DB Plan Sponsor Clients Can Now Request Consultation Prior to Filing Distress Termination

The Pension Benefit Guaranty Corporation has issued new forms and instructions for defined benefit (DB) plan distress terminations incorporating proposals made to the Office of Management and Budget.

Previously, the agency proposed to provide that the plan administrator of a plan terminating in a standard or distress termination that closes out in the private sector, may submit termination forms electronically (scanned and emailed or faxed), rather than by mail or personal delivery only.

In addition, the PBGC proposed to include an opportunity for plan sponsors to contact the agency for a pre-filing consultation to discuss the filing process and ensure the filing of a distress termination is appropriate given the sponsor’s specific circumstances.

The agency says this consultation will assist it and the plan sponsor in exploring whether a waiver of one or more filing obligations is appropriate, identifying potential issues preventing a distress termination of a particular plan, and may indicate that commencement of an agency-initiated termination of the pension plan is warranted. This consultation will be voluntary and will result in little or no added burden on the plan sponsor.