Annual Financial and Actuarial Information Reporting; Changes to Waivers, 44312-44318 [2015-18177]

Agencies

• Pension Benefit Guaranty Corporation

[Federal Register Volume 80, Number 143 (Monday, July 27, 2015)]
[Proposed Rules]
[Pages 44312-44318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18177]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 4010

RIN 1212-AB30


Annual Financial and Actuarial Information Reporting; Changes to 
Waivers

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Proposed rule.

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SUMMARY: The Pension Benefit Guaranty Corporation (PBGC) is proposing 
to amend its regulation on Annual Financial and Actuarial Information 
Reporting to codify provisions of the Moving Ahead for Progress in the 
21st Century Act and the Highway Transportation and Funding Act of 2014 
and related guidance that affect reporting under ERISA section 4010. In 
addition, PBGC is proposing to limit the reporting waiver under the 
current regulation tied to aggregate plan underfunding of $15 million 
or less to smaller plans and to add reporting waivers for plans that 
must file solely on the basis of either a statutory lien resulting from 
missed contributions over $1 million or outstanding minimum funding 
waivers exceeding the same amount (provided the missed contributions or 
funding waivers were previously reported to PBGC). The proposed rule 
also makes some technical changes.

DATES: Comments must be submitted on or before September 25, 2015.

ADDRESSES: Comments may be submitted by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the Web site instructions for submitting comments.
     Email: reg.comments@pbgc.gov.
     Fax: 202-326-4224.
     Mail or Hand Delivery: Office of the General Counsel, 
Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 
20005-4026.

All submissions must include the Regulatory Identification Number for 
this rulemaking (RIN 1212-AB30). Comments received, including personal 
information provided, will be posted to www.pbgc.gov. Copies of 
comments may also be obtained by writing to Disclosure Division, Office 
of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K 
Street

[[Page 44313]]

NW., Washington, DC 20005-4026, or calling 202-326-4040 during normal 
business hours. (TTY and TDD users may call the Federal relay service 
toll-free at 1-800-877-8339 and ask to be connected to 202-326-4040.)

FOR FURTHER INFORMATION CONTACT: Catherine B. Klion 
(Klion.Catherine@pbgc.gov), Assistant General Counsel for Regulatory 
Affairs, Office of the General Counsel; or Daniel S. Liebman 
(Liebman.Daniel@pbgc.gov), Attorney, Office of the General Counsel, 
Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 
20005-4026; 202-326-4024. (TTY/TDD users may call the Federal relay 
service toll-free at 1-800-877-8339 and ask to be connected to 202-326-
4024.)

SUPPLEMENTARY INFORMATION:

Executive Summary--Purpose of the Regulatory Action

    This rulemaking is necessary to implement statutory changes under 
the Moving Ahead for Progress in the 21st Century Act (MAP-21) and 
Highway Transportation and Funding Act of 2014 (HATFA) affecting 
reporting under PBGC's regulation on Annual Financial and Actuarial 
Information Reporting (29 CFR part 4010), to modify the regulation's 
waivers to better balance the burden of reporting with PBGC's need for 
information, and to make certain technical changes.
    PBGC's legal authority for this action comes from section 
4002(b)(3) of the Employee Retirement Income Security Act of 1974 
(ERISA), which authorizes PBGC to issue regulations to carry out the 
purposes of Title IV of ERISA, and section 4010 of ERISA.

Executive Summary--Major Provisions of the Regulatory Action

MAP-21 and HATFA Stabilized Interest Rate Rules

    MAP-21 provided rules that limited the volatility of interest rates 
(which are used for certain funding and benefit restriction purposes) 
by constraining them within a range, or ``corridor,'' around the 25-
year average segment rates. The rates inside the corridor are referred 
to as ``stabilized rates.'' HATFA extended the period during which the 
narrowest range applies. MAP-21 and HATFA included statutory provisions 
regarding the application of the stabilized rates to ERISA section 4010 
reporting requirements. The proposed rule codifies the statutory 
changes and PBGC guidance on when stabilized rates are and are not 
taken into account for purposes of PBGC's regulation on Annual 
Financial and Actuarial Information Reporting.

Changes to $15 Million Aggregate Underfunding Waiver

    Section 4010.11(a) of the current regulation provides a waiver from 
reporting if the aggregate underfunding of pension plans in a 
controlled group does not exceed $15 million. PBGC's experience with 
this waiver, especially after MAP-21 and HATFA, is that it results in 
critical information not being reported. As a result, PBGC's ability to 
timely intervene to protect potentially troubled plans, participant 
benefits, and the pension insurance system is significantly undermined. 
To address this issue, the proposed rule provides that the waiver would 
be limited to controlled groups with fewer than 500 participants.

New Waivers

    As part of PBGC's review of its regulations under Executive Order 
13563, PBGC determined that it could reduce the burden of 4010 
reporting and avoid duplicative reporting by adding two new waivers. 
The proposed rule would waive reporting required solely on the basis of 
either a statutory lien resulting from missed contributions over $1 
million or outstanding minimum funding waivers exceeding the same 
amount, provided that the missed contributions resulting in the lien or 
minimum funding waivers were reported to PBGC under its regulation on 
Reportable Events and Certain Other Notification Requirements (part 
4043) by the due date for the 4010 filing.

Other Changes

    The proposed rule also makes a few technical changes to the 
regulation.

Background

    PBGC administers the pension insurance programs under Title IV of 
ERISA. ERISA section 4010 requires the reporting of actuarial and 
financial information by controlled groups with single-employer pension 
plans that have significant funding problems. ERISA section 4010 also 
requires PBGC to provide an annual summary report to Congress 
containing aggregate information filed with PBGC under that section.\1\
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    \1\ See ERSIA section 4010(e). The report is submitted to the 
Committee on Health, Education, Labor, and Pensions and the 
Committee on Finance of the Senate and the Committee on Education 
and the Workforce and the Committee on Ways and Means of the House 
of Representatives.
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Current 4010 Regulation

    PBGC's regulation on Annual Financial and Actuarial Information 
Reporting (29 CFR part 4010) implements ERISA section 4010. Under Sec.  
4010.4(a), reporting is required if any of the following conditions 
exist:

    1. The funding target attainment percentage (FTAP) \2\ at the 
end of the preceding plan year of a plan maintained by the 
contributing sponsor or any member of its controlled group is less 
than 80 percent (80-percent Gateway Test).
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    \2\ The FTAP is a measure of how well the plan is funded. In 
general, a plan's FTAP is the ratio (expressed as a percentage) of 
the value of plan assets to the plan's funding target. See ERISA 
section 303(d)(2).
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    2. The conditions specified in ERISA section 303(k) and section 
430(k) of the Internal Revenue Code (Code) for imposing a lien for 
missed contributions exceeding $1 million have been met with respect 
to any plan maintained by any member of the controlled group.
    3. The Internal Revenue Service (IRS) has granted one or more 
minimum funding waivers totaling in excess of $1 million to any plan 
maintained by any member of the controlled group, and any portion of 
the waiver(s) is still outstanding.

    Part 4010 of PBGC's regulations specifies the identifying, 
financial, and actuarial information that filers must submit under 
ERISA section 4010. PBGC reviews the information that is filed and 
enters it into an electronic database for more detailed analysis. This 
analysis helps PBGC to anticipate possible threats to the pension 
insurance system and focus its resources on situations that pose the 
greatest risks to that system.
    Filings under part 4010 play a major role in PBGC's ability to 
protect participant and plan interests because 4010 information is 
typically more current than other sources of information available to 
PBGC. Protection for participants may be lost if a company completes a 
transaction that creates possible significant risk to the plan and 
participants before PBGC can act. PBGC can use 4010 information to 
quickly evaluate a fast-moving transaction to protect participants.
    When PBGC evaluates the risk of a plan terminating underfunded, it 
needs the plan's termination liability. If PBGC has a recent 4010 
filing for the plan, it has the plan's termination liability calculated 
directly using seriatim data and certified by an enrolled actuary. With 
reliable information readily available, PBGC can conduct a timely and 
accurate analysis. But if PBGC does not have a 4010 filing for the 
plan, PBGC must estimate the plan's termination liability based on 
outdated Form 5500 Schedule SB data. This analysis takes time and, 
because it is based on estimates, may be less accurate, which may 
negatively impact asset recoveries and participant benefits if the plan 
terminates underfunded.

[[Page 44314]]

    PBGC also uses information from 4010 filings to value its 
contingent liabilities, as reported in its annual financial statements. 
Under ERISA section 4010(e), PBGC submits an annual report to Congress 
summarizing the data received in 4010 filings.
    Under Sec.  4010.11(a) of the current regulation, reporting is 
waived if the aggregate underfunding of all plans (4010 funding 
shortfall) maintained by the filer's controlled group does not exceed 
$15 million (referred to in this preamble as the ``$15 million 
aggregate underfunding waiver''). PBGC added this waiver to the 
regulation in March 2009 when PBGC amended the regulation to implement 
changes under the Pension Protection Act of 2006.\3\
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    \3\ 74 FR 11022 (Mar. 16, 2009), https://www.gpo.gov/fdsys/pkg/FR-2009-03-16/pdf/E9-5741.pdf., (2009 rule).
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MAP-21 and HATFA

    MAP-21 (enacted July 6, 2012) provided relief from the minimum 
funding requirements that apply to plan sponsors of single-employer 
defined benefit plans. This was accomplished by establishing rules that 
limit the volatility of certain interest rates used for funding 
purposes by constraining them within a corridor. MAP-21 also contained 
provisions on the application of those rules to ERISA section 4010 
reporting requirements. Section 40211(b)(3)(D) of MAP-21 amended ERISA 
section 4010 by adding paragraph (d)(3), which provides that the 
stabilized interest rates do not apply for purposes of determining the 
funding target or the FTAP required to be reported under ERISA section 
4010(d). However, they apply for all other 4010 requirements involving 
minimum funding-related determinations, including those requirements 
created solely by regulation.
    MAP-21 provided that the stabilized interest rate corridor would 
begin phasing-out in 2013. HATFA (enacted August 8, 2014) delayed the 
start of that phase-out until 2018, thereby extending the period for 
which the stabilized interest rate rules are most likely to impact 4010 
filings.
    IRS issued Notice 2012-61 providing guidance on pension funding 
stabilization under MAP-21.\4\
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    \4\ https://www.pbgc.gov/Documents/n-12-61.pdf.
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    PBGC issued two Technical Updates providing guidance on applying 
the statutory provisions of MAP-21 and HATFA to 4010 reporting.\5\ PBGC 
wanted to provide guidance to the pension community more quickly than 
could be done through rulemaking. PBGC is now codifying the statutory 
changes and guidance in the 4010 regulation, after giving the public an 
opportunity to comment.
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    \5\ Technical Update 12-2: Effect of MAP-21 on 4010 Reporting 
(Sept. 11, 2012), https://www.pbgc.gov/prac/other-guidance/tu/tu12-2.html; Technical Update 14-2: Effect of HATFA on 4010 Reporting 
(Oct. 17, 2014), https://www.pbgc.gov/prac/other-guidance/tu/tu14-2.html.
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Regulatory Review

    On January 18, 2011, the President issued Executive Order 13563, 
``Improving Regulation and Regulatory Review,'' to ensure that Federal 
regulations seek more affordable, less intrusive means to achieve 
policy goals, and that agencies give careful consideration to the 
benefits and costs of those regulations. In response to the Executive 
Order, PBGC on August 23, 2011, promulgated its Plan for Regulatory 
Review,\6\ noting several regulatory areas--including 29 CFR part 
4010--for review to see how PBGC can reduce burden while preserving its 
ability to receive critical information. The plan identified expansion 
of waivers from 4010 reporting as an area to explore.
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    \6\ See https://www.pbgc.gov/documents/plan-for-regulatory-review.pdf.
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Proposed Regulatory Changes

MAP-21 and HATFA Stabilized Interest Rate Rules

    ERISA section 4010(b)(1) provides that 4010 reporting is required 
if any plan sponsored by a member of the controlled group has an FTAP, 
``as determined as defined in subsection (d),'' below 80 percent. 
Because section 4010(d), as amended by MAP-21, requires that the FTAP 
be determined without regard to the MAP-21 stabilized interest rate 
rules, the FTAP used for the 80-percent Gateway Test is also determined 
without regard to such rules.\7\
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    \7\ Thus, the FTAP used for purposes of the 80-percent Gateway 
Test might not be the same as the FTAP reported on line 14 of the 
2014 Schedule SB of Form 5500.
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    To codify the statutory change and the guidance in Technical 
Updates 12-2 and 14-2, PBGC is proposing to revise the definition of 
``funding target attainment percentage'' in Sec.  4010.2 to provide 
that it is determined without regard to the stabilized interest rate 
rules and rename it the ``4010 funding target attainment percentage.'' 
The proposed rule includes conforming changes in Sec. Sec.  
4010.4(a)(1), 4010.4(b), and 4010.8(a)(6). In addition, the proposed 
rule would revise Sec.  4010.8(a)(5) to clarify that the plan's funding 
target as of the valuation date (required to be reported in a 4010 
filing) is determined without regard to the stabilized interest rate 
rules.
    To reduce the administrative burden of determining whether a 4010 
filing is required, Technical Update 12-2 waives reporting if the FTAP 
of each plan maintained by the filer's controlled group, determined 
without regard to the MAP-21 stabilized interest rate rules, would be 
at least 80 percent if the value of plan assets used for minimum 
funding purposes were substituted for the value described in IRS Notice 
2012-61, Q&A NA-3. The proposed rule would codify this waiver. (See 
Technical Update 12-2 for more explanation.)

Changes to $15 Million Aggregate Underfunding Waiver

    As mentioned above, PBGC added the $15 million aggregate 
underfunding waiver to the 4010 regulation in 2009. In the preamble to 
the 2009 final rule, PBGC cited the Technical Explanation of the 
Pension Protection Act of 2006 prepared by the Staff of the Joint 
Committee on Taxation as support for the waiver. The Technical 
Explanation stated: ``It is intended that the PBGC may waive the 
requirement [for reporting under ERISA section 4010 based upon the 80-
percent Gateway Test] in appropriate circumstances, such as in the case 
of small plans.'' \8\
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    \8\ See Joint Committee on Taxation, Technical Explanation of 
H.R. 4, the ``Pension Protection Act of 2006,'' as passed by the 
House on July 26, 2006, and as considered by the Senate on August 3, 
2006 (JCX-38-06), August 3, 2006 on page 115. https://www.jct.gov/x-38-06.pdf.
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    PBGC set the waiver threshold at $15 million in aggregate 
underfunding based on its experience that underfunding below that 
amount presented a level of risk and exposure to PBGC that was 
sufficiently low to warrant the waiver of reporting based solely on the 
80-percent Gateway Test. The preamble to the 2009 final regulation 
stated that ``the waiver will generally exempt controlled groups 
maintaining only small plans from section 4010 reporting.''
    Because of the impact of MAP-21 and HATFA, PBGC believes that 
further refinement of the $15 million aggregate underfunding waiver is 
necessary. Many sponsors that would not have qualified for the waiver 
if not for MAP-21 and HATFA are waived from reporting because, using 
stabilized rates, underfunding falls below $15 million.
    As a result, PBGC is not receiving valuable information from 
approximately 200 controlled groups for which 4010 reporting was 
required before MAP-21 and HATFA (i.e., after MAP-21 and HATFA, 
reporting was not required solely because the use of

[[Page 44315]]

stabilized rates resulted in aggregate underfunding being less than $15 
million).\9\ To put that number in context, PBGC received only 313 
filings for 2013. PBGC's ability to protect plans can be reduced 
significantly if it does not have 4010 information to use to analyze 
transactions, evaluate termination risks, and measure its contingent 
liabilities for its financial statements.
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    \9\ PBGC is aware of these 200 controlled groups because PBGC's 
regulation requires an explanation be provided where a filing is 
required one year, but not the next. These 200 controlled groups 
indicated on their 4010 filings that they had a plan below 80-
percent funded, but the aggregate underfunding was below $15 
million. PBGC believes the total number of reports it is not 
receiving solely due to the stabilized rates applicable to the $15 
million aggregate underfunding waiver test is much greater than 200. 
Besides the 200 prior filers, PBGC is aware of other controlled 
groups that did not have to file in the past, but would be required 
to file now if not for the fact that the waiver is based on 
stabilized rates.
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    The vast majority of plans for which 4010 reporting would be 
required if not for MAP-21 and HATFA cover more than 1,000 participants 
and have very large unfunded benefit liabilities measured on a 
termination basis. Thus, the current regulation does not allow PBGC to 
access important available information on plans that present 
substantial risk and exposure to the pension insurance system. Further, 
because PBGC is required to submit an annual report to Congress 
summarizing the data received in 4010 filings, Congress is not 
receiving information it would otherwise receive solely because plans 
that were never intended to qualify for the regulatory waiver are, in 
fact, qualifying as a result of MAP-21 and HATFA.
    Because Congress provided that stabilized rates are disregarded for 
purposes of determining whether a 4010 filing is required, PBGC 
believes it is appropriate to modify the $15 million aggregate 
underfunding waiver to fix this anomalous and unintended result. PBGC 
considered modifying the waiver to require that the 4010 funding 
shortfall be determined using non-stabilized rates, but concluded that 
doing so would be overly complicated and administratively burdensome. 
In order to preserve simplicity, better align the waiver with the plans 
it was originally intended to cover, and eliminate any need to do an 
additional calculation solely to determine if the waiver applies, PBGC 
is proposing to leave the determination of the 4010 funding shortfall 
unchanged and instead limit the availability of the $15 million 
aggregate underfunding waiver to controlled groups where the aggregate 
number of participants in all defined benefit plans maintained by the 
controlled group is fewer than 500. For purposes of the waiver, the 
number of participants in any plan could be determined either as of the 
end of the plan year ending within the information year or as of the 
valuation date for that plan year.
    Basing the participant count threshold on fewer than 500 
participants would provide PBGC with 4010 information on nearly all of 
the approximately 200 controlled groups for which reporting would have 
been required if not for MAP-21 and HATFA. In addition, the threshold 
would be similar to an exemption under Sec.  4010.8(c) for plans with 
fewer than 500 participants from providing Sec.  4010.11 actuarial 
information in a 4010 report. PBGC specifically requests public comment 
on whether using a different participant count threshold or tying the 
$15 million aggregate underfunding waiver directly to non-stabilized 
rates would be more appropriate.
New Waivers
    In response to several public comments and as part of its 
implementation of its Plan for Regulatory Review, PBGC has reviewed 
part 4010 to see how it could reduce burden while preserving its 
ability to receive critical information. As part of this process, PBGC 
considered waiving reporting for plans that must file 4010 information 
solely on the basis of either a statutory lien resulting from missed 
required contributions of over $1 million or outstanding minimum 
funding waivers exceeding the same amount.
    In 2012 and 2013, less than five percent of 4010 filers were 
required to report based on these two filing tests; in 2013, there were 
15 such filers. PBGC can look to reportable events filings \10\ to 
obtain information similar to that reported in 4010 filings required 
solely because of these reporting triggers.
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    \10\ PBGC receives reports for missed funding contributions 
under Sec. Sec.  4043.25 and 4043.81 (Form 200) and applications for 
minimum funding waivers under Sec.  4043.33.
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    Waiving reporting based on these two tests would reduce the 
compliance and cost burden on filers. A filer waived from 4010 
reporting might save between six and 24 hours annually by not having to 
provide identifying and financial information and approximately $17,000 
in actuarial costs (depending in part on whether it was a first-time 
filing). Based on 2013 data, the aggregate actuarial cost savings for 
all filers could be over $310,000.
    Therefore, to reduce the burden of duplicative reporting, the 
proposed rule adds waivers from reporting for persons that must file a 
4010 report solely on the basis of either a reporting trigger under 
Sec.  4010.4(a)(2) for a statutory lien resulting from missed required 
contributions of over $1 million or under Sec.  4010.4(a)(3) for 
outstanding minimum funding waivers exceeding the same amount, provided 
that the missed contributions or minimum funding waivers were reported 
under part 4043 by the due date for the 4010 filing.

Other Changes

    The proposed rule revises Sec.  4010.11 to conform to the new 
waivers discussed above, remove a paragraph on transition rules that 
are no longer necessary, and reorganize the paragraphs under the 
section.
    The proposed rule deletes transition rules in current Sec. Sec.  
4010.4(b)(3) and (4) and 4010.8(h) that are no longer necessary and 
updates provisions regarding special funding rules.
    Finally, the proposed rule makes two corrections to the regulation.
    First, the proposed rule amends Sec.  4010.8(b)(1) to correct a 
cross reference from Sec.  4010.11(b) to Sec.  4010.10(b).
    Second, the proposed rule amends Sec.  4010.8(d)(2) to provide that 
the form-of-payment assumption used when determining benefit 
liabilities for purposes of 4010 reporting is the assumption prescribed 
in Sec.  4044.51 of PBGC's regulation on Allocation of Assets in 
Single-Employer Plans (part 4044). This change would conform the 
regulation to the statutory requirement. As a result of a drafting 
error in the 2009 4010 final rule, the current regulation provides 
that, for purposes of determining a plan's benefit liabilities, the 
form-of-payment assumption must be the same as what is used to 
determine the minimum required contribution. Although this assumption 
has a relatively minor impact on the overall calculation, PBGC was 
concerned about the programming changes that would need to be made to 
valuation software to effectuate this unintended assumption change and 
therefore issued guidance that the actuary may use either the form-of-
payment assumption prescribed in Sec.  4044.51 or the form-of-payment 
assumption used to determine the minimum required contribution for the 
plan year ending within the filer's information year.\11\ PBGC 
specifically

[[Page 44316]]

requests comments on whether eliminating the option of using the latter 
form-of-payment assumption (i.e., requiring that the Sec.  4044.51 
assumption be used) would necessitate significant programming changes 
or result in additional burden or cost.
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    \11\ Technical Update 09-2: ERISA section 4010 reporting; 
Alternative form-of-payment assumption for determining benefit 
liabilities (Mar. 25, 2009), https://www.pbgc.gov/prac/other-guidance/tu/tu09-2.html.
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Applicability

    The proposed rule would be applicable to information years 
beginning after December 31, 2015.

Compliance With Rulemaking Guidelines

Executive Orders 12866 ``Regulatory Planning and Review'' and 13563 
``Improving Regulation and Regulatory Review''

    PBGC has determined, in consultation with the Office of Management 
and Budget (OMB), that this rulemaking is not a ``significant 
regulatory action'' under Executive Order 12866.
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. Executive Orders 12866 and 13563 require a comprehensive 
regulatory impact analysis be performed for any economically 
significant regulatory action, defined as an action that would result 
in an annual effect of $100 million or more on the national economy or 
which would have other substantial impacts.
    Pursuant to section 1(b)(1) of E.O. 12866 (as amended by Executive 
Order 13422), PBGC has determined that regulatory action is required in 
this area. Principally, this regulatory action is necessary to codify 
changes made to 4010 reporting by MAP-21 and HATFA and related 
guidance. In addition, this proposed rule is necessary to modify 
waivers from 4010 reporting to better balance the burden of reporting 
with PBGC's need for the information and to target those plans with the 
highest risk and exposure to PBGC and the pension insurance system. 
Finally, the proposed rule is needed to correct errors in the current 
regulation. In accordance with OMB Circular A-4, PBGC also has examined 
the economic and policy implications of this proposed rule and has 
concluded that the action's benefits justify its costs.
    Under Section 3(f)(1) of Executive Order 12866, a regulatory action 
is economically significant if ``it is likely to result in a rule that 
may * * * [h]ave an annual effect on the economy of $100 million or 
more or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities.'' PBGC has determined that this proposed rule does not 
cross the $100 million threshold for economic significance and is not 
otherwise economically significant. The annual effect of the regulation 
with the proposed rule changes would far be less than $100 million. See 
discussion under Paperwork Reduction Act.
    This proposed rule is associated with retrospective review and 
analysis in PBGC's Plan for Regulatory Review issued in accordance with 
Executive Order 13563.

Regulatory Flexibility Act

    The Regulatory Flexibility Act imposes certain requirements with 
respect to rules that are subject to the notice and comment 
requirements of section 553(b) of the Administrative Procedure Act and 
that are likely to have a significant economic impact on a substantial 
number of small entities. Unless an agency determines that a rule is 
not likely to have a significant economic impact on a substantial 
number of small entities, section 603 of the Regulatory Flexibility Act 
requires that the agency present an initial regulatory flexibility 
analysis at the time of the publication of the proposed rule describing 
the impact of the rule on small entities and seeking public comment on 
such impact. Small entities include small businesses, organizations and 
governmental jurisdictions.
    For purposes of the Regulatory Flexibility Act requirements with 
respect to the proposed amendments to the Annual Financial and 
Actuarial Information Reporting regulation, PBGC considers a small 
entity to be a plan with fewer than 100 participants. This is 
substantially the same criterion PBGC uses in other regulations \12\ 
and is consistent with certain requirements in Title I of ERISA \13\ 
and the Code,\14\ as well as the definition of a small entity that the 
Department of Labor (DOL) has used for purposes of the Regulatory 
Flexibility Act.\15\
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    \12\ See e.g., special rules for small plans under part 4007 
(Payment of Premiums).
    \13\ See, e.g., ERISA section 104(a)(2), which permits the 
Secretary of Labor to prescribe simplified annual reports for 
pension plans that cover fewer than 100 participants.
    \14\ See, e.g., Code section 430(g)(2)(B), which permits plans 
with 100 or fewer participants to use valuation dates other than the 
first day of the plan year.
    \15\ See, e.g., DOL's final rule on Prohibited Transaction 
Exemption Procedures, 76 FR 66637, 66644 (Oct. 27, 2011).
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    Further, while some large employers may have small plans, in 
general most small plans are maintained by small employers. Thus, PBGC 
believes that assessing the impact of the proposed rule on small plans 
is an appropriate substitute for evaluating the effect on small 
entities. The definition of small entity considered appropriate for 
this purpose differs, however, from a definition of small business 
based on size standards promulgated by the Small Business 
Administration (13 CFR 121.201) pursuant to the Small Business Act. 
PBGC therefore requests comments on the appropriateness of the size 
standard used in evaluating the impact on small entities of the 
proposed amendments to part 4010.
    PBGC certifies under section 605(b) of the Regulatory Flexibility 
Act that the amendments in this proposed rule would not have a 
significant economic impact on a substantial number of small entities. 
The proposed amendments would limit application of a reporting waiver 
to larger plans and provide two new reporting waivers to plans of all 
sizes. 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.

Paperwork Reduction Act

    PBGC is submitting the information requirements under part 4010 to 
OMB for review and approval under the Paperwork Reduction Act. The 
information requirements under part 4010 have been approved by the OMB 
under the Paperwork Reduction Act (OMB control number 1212-0049, 
expires July 31, 2015). Copies of PBGC's request may be obtained free 
of charge by contacting the Disclosure Division of the Office of the 
General Counsel of PBGC, 1200 K Street NW., Washington, DC 20005, 202-
326-4040.
    PBGC estimates that once the final rule takes effect it will 
receive 4010 filings from about 450 contributing sponsors or controlled 
group members annually and that the total annual burden of the 
collection of information

[[Page 44317]]

will be about 3,900 hours and $7,632,000.
    Comments on the paperwork provisions under this proposed rule 
should be mailed to the Office of Information and Regulatory Affairs, 
Office of Management and Budget, Attention: Desk Officer for Pension 
Benefit Guaranty Corporation, via electronic mail at 
OIRA_DOCKET@omb.eop.gov or by fax to (202) 395-6974. Although comments 
may be submitted through September 25, 2015, the Office of Management 
and Budget requests that comments be received on or before August 26, 
2015 to ensure their consideration. Comments may address (among other 
things)--
     Whether the proposed collection of information is needed 
for the proper performance of PBGC's functions and will have practical 
utility;
     The accuracy of PBGC's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used;
     Enhancement of the quality, utility, and clarity of the 
information to be collected; and
     Minimizing the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.

List of Subjects in 29 CFR Part 4010

    Pension insurance, Pensions, Reporting and recordkeeping 
requirements.

    For the reasons given above, PBGC proposes to amend 29 CFR part 
4010 as follows:

PART 4010--ANNUAL FINANCIAL AND ACTUARIAL INFORMATION REPORTING

0
1. The authority citation for part 4010 continues to read as follows:

    Authority:  29 U.S.C. 1302(b)(3), 1310.
0
2. Section 4010.2 is amended by removing the definition for ``Funding 
target attainment percentage'' and adding a definition for ``4010 
funding target attainment percentage'' in alphanumeric order to read as 
follows:


Sec.  4010.2  Definitions.

* * * * *
    4010 funding target attainment percentage means, with respect to a 
plan for a plan year, the percentage as determined under Sec.  
4010.4(b) for the plan year.
* * * * *
0
3. In Sec.  4010.4:
0
a. Paragraph (a) introductory text is amended by removing the words ``A 
contributing sponsor'' and adding in their place the words ``Subject to 
the waivers in Sec.  4010.11, a contributing sponsor''.
0
b. Paragraph (a)(1) is amended by adding ``4010'' before the phrase 
``funding target attainment percentage''.
0
c. Paragraph (d) is removed, and paragraphs (e) and (f) are 
redesignated as paragraphs (d) and (e), respectively.
0
d. Paragraph (b) and newly redesignated paragraph (e) are revised to 
read as follows:


Sec.  4010.4  Filers.

* * * * *
    (b) 4010 funding target attainment percentage--(1) General. The 
4010 funding target attainment percentage for a plan for a plan year 
equals the funding target attainment percentage as provided under ERISA 
section 303(d)(2) and Code section 430(d)(2) determined as of the 
valuation date for the plan year without regard to the segment rate 
stabilized interest provisions of ERISA section 303(h)(2)(iv) and Code 
section 430(h)(2)(iv).
    (2) Prefunding balance and funding standard carryover balance 
elections. For purposes of determining the 4010 funding target 
attainment percentage for a plan for the plan year, prefunding balances 
and funding standard carryover balances must reflect any elections (or 
deemed elections) under ERISA section 303(f) and Code section 430(f) 
that affect the value of such balances as of the beginning of the plan 
year, regardless of when the elections (or deemed elections) are made.
* * * * *
    (e) Certain plans to which special funding rules apply. Except for 
purposes of determining the information to be submitted under Sec.  
4010.8(h) (in connection with the actuarial valuation report), the 
following statutory provisions are disregarded for purposes of this 
part:
    (1) Section of 402(b) of the Pension Protection Act of 2006, Public 
Law 109-280, dealing with certain frozen plans of commercial passenger 
airlines and airline caterers.
    (2) Section 104 of the Pension Protection Act of 2006 as amended by 
the Preservation of Access to Care for Medicare Beneficiaries and 
Pension Relief Act of 2010, Public Law 111-192, dealing with eligible 
charity plans and plans of certain rural cooperatives.
    (3) The Cooperative and Small Employer Charity Pension Flexibility 
Act, Public Law 113-97, dealing with certain defined benefit pension 
plans maintained by more than one employer.
0
4. In Sec.  4010.8:
0
a. Paragraph (a)(6) is amended by adding ``4010'' before ``funding 
target attainment percentage.''
0
b. Paragraph (b)(1) is amended by removing the reference ``Sec.  
4010.11(b)'' and adding in its place the reference ``Sec.  
4010.10(b)''.
0
c. Paragraph (c)(1)(i) is amended by removing the reference ``Sec.  
4010.11(c)'' and adding in its place the reference ``Sec.  
4010.11(b)''.
0
d. Paragraph (d)(2)(i) is amended by adding the words ``form of 
payment,'' after ``Interest,''.
0
e. Paragraph (d)(2)(ii) is amended by removing the words ``form of 
payment''.
0
f. Paragraph (h) is removed and paragraph (i) is redesignated as 
paragraph (h).
0
g. Paragraph (a)(5) and newly redesignated paragraph (h) are revised to 
read as follows:


Sec.  4010.8  Plan actuarial information.

    (a) * * *
    (5) The funding target (as of the valuation date) for the plan year 
ending within the information year determined in accordance with ERISA 
section 303(i) and Code section 430(i)--
    (i) Without regard to the segment rate stabilized interest 
provisions of ERISA section 303(h)(2)(iv) and Code section 
430(h)(2)(iv); and
    (ii) As if the plan has been in at-risk status for a consecutive 
period of at least five plan years;
* * * * *
    (h) Plans subject to special funding rules. Instead of the 
requirements of paragraph (a)(11) of this section:
    (1) In the case of a plan year for which a plan is subject to 
section 402(b) of the Pension Protection Act of 2006, Public Law 109-
280, dealing with certain frozen plans of commercial passenger airlines 
and airline caterers, the plan must meet the requirements in connection 
with the actuarial valuation report in accordance with instructions on 
PBGC's Web site, https://www.pbgc.gov.
    (2) In the case of a plan year for which the application of new 
funding rules is deferred for a plan under section 104 of the Pension 
Protection Act of 2006, Public Law 109-280, as amended by the 
Preservation of Access to Care for Medicare Beneficiaries and Pension 
Relief Act of 2010, Public Law 111-192, dealing with eligible charity 
plans and plans of certain rural cooperatives, the plan must meet the 
requirements in paragraph (a)(5) of this section (in connection with 
the actuarial valuation

[[Page 44318]]

report) in effect as of December 31, 2007.
    (3) In the case of a plan year for which a plan is subject to the 
Cooperative and Small Employer Charity Pension Flexibility Act, Public 
Law 113-97, dealing with certain defined benefit pension plans 
maintained by more than one employer, the plan must meet the 
requirements in connection with the actuarial valuation report in 
accordance with instructions on PBGC's Web site, https://www.pbgc.gov.
0
5. Section 4010.11 is revised to read as follows:


Sec.  4010.11  Waivers and extensions.

    (a) Plan funding/participant count waiver. Unless reporting is 
required by Sec.  4010.4(a)(2) or (3), reporting is waived for a person 
(that would be a filer if not for the waiver) for an information year 
if, for the plan year ending within the information year--
    (1) The aggregate 4010 funding shortfall for all plans (including 
any exempt plans) maintained by the person's controlled group 
(disregarding those plans with no 4010 funding shortfall) does not 
exceed $15 million; and
    (2) The aggregate number of participants in all plans (including 
any exempt plans) maintained by the person's controlled group is fewer 
than 500. For this purpose, the number of participants in any plan may 
be determined either as of the end of the plan year ending within the 
information year or as of the valuation date for that plan year.
    (b) 4010 funding shortfall for waivers and exemptions--(1) General. 
A plan's 4010 funding shortfall for a plan year equals the funding 
shortfall as provided under ERISA section 303(c)(4) and Code section 
430(c)(4) determined as of the valuation date for the plan year, except 
that the value of plan assets is determined without regard to the 
reduction under ERISA section 303(f)(4)(B) and Code section 
430(f)(4)(B) (dealing with reduction of assets by the amount of 
prefunding and funding standard carryover balances).
    (2) Multiple employer plans. For purposes of Sec.  4010.8(c) and 
paragraph (a) of this section, the entire 4010 funding shortfall of any 
multiple employer plan of which the filer or any member of the filer's 
controlled group is a contributing sponsor is included.
    (c) Alternative 4010 FTAP. Unless reporting is required by Sec.  
4010.4(a)(2) or (3), reporting is waived for a person for an 
information year if the 4010 funding target attainment percentage of 
each plan maintained by the person's controlled group would be at least 
80 percent if the value of plan assets used for minimum funding 
purposes were substituted for the asset value determined without regard 
to the segment rate stabilized interest provisions of ERISA section 
303(h)(2)(iv) for purposes of determining such percentage.
    (d) Missed contributions resulting in a lien or outstanding minimum 
funding waivers. Reporting is waived for a person (that would be a 
filer if not for the waiver) for an information year if, for the plan 
year ending within the information year, reporting would have been 
required solely under Sec.  4010.4(a)(2) or (3), provided that the 
missed contributions or minimum funding waivers (as applicable) were 
reported to PBGC under part 4043 of this chapter by the due date for 
the 4010 filing.
    (e) Other waiver authority. PBGC may waive the requirement to 
submit information with respect to one or more filers or plans or may 
extend the applicable due date or dates specified in Sec.  4010.10. 
PBGC will exercise this discretion in appropriate cases where it finds 
convincing evidence supporting a waiver or extension; any waiver or 
extension may be subject to conditions. A request for a waiver or 
extension must be filed in writing with PBGC at the address provided in 
Sec.  4010.10(c) no later than 15 days before the applicable due date 
specified in Sec.  4010.10, and must state the facts and circumstances 
on which the request is based.

    Issued in Washington, DC, this 17th day of July, 2015.
Alice C. Maroni,
Acting Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2015-18177 Filed 7-24-15; 8:45 am]
 BILLING CODE 7709-02-P