Electronic Premium Filing, 31077-31082 [E6-8433]
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Federal Register / Vol. 71, No. 105 / Thursday, June 1, 2006 / Rules and Regulations
Example 2. M is an Internet auction
company that produces computer software
within the United States that enables its
customers to participate in Internet auctions
for a fee. Under paragraph (i)(6)(ii) of this
section, gross receipts derived from online
services are attributable to a service and do
not constitute a lease, rental, license, sale,
exchange, or other disposition of computer
software. M’s activities constitute the
provision of online services. Therefore, M’s
gross receipts derived from the Internet
auction services are non-DPGR.
Example 3. N provides telephone services,
voicemail services, and e-mail services. N
produces computer software within the
United States that runs all of these services.
Under paragraph (i)(6)(ii) of this section,
gross receipts derived from telephone and
related telecommunication services are
attributable to a service and do not constitute
a lease, rental, license, sale, exchange, or
other disposition of computer software.
Therefore, N’s gross receipts derived from the
telephone and other telecommunication
services are non-DPGR.
Example 4. O produces tax preparation
computer software within the United States.
O derives, on a regular and ongoing basis in
its business, gross receipts from both the sale
to customers that are unrelated persons of O’s
computer software that has been affixed to a
compact disc as well as from the sale to
customers of O’s computer software that
customers have downloaded from the
Internet. O also derives gross receipts from
customers from providing the computer
software to its customers for the customers’
direct use while connected to the Internet.
Assume that the computer software sold on
compact disc or by download has only minor
or immaterial differences from the computer
software provided over the Internet, and O
does not provide any services in connection
with the computer software provided over
the Internet. Under paragraph (i)(6)(iii)(A) of
this section, O’s gross receipts derived from
providing its computer software to customers
over the Internet will be treated as derived
from the lease, rental, license, sale, exchange,
or other disposition of computer software
and are domestic production gross receipts
(DPGR) (as defined in § 1.199–3) (assuming
all the other requirements of § 1.199–3 are
met).
Example 5. The facts are the same as in
Example 4, except that O does not sell the
tax preparation computer software to
customers affixed to a compact disc and O’s
only method of providing the tax preparation
computer software to customers is over the
Internet. P, an unrelated person, derives, on
a regular and ongoing basis in its business,
gross receipts from the sale to customers of
P’s substantially identical tax preparation
computer software that has been affixed to a
compact disc as well as from the sale to
customers of P’s substantially identical tax
preparation computer software that
customers have downloaded from the
Internet. Under paragraph (i)(6)(iii)(B) of this
section, O’s gross receipts derived from
providing its tax preparation computer
software to customers over the Internet will
be treated as derived from the lease, rental,
license, sale, exchange, or other disposition
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of computer software and are DPGR
(assuming all the other requirements of
§ 1.199–3 are met).
Example 6. P produces payroll
management computer software within the
United States. For a fee, P provides the
payroll management computer software to
customers for the customers’ direct use while
connected to the Internet. This is P’s sole
method of providing its payroll management
computer software to customers. In
conjunction with the payroll management
computer software, P provides storage of
customers’ data and telephone support. Q, an
unrelated person, derives, on a regular and
ongoing basis in its business, gross receipts
from the sale to customers of Q’s
substantially identical payroll management
software that has been affixed to a compact
disc as well as from the sale to customers of
Q’s substantially identical payroll
management software that customers have
downloaded from the Internet. Under
paragraph (i)(6)(iii)(B) of this section, P’s
gross receipts derived from providing its
payroll management computer software to
customers over the Internet will be treated as
derived from the lease, rental, license, sale,
exchange, or other disposition of computer
software and are DPGR (assuming all the
other requirements of § 1.199–3 are met).
However, P’s gross receipts derived from the
fees it receives that are properly allocable to
the storage of customers’ data and telephone
support are non-DPGR.
Par. 3. Section 1.199–8T is added to
read as follows:
§ 1.199–8T
Other rules (temporary).
(a) through (h) [Reserved]. For further
guidance, see § 1.199–8(a) through (h).
(i) Effective dates. (1) through (3)
[Reserved]. For further guidance, see
§ 1.199–8(i)(1) through (3).
(4) Computer software. Section 1.199–
3T(i)(6)(ii) through (v) are applicable for
taxable years beginning on or after June
1, 2006. Taxpayers may apply these
temporary regulations to taxable years
beginning after December 31, 2004, and
before June 1, 2006. The applicability of
§ 1.199–3T(i)(6)(ii) through (v) expires
on or before May 25, 2009.
Mark E. Mathews,
Deputy Commissioner for Services and
Enforcement.
Approved: May 2, 2006.
Eric Solomon,
Acting Deputy Assistant Secretary of the
Treasury.
[FR Doc. 06–4828 Filed 5–24–06; 11:47 am]
BILLING CODE 4830–01–P
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31077
PENSION BENEFIT GUARANTY
CORPORATION
29 CFR Parts 4000, 4006, and 4007
RIN 1212–AB02
Electronic Premium Filing
Pension Benefit Guaranty
Corporation.
ACTION: Final rule.
AGENCY:
SUMMARY: The PBGC is changing its
regulations to require that premium
declarations be filed electronically. The
requirement becomes effective for plans
with 500 or more participants for the
prior plan year starting with filings for
plan years beginning in 2006 that are
made on or after July 1, 2006, and for
smaller plans starting with filings for
plan years beginning after 2006. Plans
may apply for exemptions on a case-bycase basis. Filings may be submitted
through the PBGC’s on-line e-filing
application (‘‘My Plan Administration
Account,’’ or ‘‘My PAAA’’). My PAA
has data entry and editing screens that
can be used to create and submit a
filing, and can also accept uploaded
files containing filing information that
has been prepared and formatted using
private-sector software in accordance
with the PBGC’s published standards.
DATES: Effective date: July 1, 2006. For
a discussion of applicability of these
amendments, see the Applicability
section in SUPPLEMENTARY INFORMATION.
FOR FURTHER INFORMATION CONTACT: John
H. Hanley, Director, or Deborah C.
Murphy, Attorney, Legislative and
Regulatory Department, Pension Benefit
Guaranty Corporation, 1200 K Street,
NW., Washington, DC 20005–4026, 202–
326–4024. (For TTY/TTD users, call the
Federal relay service toll-free at 1–800–
877–8339 and ask to be connected to
202–326–4024.)
SUPPLEMENTARY INFORMATION: This final
rule is part of an ongoing
implementation of the Government
Paperwork Elimination Act by the
Pension Benefit Guaranty Corporation
(‘‘PBGC’’) and is consistent with the
Office of Management and Budget’s
directive to remove regulatory
impediments to electronic transactions.
The rule addresses electronic
submission of premium filings that are
required under the regulation on
Payment of Premiums (29 CFR part
4007) and builds in the flexibility
needed to allow updating of the
electronic filing process as technology
advances.
The PBGC administers the pension
insurance programs under Title IV of
the Employee Retirement Income
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Security Act of 1974 (‘‘ERISA’’). Pension
plans covered by Title IV must pay
annual premiums to the PBGC.
Premium filings must include
information to identify the plans for
which premiums are paid and to
demonstrate that the amounts paid are
correct.
The PBGC has been processing
premium filings for 30 years. The
volume of filings processed annually is
in the tens of thousands. Processing
methods have become progressively
more automated, and the specially
designed premium forms that have been
used for some years can be read by
optical character recognition (‘‘OCR’’)
devices. Even with OCR, however, the
capture of data from paper premium
forms and the translation of the data
into electronic data files is an imperfect
process that inevitably gives rise to
errors that can be difficult and
burdensome to detect and correct. These
errors cause problems for both the PBGC
and premium filers, because they can
lead to the issuance of improper bills for
premiums that have in fact been paid,
to delays in the processing of refund
requests, to erroneous filing histories,
etc.
With a view to reducing problems of
this kind, and consistent with the
Government Paperwork Elimination
Act, optional electronic premium filing
was introduced for plan years beginning
in 2004 using an application on the
PBGC’s Web site (https://www.pbgc.gov)
called ‘‘My Plan Administration
Account’’ (‘‘My PAA’’). To make a
premium filing using My PAA, a user
logs onto a secure account on the Web
site. My PAA has been enhanced since
2004 and now offers multiple methods
for making premium filings.
The filing method first introduced in
2004 enables users to create electronic
premium filings by entering information
in on-line data entry screens, route
those premium filings among
themselves electronically for editing
and for electronic certification, and
submit completed filings with the click
of a mouse. The information submitted
can be loaded directly into the PBGC’s
premium data processing systems, thus
eliminating the errors inherent in the
OCR data capture process. Premium
payments can also be made online as
part of the filing process.
A second filing method, introduced in
late summer 2005, accommodates
pension practitioners who may prefer to
continue using private-sector software—
either purchased from a commercial
developer or developed ‘‘in-house’’—for
preparing premium filings. The PBGC
has issued standards for structuring a
computer file containing premium filing
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information; by incorporating those
standards into their software,
developers give software users the
ability to create premium data files that
they can upload through My PAA.
(These standards are available on the
PBGC’s Web site, https://www.pbgc.gov.)
Using this new method, practitioners
can prepare premium filing information
using their own software, which will
put the information into files that meet
the formatting standards, and can
electronically transmit those files to the
PBGC.
Finally, My PAA was enhanced in
early 2006 to permit importation of draft
filings that have been prepared with
private-sector software into the My PAA
data entry and editing screens, thus
combining features of the first two
methods.
E-filers using any of the My PAA
filing methods can pay premiums either
through My PAA (by credit card,
electronic check, or Automated Clearing
House (ACH) transfer) or outside My
PAA (by paper check or wire transfer).
My PAA streamlines the premium
filing process for users and contributes
to making the processing of premium
filings faster and more accurate. Thus it
has the potential to help reduce the
number of erroneous bills, to speed up
refund processing, and in general to
improve premium collection functions
while enhancing service to premium
payers.
On March 9, 2005 (at 70 FR 11592),
a proposed rule was published that
would require premium filings for large
plans to be made electronically for plan
years beginning after 2005, and
premium filings for all plans to be made
electronically for plan years beginning
after 2006; exemptions from the
electronic filing requirement could be
granted for good cause in appropriate
circumstances. (The electronic filing
requirement would not apply to
submission of information specially
requested in connection with a
premium compliance review.)
Four commenters submitted
comments on the proposal. Changes to
My PAA since the publication of the
proposed rule address many of the
comments on the proposed rule, and in
most respects, the substance of the
proposed rule has not been changed.
However, to provide more time for
software developers and filers to
prepare for e-filing, applicability of the
mandatory e-filing requirement has been
delayed for six months. The comments
are discussed below.
Payment Methods
Two commenters urged that filers be
permitted to make payment outside the
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e-filing system (e.g., by paper check). As
noted above, My PAA has been
enhanced to offer this feature. Like the
proposed rule, the final rule does not
require electronic payment, only
electronic filing of premium
information. However, the final rule
clarifies that filing methods for
payments (as well as for information)
are governed by the premium filing
instructions. While not anticipated, it is
possible that at some future date, as efiling becomes more prevalent, the
electronic payment of premiums (via
My PAA) may be required.
Certification
A number of comments addressed the
procedures for certifying filings. For
filings created and edited within My
PAA, My PAA provides an electronic
certification method similar to that used
historically for paper premium filings.
Before such a filing can be submitted,
the plan administrator—and, where
appropriate, the plan actuary—must
provide a certification using an
authentication process that establishes
the identity of the person making the
certification. For uploaded filings, a
different certification process is
provided: The plan administrator—and,
where appropriate, the plan actuary—
provide certifications that must be
preserved for six years (as is already
required for the information supporting
the premium filing) but that need not be
transmitted to the PBGC at the time of
upload. The identity of the uploader is
authenticated in a manner similar to
that used for filings created within My
PAA.
One commenter urged that the
certification method used by those who
create their filings within My PAA also
be made available to filers who create
their filings with private-sector
software; another commenter urged that
the certification method provided for
uploaders be made available to those
who create their filings within My PAA.
The first of the two comments has
already been addressed through the
introduction of the import filing method
in early 2006; filings created with
private-sector software and imported
into the data entry and editing screens
can be certified in the same manner as
filings created using those screens. The
second suggestion is also worthwhile
and is being considered for a future My
PAA enhancement.
The same two commenters also
objected to the logistical burden of
obtaining and retaining plan
administrator and enrolled actuary
certifications of uploaded filings
prepared with private-sector software.
The upload certification process is no
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more burdensome than the certification
process for paper filings, especially if
the plan administrator makes the
upload. And the import filing method
permits electronic certification of filings
prepared with private-sector software.
Nonetheless, consideration is being
given to how the certification process
(and indeed the whole premium filing
process) can be further streamlined
through future enhancements to My
PAA. To provide more flexibility in
improving the certification process, this
final rule removes from the regulation
on Premium Rates (29 CFR part 4006)
the provisions for certification of
specified items of information and
replaces them with a centralized
provision (in § 4007.3 of the premium
payment regulation) for certifications in
accordance with the premium
instructions. This is a simplification
from the current situation where some
certification rules are in the regulations
and others in the instructions.
A final objection to the certification
process by one of the same two
commenters was that plan
administrators without Internet access
would be unable to log on to My PAA
to certify filings created within My
PAA. Filers can avoid this difficulty by
using the upload method, which does
not require the plan administrator to
certify on-line. Thus, this problem does
not present an obstacle to adoption of
the e-filing requirement.
Moving Between Systems/Formats
Three commenters raised issues about
the need to move between different
systems or formats in using the new
premium e-filing methods. For example,
one commenter noted that a filing for
upload must be in a format (an XML
computer file meeting prescribed
specifications) that a plan administrator
cannot typically read. Thus, the
commenter noted, the filing data must
be reproduced in another format for
plan administrator review. The
commenter suggested that there be a
way to allow plan administrators to
review (in My PAA) filings prepared
with private-sector software, in the same
way that filings created within My PAA
can be reviewed. The recently
introduced import filing method
provides this capability.
The same commenter pointed out that
many pension service providers prepare
only variable-rate premium information
(information that would go on paper
Schedule A) for their pension plan
clients, and that this information must
then be combined with other
information (information that would go
on paper Form 1) for submission to the
PBGC. The commenter expressed
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concern that transcription errors could
occur in the process of combining these
two sets of data into a single uploadable
file. The commenter recommended that
there be a way to merge these two sets
of data after upload. This data-merging
problem can be avoided by having the
service provider and the plan
administrator enter their data into My
PAA’s data entry screens to produce a
single filing that both parties can
review. Nonetheless, the commenter’s
suggestion has merit and will be
considered for a possible future
enhancement to My PAA.
A second commenter objected that if
a plan prepared a filing with privatesector software and then decided to use
My PAA’s data entry screens, the data
would have to be reentered into My
PAA. Of course, if the private-sector
software were designed to work with the
upload and import systems, the filing as
initially prepared could simply be
uploaded or imported; if the software
were not so designed, the plan might
choose not to use it in the first place,
and simply use My PAA from the
beginning.
A third commenter noted that My
PAA neither performs actuarial
calculations for determining the
variable-rate premium nor produces
Participant Notices required under the
regulation on Disclosure to Participants
(29 CFR part 4011), requiring the use of
other systems for both purposes. Neither
of these functions has been performed
in the past by the paper filing system,
and the information required for
Participant Notices (e.g., the plan’s
current funded liability percentage and
the guarantee limits under the pension
insurance system) is different from the
information required for premium
filings. The 2005 enhancements to My
PAA do, however, automate many of the
calculations that filers have heretofore
done themselves.
Work Flow
Two commenters raised work flow
issues. One of them—a ‘‘volume
preparer’’ of premium filings—
recommended that a method be devised
for accepting ‘‘batch’’ filings (multiple
filings prepared with private-sector
software and transmitted to the PBGC in
a single computer file). The 2006 My
PAA enhancements permit both batch
uploads and batch imports.
The other commenter catalogued a
number of difficulties in beginning to
use My PAA: The need to educate
clients, get authority to act as filing
coordinator, determine filing team
members, get them to register in My
PAA, identify errors in information
displayed in My PAA (due for example
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to inaccurate data capture in the paper
filing process), correct the errors, etc.
(The commenter also noted that clients
might need to rethink who certifies their
filings ‘‘now that it requires more than
physically signing the form placed in
front of the individual.’’)
There are one-time burdens associated
with the shift to e-filing, although some
of those mentioned by this commenter
can be avoided by using the upload
process. Furthermore, errors in a plan’s
information displayed in My PAA can
generally be corrected while creating the
plan’s e-filings, and the PBGC stands
ready to work with service providers
who want to correct errors outside the
e-filing process. But these start-up
burdens are far outweighed by the
benefits of electronic filing.
Effective Date
Start-up difficulties, however—those
just mentioned and others—were also
the basis for several requests for delay
of the effective date of the mandatory
premium e-filing requirements. One
commenter stated that 12 months would
be needed to convert its systems to
produce uploadable filings. Another
expressed concerns that the upload
system would not be in place early
enough to make sure that it was
functioning properly before the first
mandatory e-filings came due.
The upload and import systems are
now in operation, and the original My
PAA data entry filing method has been
proven effective and reliable since 2004.
Furthermore, e-filing will not become
mandatory for the majority of plans—
those with fewer than 500
participants—until the 2007 plan year,
for which the earliest filings are due in
October 2007. But for large plans, some
delay in the proposed January 1, 2006,
effective date seems appropriate to
provide additional time to make
software changes and become familiar
with My PAA and the electronic filing
process. Accordingly, the applicability
of the mandatory premium e-filing
requirements for large plans has been
delayed until July 1, 2006. Premium efiling will be mandatory for large plans
starting with estimated or final filings
for plan years beginning in 2006 that are
made on or after July 1, 2006.
For example, a 2006 estimated filing
for a large plan with a plan year starting
May 1 that is made by the due date
(June 30, 2006) may be made using
paper Form 1–ES, whereas for a plan
with a plan year starting July 1, the
estimated filing would have to be made
electronically. If the plan year begins
June 1, the estimated filing (with a due
date of July 31, 2006) would have to be
made electronically if made on or after
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July 1, 2006, but could be made on Form
1–ES if made before that date.
The PBGC believes that, with this
delay, there will be adequate time for
compliance with the mandatory e-filing
requirements. In any event, the
discretion to grant exemptions from the
e-filing requirement for good cause in
appropriate circumstances obviates any
need to further delay the effective date
of the whole regulation. The
applicability of mandatory premium efiling requirements for small plans has
not changed from the proposed rule.
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Resistance to Change
Two commenters advanced the thesis
that a number of plan administrators are
computer-illiterate, lack comfort with or
confidence in electronic transactions,
resist change, or for other reasons are
reluctant to file electronically. To
accommodate this circumstance (and/or
other perceived difficulties, discussed
above, with the e-filing proposal), one of
them suggested the need for leniency in
granting exemptions for the first year of
mandatory e-filing, and the other that efiling be made voluntary and be
encouraged through the use of
incentives, some of which also are
discussed above. Other incentives
mentioned were providing more edit
checks and granting limited relief from
penalties and/or interest for late efilings.
The 2005 enhancements to My PAA’s
data entry and editing screens include
more edit checks. ERISA does not
provide for relief from interest on late
premium payments. The policy on
penalties for the late submission of
premium information is sufficiently
flexible to permit penalty relief where
there is reasonable cause for delay in
filing (although e-filing should make it
easier, rather than harder, to file on
time). And filers can expect that
exemptions from the e-filing
requirement will be granted wherever
there is good cause in appropriate
circumstances to do so. Conducting
business electronically is becoming
commonplace. As it continues to
increase in popularity, individual
reluctance to e-file is expected to
diminish. Furthermore, the upload
process offers a filing alternative for
plan administrators who are
uncomfortable about working in an
electronic environment: They may
choose to have their consultants do the
electronic part of the filing process.
Exemptions
Finally, one commenter made some
detailed comments about the exemption
process. One was that plans with 25 or
fewer participants should be exempted
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from mandatory e-filing. Plans in this
size range have until October 2007 to
prepare to file electronically. Moreover,
plans in this size range would inevitably
move above and below the 25participant cutoff from year to year,
introducing the opportunity for
confusion and administrative
complexity.
The commenter also requested that
guidance be provided on what
constitutes ‘‘good cause in appropriate
circumstances’’ for granting an
exemption from the e-filing
requirement. Each case must be judged
on the basis of its own facts and
circumstances. Because the nature and
scope of exemption requests cannot be
anticipated, it is difficult at this time to
provide much guidance on what might
be appropriate grounds for granting an
exemption. Of course, if there should be
some massive breakdown in the Internet
or the electronic premium filing system,
a broad e-filing exemption could be
granted to deal with the problem or
provide for relief from late filing
penalties. As experience with
exemption requests is gained, it may be
possible to provide more guidance in
this area.
Applicability
The changes to the filing requirements
made by this final rule are applicable to
filings for plan years beginning in 2006
that are made on or after July 1, 2006,
for large plans (those with 500 or more
participants for the prior plan year) and
to filings for all plans for plan years
beginning after 2006.
phased out as the need for paper forms
diminishes.
The final regulation includes some
editorial changes from the proposed
regulation designed to make the rules
easier to understand.
Compliance with Rulemaking
Guidelines
The PBGC has determined, in
consultation with the Office of
Management and Budget (‘‘OMB’’), that
this rule is a ‘‘significant regulatory
action’’ under Executive Order 12866.
OMB has therefore reviewed this rule
under Executive Order 12866.
The PBGC certifies under section
605(b) of the Regulatory Flexibility Act
that the amendments in this rule will
not have a significant economic impact
on a substantial number of small
entities. The PBGC expects electronic
premium filing to be no more
burdensome than paper filing for filers
generally and will grant exemptions
from the electronic filing requirement
for good cause in appropriate
circumstances. Accordingly, as
provided in section 605 of the
Regulatory Flexibility Act (5 U.S.C. 601
et seq.), sections 603 and 604 do not
apply.
OMB has approved under the
Paperwork Reduction Act the changes to
the PBGC’s collection of information for
premium filing (OMB control number
1212–0009) made by this rule and by
the My PAA enhancements discussed in
this preamble.
List of Subjects
Other Changes
29 CFR Part 4000
The adoption of this final rule
provides an opportunity to make a
technical correction to § 4007.11(b)(2) of
the premium payment regulation.
Section 4007.11(b) explains how to
determine the number of plan
participants for purposes of the early
filing rule for flat-rate premiums of large
plans. Paragraph (b)(2) states the dates
as of which multiemployer plan
participants are to be counted for this
purpose, but the language was
inadvertently truncated when the
regulations were reorganized and
renumbered in 1996. The technical
correction being made in this final rule
corrects that error. This correction
makes no change in the substance of the
regulation.
The adoption of this final rule also
provides an opportunity to remove from
the premium regulations references to
the ‘‘Premium Payment Package,’’ the
paper premium filing booklet, which is
expected to change function or be
Pension insurance, Pensions,
Reporting and recordkeeping
requirements.
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29 CFR Part 4006
Pension insurance, Pensions.
29 CFR Part 4007
Penalties, Pension insurance,
Pensions, Reporting and recordkeeping
requirements.
I For the reasons given above, the PBGC
is amending 29 CFR parts 4000, 4006,
and 4007 as follows.
PART 4000—FILING, ISSUANCE,
COMPUTATION OF TIME, AND
RECORD RETENTION
1. The authority citation for part 4000
continues to read as follows:
I
Authority: 29 U.S.C. 1082(f), 1302(b)(3).
2. In § 4000.3, paragraph (b) and
paragraph (c) introductory text are
revised to read as follows:
I
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§ 4000.3
What methods of filing may I use?
*
*
*
*
*
(b) Electronic filings.
(1) You must file premium
declarations under part 4007 of this
chapter electronically in accordance
with the instructions on the PBGC’s
Web site subject to the following
provisions:
(i) This electronic filing requirement
applies to filings for plan years
beginning in 2006 that are made on or
after July 1, 2006, for plans with 500 or
more participants for the prior plan year
and to filings for all plans for plan years
beginning after 2006.
(ii) This electronic filing requirement
does not apply to premium information
to the extent that the PBGC grants an
exemption for good cause in appropriate
circumstances.
(iii) This electronic filing requirement
does not apply to premium payments
except to the extent that the PBGC so
provides in the instructions on the
PBGC’s Web site.
(iv) This electronic filing requirement
does not apply to information you file
to comply with a request we make
under § 4007.10(c) of this chapter
(dealing with providing record
information in connection with a
premium compliance review).
(2) You must submit the information
required under part 4010 of this chapter
electronically in accordance with the
instructions on the PBGC’s Web site,
except as otherwise provided by the
PBGC.
(c) Information on how to file. Current
information on how to file, including
permitted filing methods, fax numbers,
and mail and e-mail addresses, is—
*
*
*
*
*
PART 4006—PREMIUM RATES
3. The authority citation for part 4006
continues to read as follows:
I
Authority: 29 U.S.C. 1302(b)(3), 1306,
1307.
4. In § 4006.4, paragraph (a)
introductory text is amended by
removing the words ‘‘(a)(2), and shall be
certified to in accordance with
paragraph (a)(4)’’ and adding in their
place ‘‘(a)(2)’’; paragraph (b)(1)
introductory text is amended by
removing the words ‘‘an enrolled
actuary certifies that’’; paragraph (c)
introductory text is amended by
removing the words ‘‘shall be
determined, in accordance with the
Premium Payment Package, from
values’’ and adding in their place the
words ‘‘shall be determined from
values’’; paragraph (c) introductory text
is further amended by removing the
mstockstill on PROD1PC68 with RULES
I
VerDate Aug<31>2005
15:15 May 31, 2006
Jkt 208001
words ‘‘the plan administrator certifies
that’’; paragraph (c)(3) is amended by
removing the words ‘‘Premium Payment
Package’’ and adding in their place the
words ‘‘PBGC’s premium instructions’’;
and paragraphs (a)(4), (d)(1)(i) and
(d)(1)(ii) are revised to read as follows:
§ 4006.4 Determination of unfunded vested
benefits.
(a) General rule. * * *
*
*
*
*
(4) In the case of any plan that
determines the amount of its unfunded
vested benefits under the general rule
described in this paragraph, the
determination must be made in a
manner consistent with generally
accepted actuarial principles and
practices.
*
*
*
*
*
(d) Restrictions on alternative
calculation method for large plans.
(1) * * *
(i) No significant event, as described
in paragraph (d)(2) of this section, has
occurred between the first day and the
last day of the plan year preceding the
premium payment year; or
(ii) An enrolled actuary makes an
appropriate adjustment to the value of
unfunded vested benefits to reflect the
occurrence of significant events that
have occurred between those dates.
*
*
*
*
*
I 5. In § 4006.5, paragraph (a)(5)
introductory text is amended by
removing the last sentence; paragraph
(b) is amended by removing the words
‘‘in the Premium Payment Package’’;
and paragraphs (a)(1), (a)(2), and (a)(3)
are revised to read as follows:
31081
PART 4007—PAYMENT OF PREMIUMS
6. The authority citation for part 4007
continues to read as follows:
I
Authority: 29 U.S.C. 1302(b)(3), 1303(a),
1306, 1307.
7. Section 4007.3 is revised to read as
follows:
I
*
§ 4007.3
filing.
§ 4006.5
The estimation, declaration,
reconciliation, and payment of
premiums shall be made in accordance
with the premium instructions on the
PBGC’s Web site (https://www.pbgc.gov).
The plan administrator of each covered
plan is responsible for filing prescribed
premium information and payments. No
later than the applicable due date(s)
specified in § 4007.11, a plan’s required
premium payment(s) and related
information, certified as provided in the
premium instructions, must be filed in
the manner and format prescribed in the
instructions. Information must be filed
electronically except to the extent that
the PBGC grants an exemption for good
cause in appropriate circumstances. The
requirement to file electronically
applies to filings for plan years
beginning in 2006 that are made on or
after July 1, 2006, for plans with 500 or
more participants for the prior plan year
and to filings for all plans for plan years
beginning after 2006. (The requirement
to file electronically does not apply to
information filed to comply with a
PBGC request under ( 4007.10(c)
(dealing with providing record
information in connection with a
premium compliance review).)
Exemptions and special rules.
(a) Variable-rate premium
exemptions. * * *
(1) Certain fully funded plans. A plan
is described in this paragraph if the plan
had fewer than 500 participants on the
last day of the plan year preceding the
premium payment year, and as of that
date, the plan had no unfunded vested
benefits (valued at the interest rate
prescribed in § 4006.4(b)(1)).
(2) Plans without vested benefit
liabilities. A plan is described in this
paragraph if it did not have any
participants with vested benefits as of
the last day of the plan year preceding
the premium payment year.
(3) Section 412(i) plans. A plan is
described in this paragraph if the plan
was a plan described in section 412(i) of
the Code and the regulations thereunder
on the last day of the plan year
preceding the premium payment year.
*
*
*
*
*
PO 00000
Frm 00013
Fmt 4700
Sfmt 4700
Filing requirement; method of
8. Section 4007.4 is revised to read as
follows:
I
§ 4007.4
Where to file.
See § 4000.4 of this chapter for
information on where to file.
9. In § 4007.11, paragraph (e) is
amended by removing the words ‘‘in the
Premium Payment Package’’; and
paragraph (b)(2) introductory text is
revised to read as follows:
I
4007.11
Due dates.
*
*
*
*
*
(b) Participant count rule for purposes
of determining filing due dates. * * *
*
*
*
*
*
(2) For a multiemployer plan, the
number of participants determined as of
the following date:
*
*
*
*
*
E:\FR\FM\01JNR1.SGM
01JNR1
31082
Federal Register / Vol. 71, No. 105 / Thursday, June 1, 2006 / Rules and Regulations
Issued in Washington, DC, this 25th day of
May, 2006.
Elaine L. Chao,
Chairman, Board of Directors, Pension Benefit
Guaranty Corporation.
Issued on the date set forth above pursuant
to a resolution of the Board of Directors
authorizing its Chairman to issue this final
rule.
Judith R. Starr,
Secretary, Board of Directors, Pension Benefit
Guaranty Corporation.
[FR Doc. E6–8433 Filed 5–31–06; 8:45 am]
BILLING CODE 7709–01–P
Office of the Secretary
32 CFR Part 216
Military Recruiting and Reserve Officer
Training Corps Program Access to
Institutions of Higher Education
Department of Defense.
Final rule.
AGENCY:
mstockstill on PROD1PC68 with RULES
SUMMARY: This document re-establishes
the Department of Defense’s rules
addressing military recruiting and
Reserve Officer Training Corps program
access at institutions of higher
education. These rules were
inadvertently removed from the CFR by
a document published in the Federal
Register on March 18, 2006. These rules
implement the National Defense
Authorization Act for Fiscal Year 1995,
the National Defense Authorization Act
for Fiscal Year 1996, and the Omnibus
Consolidated Appropriations Act, 1997
(the Acts). The Acts state that no funds
available under appropriations acts for
any fiscal year for the Departments of
Defense, Transportation (with respect to
military recruiting), Labor, Health and
Human Services, Education, and
Related Agencies may be provided by
contract or grant (including a grant of
funds to be available for student aid) to
a covered school that has a policy or
practice (regardless of when
implemented) that either prohibits, or in
effect prevents, the Secretary of Defense
from obtaining, for military recruiting
purposes, entry to campuses, access to
students on campuses, access to
directory information on students, or
that has an anti-ROTC policy.
DATES: Effective Date: June 1, 2006.
FOR FURTHER INFORMATION CONTACT:
William J. Carr, (703) 697–8444.
SUPPLEMENTARY INFORMATION: On March
10, 2006 (71 FR 12280), the Department
of Defense removed 32 CFR Part 216 to
correlate with the DoD Directive
VerDate Aug<31>2005
15:15 May 31, 2006
Jkt 208001
List of Subjects in 32 CFR Part 216
Armed forces, Armed forces reserves,
Colleges and universities, Education.
I Accordingly, 32 CFR part 216 is
added to read as follows:
PART 216—MILITARY RECRUITING
AND RESERVE OFFICER TRAINING
CORPS PROGRAM ACCESS TO
INSTITUTIONS OF HIGHER
EDUCATION
DEPARTMENT OF DEFENSE
ACTION:
1322.13 which was canceled in 1998.
The part should remain in effect. This
part is published as originally
published. The only change made was
to the first footnote 1 which gives an
availability statement directed to the
Web site.
Sec.
216.1 Purpose.
216.2 Applicability.
216.3 Definitions.
216.4 Policy.
216.5 Responsibilities.
216.6 Information requirements.
Appendix A of part 216—Military Recruiting
Sample Letter of Inquiry
Appendix B of part 216—ROTC Sample
Letter of Inquiry.
Authority: 10 U.S.C. 983.
§ 216.1
Purpose.
This part:
(a) Implements the National Defense
authorization Act of 1995 (108 Stat.
2663),
(b) Implements 10 U.S.C. 983, and
(c) Implements the Omnibus
Consolidated Appropriations Act, 1997
(110 Stat. 3009).
(d) Updates policy and
responsibilities relating to the
management of covered schools that
have a policy of either denying, or
effectively preventing military
recruiting personnel entry to their
campuses, access to their students, or
access to student recruiting information.
(e) Updates policy and
responsibilities relating to the
management of covered schools that
have an anti-ROTC policy.
§ 216.2
Applicability.
This part applies to the Office of the
Secretary of Defense, the Military
Departments, the Chairman of the Joint
Chiefs of Staff, the Combatant
Commands, the Defense Agencies, and
the DoD Field Activities (hereafter
referred to collectively as ‘‘the DoD
components’’). The policies herein also
affect the Departments of
Transportation, Labor, Health and
Human Services, Education, and
Related Agencies. The term ‘‘Military
Services,’’ as used herein, refers to the
army, the Navy, the Marine Corps, the
PO 00000
Frm 00014
Fmt 4700
Sfmt 4700
Air Force, and the Coast Guard,
including their Reserve or National
Guard components. The term ‘‘Related
Agencies,’’ as used herein, refers to the
Armed Forces Retirement Home, the
Corporation for National and
Community Service, the Corporation for
Public Broadcasting, the Federal
Mediation and Conciliation Service, the
Federal Mine Safety and Health Review
Commission, the National Commission
on Libraries and Information Science,
the National Council on Disability, the
National Education Goals Panel, the
National Labor Relations Board, the
National Mediation Board, the
Occupational Safety and Health Review
Commission, the Physician Payment
Review Commission, the Prospective
payment Assessment Commission, the
Social Security Administration, the
Railroad Retirement Board and the
United States Institute of Peace.
§ 216.3
Definitions.
(a) Anti-ROTC policy. A policy or
practice whereby a covered school
prohibits or in effect prevents the
Secretary of Defense from maintaining,
establishing, or efficiently operating a
unit of the Senior ROTC at the covered
school, or prohibits or in effect prevents
a student at the covered school from
enrolling in a Senior ROTC unit at
another institution of higher education.
(b) Covered school. An institution of
higher education, or a subelement of an
institution of higher education, subject
to the following clarifications:
(1) In the event of a determination
(§ 216.5) affecting only a subelement of
a parent institution (see § 216.3(d)), the
limitations on the use of funds
(§ 216.4(a) and (b)) shall apply only to
the subelement and not to the parent
institution as a whole.
(2) The limitations on the use of funds
(§ 216.4(a) and (b)) shall not apply to
any individual institution of higher
education that is part of a single
university system if that individual
institution does not preventy entry to
campus, access to students, or access to
student recruiting information by
military recruiters, or have an antiROTC policy, even though another
campus of the same system is affected
by a determination under § 216.5(a).
(c) Student recruiting information. For
those currently enrolled, the student’s
name, address, telephone listing, age (or
year of birth), level of education (e.g.,
freshman, sophomore, or degree
awarded for a recent graduate), and
major.
(d) Institution of higher education. A
domestic college, university, or other
institution (or subelement thereof)
providing postsecondary school courses
E:\FR\FM\01JNR1.SGM
01JNR1
]]>Agencies
[Federal Register Volume 71, Number 105 (Thursday, June 1, 2006)]
[Rules and Regulations]
[Pages 31077-31082]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-8433]
=======================================================================
-----------------------------------------------------------------------
PENSION BENEFIT GUARANTY CORPORATION
29 CFR Parts 4000, 4006, and 4007
RIN 1212-AB02
Electronic Premium Filing
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The PBGC is changing its regulations to require that premium
declarations be filed electronically. The requirement becomes effective
for plans with 500 or more participants for the prior plan year
starting with filings for plan years beginning in 2006 that are made on
or after July 1, 2006, and for smaller plans starting with filings for
plan years beginning after 2006. Plans may apply for exemptions on a
case-by-case basis. Filings may be submitted through the PBGC's on-line
e-filing application (``My Plan Administration Account,'' or ``My
PAAA''). My PAA has data entry and editing screens that can be used to
create and submit a filing, and can also accept uploaded files
containing filing information that has been prepared and formatted
using private-sector software in accordance with the PBGC's published
standards.
DATES: Effective date: July 1, 2006. For a discussion of applicability
of these amendments, see the Applicability section in SUPPLEMENTARY
INFORMATION.
FOR FURTHER INFORMATION CONTACT: John H. Hanley, Director, or Deborah
C. Murphy, Attorney, Legislative and Regulatory Department, Pension
Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005-
4026, 202-326-4024. (For TTY/TTD users, call the Federal relay service
toll-free at 1-800-877-8339 and ask to be connected to 202-326-4024.)
SUPPLEMENTARY INFORMATION: This final rule is part of an ongoing
implementation of the Government Paperwork Elimination Act by the
Pension Benefit Guaranty Corporation (``PBGC'') and is consistent with
the Office of Management and Budget's directive to remove regulatory
impediments to electronic transactions. The rule addresses electronic
submission of premium filings that are required under the regulation on
Payment of Premiums (29 CFR part 4007) and builds in the flexibility
needed to allow updating of the electronic filing process as technology
advances.
The PBGC administers the pension insurance programs under Title IV
of the Employee Retirement Income
[[Page 31078]]
Security Act of 1974 (``ERISA''). Pension plans covered by Title IV
must pay annual premiums to the PBGC. Premium filings must include
information to identify the plans for which premiums are paid and to
demonstrate that the amounts paid are correct.
The PBGC has been processing premium filings for 30 years. The
volume of filings processed annually is in the tens of thousands.
Processing methods have become progressively more automated, and the
specially designed premium forms that have been used for some years can
be read by optical character recognition (``OCR'') devices. Even with
OCR, however, the capture of data from paper premium forms and the
translation of the data into electronic data files is an imperfect
process that inevitably gives rise to errors that can be difficult and
burdensome to detect and correct. These errors cause problems for both
the PBGC and premium filers, because they can lead to the issuance of
improper bills for premiums that have in fact been paid, to delays in
the processing of refund requests, to erroneous filing histories, etc.
With a view to reducing problems of this kind, and consistent with
the Government Paperwork Elimination Act, optional electronic premium
filing was introduced for plan years beginning in 2004 using an
application on the PBGC's Web site (https://www.pbgc.gov) called ``My
Plan Administration Account'' (``My PAA''). To make a premium filing
using My PAA, a user logs onto a secure account on the Web site. My PAA
has been enhanced since 2004 and now offers multiple methods for making
premium filings.
The filing method first introduced in 2004 enables users to create
electronic premium filings by entering information in on-line data
entry screens, route those premium filings among themselves
electronically for editing and for electronic certification, and submit
completed filings with the click of a mouse. The information submitted
can be loaded directly into the PBGC's premium data processing systems,
thus eliminating the errors inherent in the OCR data capture process.
Premium payments can also be made online as part of the filing process.
A second filing method, introduced in late summer 2005,
accommodates pension practitioners who may prefer to continue using
private-sector software--either purchased from a commercial developer
or developed ``in-house''--for preparing premium filings. The PBGC has
issued standards for structuring a computer file containing premium
filing information; by incorporating those standards into their
software, developers give software users the ability to create premium
data files that they can upload through My PAA. (These standards are
available on the PBGC's Web site, https://www.pbgc.gov.) Using this new
method, practitioners can prepare premium filing information using
their own software, which will put the information into files that meet
the formatting standards, and can electronically transmit those files
to the PBGC.
Finally, My PAA was enhanced in early 2006 to permit importation of
draft filings that have been prepared with private-sector software into
the My PAA data entry and editing screens, thus combining features of
the first two methods.
E-filers using any of the My PAA filing methods can pay premiums
either through My PAA (by credit card, electronic check, or Automated
Clearing House (ACH) transfer) or outside My PAA (by paper check or
wire transfer).
My PAA streamlines the premium filing process for users and
contributes to making the processing of premium filings faster and more
accurate. Thus it has the potential to help reduce the number of
erroneous bills, to speed up refund processing, and in general to
improve premium collection functions while enhancing service to premium
payers.
On March 9, 2005 (at 70 FR 11592), a proposed rule was published
that would require premium filings for large plans to be made
electronically for plan years beginning after 2005, and premium filings
for all plans to be made electronically for plan years beginning after
2006; exemptions from the electronic filing requirement could be
granted for good cause in appropriate circumstances. (The electronic
filing requirement would not apply to submission of information
specially requested in connection with a premium compliance review.)
Four commenters submitted comments on the proposal. Changes to My
PAA since the publication of the proposed rule address many of the
comments on the proposed rule, and in most respects, the substance of
the proposed rule has not been changed. However, to provide more time
for software developers and filers to prepare for e-filing,
applicability of the mandatory e-filing requirement has been delayed
for six months. The comments are discussed below.
Payment Methods
Two commenters urged that filers be permitted to make payment
outside the e-filing system (e.g., by paper check). As noted above, My
PAA has been enhanced to offer this feature. Like the proposed rule,
the final rule does not require electronic payment, only electronic
filing of premium information. However, the final rule clarifies that
filing methods for payments (as well as for information) are governed
by the premium filing instructions. While not anticipated, it is
possible that at some future date, as e-filing becomes more prevalent,
the electronic payment of premiums (via My PAA) may be required.
Certification
A number of comments addressed the procedures for certifying
filings. For filings created and edited within My PAA, My PAA provides
an electronic certification method similar to that used historically
for paper premium filings. Before such a filing can be submitted, the
plan administrator--and, where appropriate, the plan actuary--must
provide a certification using an authentication process that
establishes the identity of the person making the certification. For
uploaded filings, a different certification process is provided: The
plan administrator--and, where appropriate, the plan actuary--provide
certifications that must be preserved for six years (as is already
required for the information supporting the premium filing) but that
need not be transmitted to the PBGC at the time of upload. The identity
of the uploader is authenticated in a manner similar to that used for
filings created within My PAA.
One commenter urged that the certification method used by those who
create their filings within My PAA also be made available to filers who
create their filings with private-sector software; another commenter
urged that the certification method provided for uploaders be made
available to those who create their filings within My PAA. The first of
the two comments has already been addressed through the introduction of
the import filing method in early 2006; filings created with private-
sector software and imported into the data entry and editing screens
can be certified in the same manner as filings created using those
screens. The second suggestion is also worthwhile and is being
considered for a future My PAA enhancement.
The same two commenters also objected to the logistical burden of
obtaining and retaining plan administrator and enrolled actuary
certifications of uploaded filings prepared with private-sector
software. The upload certification process is no
[[Page 31079]]
more burdensome than the certification process for paper filings,
especially if the plan administrator makes the upload. And the import
filing method permits electronic certification of filings prepared with
private-sector software. Nonetheless, consideration is being given to
how the certification process (and indeed the whole premium filing
process) can be further streamlined through future enhancements to My
PAA. To provide more flexibility in improving the certification
process, this final rule removes from the regulation on Premium Rates
(29 CFR part 4006) the provisions for certification of specified items
of information and replaces them with a centralized provision (in Sec.
4007.3 of the premium payment regulation) for certifications in
accordance with the premium instructions. This is a simplification from
the current situation where some certification rules are in the
regulations and others in the instructions.
A final objection to the certification process by one of the same
two commenters was that plan administrators without Internet access
would be unable to log on to My PAA to certify filings created within
My PAA. Filers can avoid this difficulty by using the upload method,
which does not require the plan administrator to certify on-line. Thus,
this problem does not present an obstacle to adoption of the e-filing
requirement.
Moving Between Systems/Formats
Three commenters raised issues about the need to move between
different systems or formats in using the new premium e-filing methods.
For example, one commenter noted that a filing for upload must be in a
format (an XML computer file meeting prescribed specifications) that a
plan administrator cannot typically read. Thus, the commenter noted,
the filing data must be reproduced in another format for plan
administrator review. The commenter suggested that there be a way to
allow plan administrators to review (in My PAA) filings prepared with
private-sector software, in the same way that filings created within My
PAA can be reviewed. The recently introduced import filing method
provides this capability.
The same commenter pointed out that many pension service providers
prepare only variable-rate premium information (information that would
go on paper Schedule A) for their pension plan clients, and that this
information must then be combined with other information (information
that would go on paper Form 1) for submission to the PBGC. The
commenter expressed concern that transcription errors could occur in
the process of combining these two sets of data into a single
uploadable file. The commenter recommended that there be a way to merge
these two sets of data after upload. This data-merging problem can be
avoided by having the service provider and the plan administrator enter
their data into My PAA's data entry screens to produce a single filing
that both parties can review. Nonetheless, the commenter's suggestion
has merit and will be considered for a possible future enhancement to
My PAA.
A second commenter objected that if a plan prepared a filing with
private-sector software and then decided to use My PAA's data entry
screens, the data would have to be reentered into My PAA. Of course, if
the private-sector software were designed to work with the upload and
import systems, the filing as initially prepared could simply be
uploaded or imported; if the software were not so designed, the plan
might choose not to use it in the first place, and simply use My PAA
from the beginning.
A third commenter noted that My PAA neither performs actuarial
calculations for determining the variable-rate premium nor produces
Participant Notices required under the regulation on Disclosure to
Participants (29 CFR part 4011), requiring the use of other systems for
both purposes. Neither of these functions has been performed in the
past by the paper filing system, and the information required for
Participant Notices (e.g., the plan's current funded liability
percentage and the guarantee limits under the pension insurance system)
is different from the information required for premium filings. The
2005 enhancements to My PAA do, however, automate many of the
calculations that filers have heretofore done themselves.
Work Flow
Two commenters raised work flow issues. One of them--a ``volume
preparer'' of premium filings--recommended that a method be devised for
accepting ``batch'' filings (multiple filings prepared with private-
sector software and transmitted to the PBGC in a single computer file).
The 2006 My PAA enhancements permit both batch uploads and batch
imports.
The other commenter catalogued a number of difficulties in
beginning to use My PAA: The need to educate clients, get authority to
act as filing coordinator, determine filing team members, get them to
register in My PAA, identify errors in information displayed in My PAA
(due for example to inaccurate data capture in the paper filing
process), correct the errors, etc. (The commenter also noted that
clients might need to rethink who certifies their filings ``now that it
requires more than physically signing the form placed in front of the
individual.'')
There are one-time burdens associated with the shift to e-filing,
although some of those mentioned by this commenter can be avoided by
using the upload process. Furthermore, errors in a plan's information
displayed in My PAA can generally be corrected while creating the
plan's e-filings, and the PBGC stands ready to work with service
providers who want to correct errors outside the e-filing process. But
these start-up burdens are far outweighed by the benefits of electronic
filing.
Effective Date
Start-up difficulties, however--those just mentioned and others--
were also the basis for several requests for delay of the effective
date of the mandatory premium e-filing requirements. One commenter
stated that 12 months would be needed to convert its systems to produce
uploadable filings. Another expressed concerns that the upload system
would not be in place early enough to make sure that it was functioning
properly before the first mandatory e-filings came due.
The upload and import systems are now in operation, and the
original My PAA data entry filing method has been proven effective and
reliable since 2004. Furthermore, e-filing will not become mandatory
for the majority of plans--those with fewer than 500 participants--
until the 2007 plan year, for which the earliest filings are due in
October 2007. But for large plans, some delay in the proposed January
1, 2006, effective date seems appropriate to provide additional time to
make software changes and become familiar with My PAA and the
electronic filing process. Accordingly, the applicability of the
mandatory premium e-filing requirements for large plans has been
delayed until July 1, 2006. Premium e-filing will be mandatory for
large plans starting with estimated or final filings for plan years
beginning in 2006 that are made on or after July 1, 2006.
For example, a 2006 estimated filing for a large plan with a plan
year starting May 1 that is made by the due date (June 30, 2006) may be
made using paper Form 1-ES, whereas for a plan with a plan year
starting July 1, the estimated filing would have to be made
electronically. If the plan year begins June 1, the estimated filing
(with a due date of July 31, 2006) would have to be made electronically
if made on or after
[[Page 31080]]
July 1, 2006, but could be made on Form 1-ES if made before that date.
The PBGC believes that, with this delay, there will be adequate
time for compliance with the mandatory e-filing requirements. In any
event, the discretion to grant exemptions from the e-filing requirement
for good cause in appropriate circumstances obviates any need to
further delay the effective date of the whole regulation. The
applicability of mandatory premium e-filing requirements for small
plans has not changed from the proposed rule.
Resistance to Change
Two commenters advanced the thesis that a number of plan
administrators are computer-illiterate, lack comfort with or confidence
in electronic transactions, resist change, or for other reasons are
reluctant to file electronically. To accommodate this circumstance
(and/or other perceived difficulties, discussed above, with the e-
filing proposal), one of them suggested the need for leniency in
granting exemptions for the first year of mandatory e-filing, and the
other that e-filing be made voluntary and be encouraged through the use
of incentives, some of which also are discussed above. Other incentives
mentioned were providing more edit checks and granting limited relief
from penalties and/or interest for late e-filings.
The 2005 enhancements to My PAA's data entry and editing screens
include more edit checks. ERISA does not provide for relief from
interest on late premium payments. The policy on penalties for the late
submission of premium information is sufficiently flexible to permit
penalty relief where there is reasonable cause for delay in filing
(although e-filing should make it easier, rather than harder, to file
on time). And filers can expect that exemptions from the e-filing
requirement will be granted wherever there is good cause in appropriate
circumstances to do so. Conducting business electronically is becoming
commonplace. As it continues to increase in popularity, individual
reluctance to e-file is expected to diminish. Furthermore, the upload
process offers a filing alternative for plan administrators who are
uncomfortable about working in an electronic environment: They may
choose to have their consultants do the electronic part of the filing
process.
Exemptions
Finally, one commenter made some detailed comments about the
exemption process. One was that plans with 25 or fewer participants
should be exempted from mandatory e-filing. Plans in this size range
have until October 2007 to prepare to file electronically. Moreover,
plans in this size range would inevitably move above and below the 25-
participant cutoff from year to year, introducing the opportunity for
confusion and administrative complexity.
The commenter also requested that guidance be provided on what
constitutes ``good cause in appropriate circumstances'' for granting an
exemption from the e-filing requirement. Each case must be judged on
the basis of its own facts and circumstances. Because the nature and
scope of exemption requests cannot be anticipated, it is difficult at
this time to provide much guidance on what might be appropriate grounds
for granting an exemption. Of course, if there should be some massive
breakdown in the Internet or the electronic premium filing system, a
broad e-filing exemption could be granted to deal with the problem or
provide for relief from late filing penalties. As experience with
exemption requests is gained, it may be possible to provide more
guidance in this area.
Applicability
The changes to the filing requirements made by this final rule are
applicable to filings for plan years beginning in 2006 that are made on
or after July 1, 2006, for large plans (those with 500 or more
participants for the prior plan year) and to filings for all plans for
plan years beginning after 2006.
Other Changes
The adoption of this final rule provides an opportunity to make a
technical correction to Sec. 4007.11(b)(2) of the premium payment
regulation. Section 4007.11(b) explains how to determine the number of
plan participants for purposes of the early filing rule for flat-rate
premiums of large plans. Paragraph (b)(2) states the dates as of which
multiemployer plan participants are to be counted for this purpose, but
the language was inadvertently truncated when the regulations were
reorganized and renumbered in 1996. The technical correction being made
in this final rule corrects that error. This correction makes no change
in the substance of the regulation.
The adoption of this final rule also provides an opportunity to
remove from the premium regulations references to the ``Premium Payment
Package,'' the paper premium filing booklet, which is expected to
change function or be phased out as the need for paper forms
diminishes.
The final regulation includes some editorial changes from the
proposed regulation designed to make the rules easier to understand.
Compliance with Rulemaking Guidelines
The PBGC has determined, in consultation with the Office of
Management and Budget (``OMB''), that this rule is a ``significant
regulatory action'' under Executive Order 12866. OMB has therefore
reviewed this rule under Executive Order 12866.
The PBGC certifies under section 605(b) of the Regulatory
Flexibility Act that the amendments in this rule will not have a
significant economic impact on a substantial number of small entities.
The PBGC expects electronic premium filing to be no more burdensome
than paper filing for filers generally and will grant exemptions from
the electronic filing requirement for good cause in appropriate
circumstances. Accordingly, as provided in section 605 of the
Regulatory Flexibility Act (5 U.S.C. 601 et seq.), sections 603 and 604
do not apply.
OMB has approved under the Paperwork Reduction Act the changes to
the PBGC's collection of information for premium filing (OMB control
number 1212-0009) made by this rule and by the My PAA enhancements
discussed in this preamble.
List of Subjects
29 CFR Part 4000
Pension insurance, Pensions, Reporting and recordkeeping
requirements.
29 CFR Part 4006
Pension insurance, Pensions.
29 CFR Part 4007
Penalties, Pension insurance, Pensions, Reporting and recordkeeping
requirements.
0
For the reasons given above, the PBGC is amending 29 CFR parts 4000,
4006, and 4007 as follows.
PART 4000--FILING, ISSUANCE, COMPUTATION OF TIME, AND RECORD
RETENTION
0
1. The authority citation for part 4000 continues to read as follows:
Authority: 29 U.S.C. 1082(f), 1302(b)(3).
0
2. In Sec. 4000.3, paragraph (b) and paragraph (c) introductory text
are revised to read as follows:
[[Page 31081]]
Sec. 4000.3 What methods of filing may I use?
* * * * *
(b) Electronic filings.
(1) You must file premium declarations under part 4007 of this
chapter electronically in accordance with the instructions on the
PBGC's Web site subject to the following provisions:
(i) This electronic filing requirement applies to filings for plan
years beginning in 2006 that are made on or after July 1, 2006, for
plans with 500 or more participants for the prior plan year and to
filings for all plans for plan years beginning after 2006.
(ii) This electronic filing requirement does not apply to premium
information to the extent that the PBGC grants an exemption for good
cause in appropriate circumstances.
(iii) This electronic filing requirement does not apply to premium
payments except to the extent that the PBGC so provides in the
instructions on the PBGC's Web site.
(iv) This electronic filing requirement does not apply to
information you file to comply with a request we make under Sec.
4007.10(c) of this chapter (dealing with providing record information
in connection with a premium compliance review).
(2) You must submit the information required under part 4010 of
this chapter electronically in accordance with the instructions on the
PBGC's Web site, except as otherwise provided by the PBGC.
(c) Information on how to file. Current information on how to file,
including permitted filing methods, fax numbers, and mail and e-mail
addresses, is--
* * * * *
PART 4006--PREMIUM RATES
0
3. The authority citation for part 4006 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
0
4. In Sec. 4006.4, paragraph (a) introductory text is amended by
removing the words ``(a)(2), and shall be certified to in accordance
with paragraph (a)(4)'' and adding in their place ``(a)(2)''; paragraph
(b)(1) introductory text is amended by removing the words ``an enrolled
actuary certifies that''; paragraph (c) introductory text is amended by
removing the words ``shall be determined, in accordance with the
Premium Payment Package, from values'' and adding in their place the
words ``shall be determined from values''; paragraph (c) introductory
text is further amended by removing the words ``the plan administrator
certifies that''; paragraph (c)(3) is amended by removing the words
``Premium Payment Package'' and adding in their place the words
``PBGC's premium instructions''; and paragraphs (a)(4), (d)(1)(i) and
(d)(1)(ii) are revised to read as follows:
Sec. 4006.4 Determination of unfunded vested benefits.
(a) General rule. * * *
* * * * *
(4) In the case of any plan that determines the amount of its
unfunded vested benefits under the general rule described in this
paragraph, the determination must be made in a manner consistent with
generally accepted actuarial principles and practices.
* * * * *
(d) Restrictions on alternative calculation method for large plans.
(1) * * *
(i) No significant event, as described in paragraph (d)(2) of this
section, has occurred between the first day and the last day of the
plan year preceding the premium payment year; or
(ii) An enrolled actuary makes an appropriate adjustment to the
value of unfunded vested benefits to reflect the occurrence of
significant events that have occurred between those dates.
* * * * *
0
5. In Sec. 4006.5, paragraph (a)(5) introductory text is amended by
removing the last sentence; paragraph (b) is amended by removing the
words ``in the Premium Payment Package''; and paragraphs (a)(1),
(a)(2), and (a)(3) are revised to read as follows:
Sec. 4006.5 Exemptions and special rules.
(a) Variable-rate premium exemptions. * * *
(1) Certain fully funded plans. A plan is described in this
paragraph if the plan had fewer than 500 participants on the last day
of the plan year preceding the premium payment year, and as of that
date, the plan had no unfunded vested benefits (valued at the interest
rate prescribed in Sec. 4006.4(b)(1)).
(2) Plans without vested benefit liabilities. A plan is described
in this paragraph if it did not have any participants with vested
benefits as of the last day of the plan year preceding the premium
payment year.
(3) Section 412(i) plans. A plan is described in this paragraph if
the plan was a plan described in section 412(i) of the Code and the
regulations thereunder on the last day of the plan year preceding the
premium payment year.
* * * * *
PART 4007--PAYMENT OF PREMIUMS
0
6. The authority citation for part 4007 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1303(a), 1306, 1307.
0
7. Section 4007.3 is revised to read as follows:
Sec. 4007.3 Filing requirement; method of filing.
The estimation, declaration, reconciliation, and payment of
premiums shall be made in accordance with the premium instructions on
the PBGC's Web site (https://www.pbgc.gov). The plan administrator of
each covered plan is responsible for filing prescribed premium
information and payments. No later than the applicable due date(s)
specified in Sec. 4007.11, a plan's required premium payment(s) and
related information, certified as provided in the premium instructions,
must be filed in the manner and format prescribed in the instructions.
Information must be filed electronically except to the extent that the
PBGC grants an exemption for good cause in appropriate circumstances.
The requirement to file electronically applies to filings for plan
years beginning in 2006 that are made on or after July 1, 2006, for
plans with 500 or more participants for the prior plan year and to
filings for all plans for plan years beginning after 2006. (The
requirement to file electronically does not apply to information filed
to comply with a PBGC request under ( 4007.10(c) (dealing with
providing record information in connection with a premium compliance
review).)
0
8. Section 4007.4 is revised to read as follows:
Sec. 4007.4 Where to file.
See Sec. 4000.4 of this chapter for information on where to file.
0
9. In Sec. 4007.11, paragraph (e) is amended by removing the words
``in the Premium Payment Package''; and paragraph (b)(2) introductory
text is revised to read as follows:
4007.11 Due dates.
* * * * *
(b) Participant count rule for purposes of determining filing due
dates. * * *
* * * * *
(2) For a multiemployer plan, the number of participants determined
as of the following date:
* * * * *
[[Page 31082]]
Issued in Washington, DC, this 25th day of May, 2006.
Elaine L. Chao,
Chairman, Board of Directors, Pension Benefit Guaranty Corporation.
Issued on the date set forth above pursuant to a resolution of
the Board of Directors authorizing its Chairman to issue this final
rule.
Judith R. Starr,
Secretary, Board of Directors, Pension Benefit Guaranty Corporation.
[FR Doc. E6-8433 Filed 5-31-06; 8:45 am]
BILLING CODE 7709-01-P
