PBGC Wants to Collect Information About DB Plans’ ERISA Coverage

The Pension Benefit Guaranty Corporation (PBGC) intends to request that the Office of Management and Budget (OMB) approve a collection of information necessary for the PBGC to determine whether a defined benefit (DB) plan is covered under title IV of the Employee Retirement Income Security Act (ERISA).

The PBGC insures DB plans covered under title IV of ERISA. Covered plans are those described in Section 4021(a) of ERISA but not those described in Section 4021(b)(1)–(13). If a question arises about whether a plan is covered under title IV, the PBGC may make a coverage determination.

A proposed form and instructions would be used by a plan sponsor or plan administrator to request a coverage determination and would be suitable for all types of requests. The proposed form would highlight the four plan types for which coverage determinations are most frequently requested:

• Church plans as listed in Section 4021(b)(3) of ERISA;
• Plans that are established and maintained exclusively for the benefit of plan sponsors’ substantial owners as listed in Section 4021(b)(9);
• plans covering, since September 2, 1974, no more than 25 active participants that are established and maintained by professional services employers as listed in Section 4021(b)(13); and
• Puerto Rico-based plans within the meaning of Section 1022(i)(1) of ERISA.

Notably, a number of DB plans that have been determined to qualify for church-plan status by the IRS have had that status challenged in lawsuits. Plaintiffs in the lawsuits are concerned that the plans are not following ERISA funding requirements and are not insured by the PBGC.