In January, the Department of Labor (“DOL”) finalized regulations intended to increase understanding on the part of multiemployer plan participants and beneficiaries of the funding status of their defined benefit pension plans. Issued under the Pension Funding Equity Act of 2004, the new rules require multiemployer plans to provide an annual “funding notice” with respect to all plan years beginning after December 31, 2004. Unions and employers that co-sponsor such plans are also intended to benefit from this new notice requirement.
This funding notice must be furnished within nine months after the close of the plan year to which it relates – unless the plan has obtained an extension of time to file its Annual Report (Form 5500), in which case the notice is due two months after the extended filing deadline. (These are the same deadlines that apply to the distribution of a Summary Annual Report.) Thus, for a calendar-year plan that does not secure a filing extension for its 2005 Annual Report, the first funding notice will be due by September 30, 2006.
Satisfying the form and content requirements of the regulations should be quite simple. The regulations include a model notice, and only a few items of information – which must be pulled directly from the plan’s Annual Report – are needed to complete the model.
This annual notice must be provided to the following parties:
- the Pension Benefit Guaranty Corporation (“PBGC”);
- plan participants;
- beneficiaries who are receiving benefits;
- the unions representing plan participants; and
- each employer that is either a party to a collective bargaining agreement under which the plan is maintained or otherwise subject to withdrawal liability.
The notice may be furnished by any means that is reasonably calculated to ensure actual receipt and likely to result in full distribution, including delivery by e-mail pursuant to existing DOL regulations. Although the DOL specifically rejected a suggestion that plans be allowed to include this notice within a Summary Annual Report, many plans may nonetheless choose to distribute the notice and SAR at the same time and in the same manner.