Following are answers to questions frequently asked by employers and pension professionals relating to termination of defined benefit pension plans insured by the Pension Benefit Guaranty Corporation. If you do not find the answer to your particular question, please contact our customer service representatives for assistance at the addresses and telephone numbers listed below.
- What types of plans are insured by PBGC?
- Does PBGC cover plans that only cover self-employed individuals?
- If my plan, in the normal course of administration, pays out all benefits of all participants except substantial owners of the sponsoring company, is the plan still covered by PBGC? What do I need to do?
- What is a plan termination?
- May I file my signed standard termination forms by fax?
- What happens if the plan administrator decides not to terminate the plan after a filing has been made with PBGC?
- Do I have to give spousal election forms to participants whose distributions exceed the plan's de minimis cash-out level if the participants are just rolling over their distributions to another employer-sponsored plan or an individual retirement account?
- Do plan administrators have to provide the notice of identity of insurers to participants expected to elect lump sums?
- Should I wait to file the Post-Distribution Certification (PDC) until all assets, including excess assets, have been distributed?
- What are the premium payment rules regarding terminating plans and why are payment notices sometimes sent to terminated plans?
- Why do I continue to receive premium filing booklets for my terminated plan, and how do I stop this mailing?
- How does PBGC decide which standard terminations to audit?
- Does PBGC nullify the termination if it finds a distribution error during the standard termination audit?
- How do I close out my plan if I can't locate every participant and beneficiary?
- My plan isn't terminating but I have a number of "missing participants." May I turn their benefits over to PBGC?
- Is a "diligent search" required if an annuity is purchased for a missing participant?
- What requirements must be met for a "diligent search" before money can be paid to PBGC?
- When must a "diligent search" be made?
- May I use PBGC's Missing Participants Program for a participant whose whereabouts are known but who refuses to return the election forms?
- Does 20% tax withholding apply to the transfer of a participant's benefit to PBGC under the Missing Participants Program?
- If a PBGC audit finds that additional amounts are due participants after I have completed benefit distributions to all participants in a standard termination, what are the tax consequences of the subsequent supplemental distributions?
- When replacing a defined benefit plan with a defined contribution plan, may the assets in the defined benefit plan be merged or transferred directly into the defined contribution plan without participant and spousal consent?
- Where should checks and filings for standard and distress terminations be sent to PBGC?
- Where should inquiries be directed?
INSURED PLANS
penalty policy adopted in March 1997 to provide penalty relief, PBGC will not assess a penalty if the PDC is filed within 90 days after the deadline for completing the distribution.
PREMIUMS FOR TERMINATED PLANS
10. What are the premium payment rules regarding terminating plans and why are payment notices sometimes sent to terminated plans?
Click here for the answer, which is located within the FAQs on Premiums.
Click here for the answer, which is located within the FAQs on Premiums.
STANDARD TERMINATION AUDITS
Click here for Pension Search fact sheet on PBGC's Missing Participants Program.
information letter from the Internal Revenue Service regarding the tax treatment of amounts transferred to PBGC for a missing participant.
While PBGC makes the determination whether additional amounts are owed to participants, the income tax consequences for the plan sponsor, plan, and plan participants would be determined by Internal Revenue Code rules and regulations. You may wish to ask the IRS or your tax advisor(s) for specific guidance.
OTHER STANDARD TERMINATION QUESTIONS
Conversion of a defined benefit plan into a defined contribution plan (whether a target benefit, profit-sharing, 401(k), or other type of defined contribution plan) is a voluntary termination of the defined benefit plan and is subject to all the rules and requirements governing terminations of defined benefit plans. This includes all notices to participants and beneficiaries and filings with PBGC. Benefit elections and spousal consents are governed by the applicable provisions of the Internal Revenue Code and the implementing regulations.
ADDRESSES AND PHONE NUMBERS
23. Where should checks and filings for standard and distress terminations be sent to PBGC?
It is very important that the correct mailing address be used, in particular for the submission of checks and forms, as there are different addresses for different situations. If you are unsure of whether you have the correct address, please contact PBGC first for clarification ( click here for the telephone numbers and addresses of PBGC's customer service representatives).
Plan terminations and coverage requests should be sent to:
Pension Benefit Guaranty Corporation
Technical Assistance Branch, Suite 930
1200 K Street NW
Washington, DC 20005-4026
Missing participant program payments and vouchers should be sent to:
Pension Benefit Guaranty Corporation
P.O. Box 64523
Baltimore, MD 21264-4523
The mailing address for premium checks and filings may be found in PBGC's FAQs on Premiums.
24. Where should inquiries be directed?
For plan termination and coverage inquiries and requests (e.g., requests for plan termination-related forms and booklets, questions about the missing participants program) or other plan-related questions (e.g., participant notice requirements):
Call: 202-326-4000
For TTY/TDD users, call the federal relay service toll-free at 1-800-877-8339 and ask to be connected to the number listed above.
Write:
Pension Benefit Guaranty Corporation
Technical Assistance Branch, Suite 930
1200 K Street NW
Washington, DC 20005-4026
See PBGC's FAQs on Premiums for the appropriate telephone number and address for premium-related inquiries and requests.