PBGC GRAB Bag Flashcards
What are the 6 priority categories?
- Voluntary Contribs
- Mandatory Contribs
- Benefits payable 3 years ago with worst benefits in effect in past 5 years (current age is used for PV factors)
- Guaranteed Benefits
- Vested Benefits
- Non-vested Benefits
How are assets allocated between category 1, 2 & 3?
Allocated based on priority level (1, 2 then 3)
If the assets run out in a level, the rest is paid pro-rata to the level in which assets run out
How are assets allocated in priority category 4?
- Pay guaranteed benefits pro-rata
2. Then pay to guaranteed benefits treating the majority owners as non-majority owners
How are assets allocated in priority category 5?
First to vested benefit using plan provisions from 5 years ago, then next plan amendment, then next…
T/F Sub classes can be created in priority classes 3,4,5,6 but not 1 and 2.
True - can create classes so people with longer service get paid out first
For missing participants, you must conduct a “diligent search” within X months of filing MP-100. What is X?
9
What is a diligent search for missing participants? What is max cost you should expend?
NRB <= $50 month - can search company and public databases
NRB > $50 month - must use a commercial locator
In no case should the cost of searching exceed the benefit.
Which section of assumptions do you use to value the liability of missing participants? Which does the PBGC use when adjusting benefit?
4044
4022
Who is a “missing participant”?
- PTP cannot be located after diligent search
2. Due a mandatory cash out, but do not return the paperwork.
How much needs to be transferred to the PBGC for a missing PTP? (assume ptp is before NRD)
(1) Calculate LS under plan assumptions
(2) Calculate most valuable annuity under missing ptp assumptions.
If (1) < mandatory cashout then (1). Else take the larger of (1), if available, and (2).
For a ptp after NRD that has not commenced their benefit, how is the benefit transfer amount for a missing ptp adjusted?
Value is increased by the missed payments assuming an SLA started at NRD.
For a ptp after NRD that HAS commenced their benefit, how is the benefit transfer amount for a missing ptp adjusted?
Value is increased by the missed payments
When does the MP-100 form need to be filed?
30 days after the last distribution date (i.e. same timeline for sending a Post-Distribution Certification)
What is admin fee charged by the PBGC if you transfer a missing participants’ liability to the PBGC? if you buy an annuity from an IC?
$35 if benefit transfer amount is > $250
$0 if buy an annuity from IC
What are the two options for dealing with missing participants?
- Buy them an insurance contract
2. Transfer benefit amount to PBGC
When does a “substantial cessation of operations occur”?
- 15% of employees that were eligible for either a DB or DC plan have a permanent cessation of employment
What are the exceptions to a “substantial cessation of operations liability” in 4062(e)?
- Less than 100 ptps w/ accrued benefit in current plan year
- MVA/PBGC FT >= 90%
If a contribution is triggered because of cessation of operations, what is the contribution amt?
Unfunded plan termination liability * (eligible employees that left) / (total eligible employees in the controlled group)
What is the alternative 7 year charge for the cessation of operations contribution amt?
UVB for prior plan year * (eligible employees that left) / (total eligible employees in the controlled group). Then Divide by 7 and pay over 7 years.
What is the cap on the 7 year alternative charge for the cessation of operations?
25% * UVB - MRC
If prior year’s MVA exceeds 90% of PBGC FT, then no payment needed
What is a Standard Termination?
Assets are sufficient to cover the termination liability.
T/F a plan does not have sufficient assets to cover liability, but a MO waives their benefit so there is enough assets. This is a Standard Termination
True
T/F a plan does not have sufficient assets to cover liability, but employer makes written commitment to contribute the necessary amount. This is a standard term.
True
What is a distress termination
Assets are not sufficient to cover the liabilities and plan sponsor wants to terminate the plan.
How do you determine if a new definition of compensation is discriminatory?
Find the average of the comp used to total comp for the HCE and NHCE group. HCE group cannot exceed NHCE by undefined de minimus amount
Who is excluded when testing 414(s)
Anyone who would be excluded under 410(a) statutory reasons.
If you fail to make a minimum required contribution or a required quarterly, under what circumstances do you have to file form 200 with the PBGC?
- Unpaid balance is over $1M (including interest)
2. FTAP < 100%
If you have to file Form 200 with PBGC, when is it due?
10 days after the payment is missed
If you miss a quarterly of 100000, EIR is 5% and then you miss another quarterly of 100000 a year later, what is the total outstanding amount (if never paid off)?
100000*10% + 100000
210000
