Blogging Employee Benefits

January 20, 2006

PBGC Backs Up Its Own Relief

Filed under: PBGC — Fuguerre @ 4:30 pm

As previously noted here, the PBGC has granted 4010 filing relief through June 30, 2006, for pension plans that would satisfy the 4010 Gateway Test on the basis of measurement of vested benefits using 85% of the corporate bond rate. Technically, use of that rate expired at the end of 2005, but pension reform legislation broadly expected to be enacted early in 2006 would extend use of that rate effective as of the beginning of 2006, so the PBGC quite generously has waived 4010 reporting for those pension plans that would benefit from the legislation.

Problem is, the corporate bond rate at the focal point of the rule has traditionally been published by the IRS per its authority over the minimum funding standards under IRC 412.  But although the same pension reform legislation would similarly extend reference to the corporate bond rate for purposes of IRC 412, the IRS ceased publishing the rate after December 2005, in this particular instance being a more costive stickler for the current governing statutory rule as not yet amended than its more accommodating sister agency is prepared to be. So the PBGC has stepped in and provided the specific rate that applies for the modified 4010 Gateway Test for plan years beginning in January 2006: 4.86%. [PBGC Website]

Thanks, PBGC. Get with the program, IRS.

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