 2 nd preceding plan year

32 Proposed Changes to Particular Events Missed contributions (continued) Reporting would NOT be waived by satisfying the employer or plan financially sound criteria, nor by de minimis or foreign-entity waivers. 62 Proposed Changes to Particular Events Inability to pay benefits when due Reporting would NOT be waived by satisfying the employer or plan financially sound criteria, by the de minimis or foreign-entity waivers, or by the small plan waiver

33 Proposed Changes to Particular Events Distribution to substantial owner Proposal would narrow event (and replace 1% of assets waiver) to apply only if distributions over past year exceeded: 5% of plan assets as of end of each of two prior years (for all substantial owners); or 1% of plan assets as of end of each of two prior years (for one substantial owner). Reporting required only once for non-increasing distributions in annuity form. 64 Proposed Changes to Particular Events Distribution to substantial owner Reporting would be waived by satisfying the employer or plan financially sound criteria. Reporting would NOT be waived by de minimis or foreignentity waivers, nor the small plan waiver

34 Proposed Changes to Particular Events Change in controlled group Proposal would clarify meaning of legally binding agreement. Event occurs when there is transaction that results, or will result, in person ceasing to be member of controlled group. Transaction includes legally binding agreement. Proposal would provide that legally binding is determined without regard to any conditions in the agreement. 66 Proposed Changes to Particular Events Change in controlled group (continued) Proposal (per preamble) would eliminate reporting where one member of group merges into other member of group. Reporting would be waived by satisfying the employer or plan financially sound criteria, by the de minimis or foreign-entity waivers, or by the small plan waiver

35 Proposed Changes to Particular Events Liquidation Reporting would NOT be waived by satisfying the employer or plan financially sound criteria. Reporting would be waived by de minimis or foreign-entity waivers. 68 Proposed Changes to Particular Events Extraordinary dividend or stock redemption Existing regulation requires reporting if distributions during the current fiscal year exceed specified levels: Cash distributions test on a 1-year and 4-year basis. Non-cash distributions test on a 1-year basis. Methodology for combining cash/non-cash. Intra-controlled group distributions are taken into account

36 Proposed Changes to Particular Events Extraordinary dividend or stock redemption (continued) Proposal would simplify reporting threshold: Reporting required where distributions during current fiscal year exceed 100% of net income for prior year. Intra-controlled group distributions would be disregarded. Reporting would be waived by satisfying the employer or plan financially sound criteria, by the de minimis or foreign-entity waivers, or by the small plan waiver. 70 Proposed Changes to Particular Events Transfer of benefit liabilities Proposal would clarify that lump sums and irrevocable commitments are not reportable transfers. Proposal would eliminate waivers under existing regulation: Complete plan transfer; Transfer of < 3% of assets; Section 414(l) safe harbor; and Fully funded plans. Reporting would be waived by satisfying the employer or plan financially sound criteria, or by the small plan waiver. Reporting would NOT be waived by satisfying the de minimis or foreign-entity waivers

37 Proposed Changes to Particular Events Minimum funding waiver application Reporting would NOT be waived by satisfying the employer or plan financially sound criteria, by the de minimis or foreign-entity waivers, or by the small plan waiver. 72 Proposed Changes to Particular Events Loan default Existing regulations define event as default on loan with outstanding balance of at least $10M if: Payment is more than 30 days late, Lender accelerates loan, or Written default notice due to specified reasons. Existing waivers if default cured, or waived by lender, within 30 days (or by end of longer cure period), or plan well-funded

38 Proposed Changes to Particular Events Loan default (continued) Proposal would expand event to cover acceleration by lender or default of any kind by debtor. Proposal would also expand event to encompass amendment or waiver by lender of any covenant in order to avoid default. Only waivers would be foreign non-parent and de minimis (10%). 74 Proposed Changes to Particular Events Loan default (continued) Reporting would NOT be waived by satisfying the employer or plan financially sound criteria, or by the small plan waiver. Reporting would be waived by de minimis or foreign-entity waivers

39 Proposed Changes to Particular Events Bankruptcy or similar settlement Existing regulations include Bankruptcy Code cases as reportable events. Proposal would exclude Bankruptcy Code cases because notice can be (and routinely is) reliably obtained by other means. Proposal would require more information with initial filing (largely same information as required in response to followup requests). Proposal would make currently optional reportable events forms mandatory. 76 Proposed Changes to Particular Events Bankruptcy or similar settlement (continued) Reporting would NOT be waived by satisfying the employer or plan financially sound criteria, or by the small plan waiver. Reporting would be waived by de minimis or foreign-entity waivers

40 Proposed Changes to Forms, Instructions, and Filing Proposal would move information requirements from regulations to instructions (to facilitate later changes). Proposal would mandate electronic filing for reportable events. 78 Thank you! 79 40