On April 25, 2023, the U.S. Department of Labor (DOL) published a press release to inform that its Employee Benefits Security Administration (EBSA) has issued a new Field Assistance Bulletin 2023-01 which contains frequently asked questions (FAQs) on the „annual funding notice requirements for multiemployer pension plans that received special financial assistance under the American Rescue Plan Act“. To recall, the Act was concluded in 2021 as a direct response to the COVID-19 pandemic and provided financial support to the American people, employers, and businesses. The Act also introduced financial help for employer-sponsored defined benefit pension plans close to insolvency provided that they meet certain conditions. One of these conditions was / is the requirement to disclose the so-called „annual funding notice“ which shall inform scheme participants of the value of assets contained in the scheme and the general standing of the scheme. The now issued FAQs shall help plan administrators comply with this requirement. The FAQs thereby include the following – as quoted; for the answers, please click on the above noted link:
Q1. The annual funding notice requires a statement of the funded percentage under section 101(f)(2)(B)(i)(II) of ERISA and a statement of the actuarial value of plan assets under section 101(f)(2)(B)(ii)(II) of ERISA. Is SFA taken into account when determining those disclosures?
Q2. Should the annual funding notice’s statement of fair market value of assets as of the last day of the notice year and the two preceding years (as required by section 101(f)(2)(B)(ii)(II) of ERISA) reflect SFA received by the plan?
Q3. Does a plan’s receipt of SFA trigger the „material effect“ explanation required under section 101(f)(2)(B)(vii) of ERISA?
Q4. For which plan year should the „material effect“ explanation required by section 101(f)(2)(B)(vii) of ERISA be provided?
Q5. When a plan’s receipt of SFA triggers the „material effect“ explanation required under section 101(f)(2)(B)(vii) of ERISA, what information must the explanation include?
Q6. How does a plan’s receipt of SFA affect the plan administrator’s obligation with respect to the statement required by 29 CFR 2520.101-5(b)(6), relating to plans in endangered, critical, or critical and declining status?
Q7. Does a plan’s receipt of SFA affect the general description of the plan’s investment policy required by 29 CFR 2520.101-5(b)(5)(iii)?
Q8. Does the plan administrator have to separately identify the assets in the SFA account to satisfy the requirements of 29 CFR 2520.101-5(b)(5)(ii)?
Q9. If the plan received SFA, does the annual funding notice have to include a summary of the rules governing insolvency, including the limitations on benefit payments as required by 29 CFR 2520.101-5(b)(8)(ii)?
Q10. May an insolvent plan that is eligible for but has not applied for SFA modify the model language in Appendix B of 29 CFR 2520.101-5 summarizing the rules governing insolvent plans to inform participants that the plan is eligible for SFA?
Q11. Section 4262(m)(6) of ERISA provides that a plan receiving SFA may not subsequently apply to suspend benefits under section 305(e)(9) of ERISA in the future even if the plan is in critical and declining status and otherwise meets the requirements for suspension. May the annual funding notice of a plan that received SFA include a statement describing the prohibition against such future suspensions?
US Department of Labor publishes transcripts of online hearing on proposed ...
