Annual Financial and Actuarial Information Reporting, 15432-15440 [2016-06470]

Download as PDF 15432 Federal Register / Vol. 81, No. 56 / Wednesday, March 23, 2016 / Rules and Regulations location point names as used in the NAESB WGQ Version 3.0 Standards. 3. In comments on the Notice of Proposed Rulemaking (NOPR), Southern Star and INGAA pointed out that the Commission in the NOPR had failed to make conforming changes to certain regulations, including, as relevant here, the regulations requiring posting of interruptible transportation at 18 CFR 284.13(b)(2)(iv). Based on the regulatory text proposed by Southern Star, the Commission revised this regulation to require pipelines to post: ‘‘[t]he receipt and delivery points and the zones or segments covered by the contract, including the location name and code adopted by the pipeline in conformance with paragraph (f) of this section for each point, zone or segment.’’ (Emphasis added.) 4. After the issuance of Order No. 587–W, both Southern Star and INGAA filed separate requests for rehearing, challenging the inclusion of the phrase ‘‘covered by the contract’’ in the regulation. They argue that the regulatory text adopted for posting of interruptible transportation promulgated in 18 CFR 284.13(b)(2)(iv) did not correctly reflect the Commission’s determination in Order No. 637–A that the postings for interruptible transportation should not refer to points covered by the contract, but rather to the points over which the shipper is permitted to transport natural gas.3 INGAA contends the Commission rejected that contract-covered language in Order No. 637, because that language implied that receipt or delivery points should be those in the pro forma or master contracts, rather than the points in the subsequent agreement to provide interruptible service. jstallworth on DSK7TPTVN1PROD with RULES II. Discussion 5. We grant rehearing, concluding that the language we adopted in Order No. 587–W incorrectly includes the ‘‘covered by the contract’’ language that does not reflect how pipelines arrange for and schedule interruptible service. In Order No. 637–A, the Commission recognized that shippers obtaining interruptible service frequently execute pro forma master contracts for interruptible service, but do not specify 3 Regulation of Short-Term Natural Gas Transportation Services and Regulations of Interstate Natural Gas Transportation Services, Order No. 637. FERC Stats. & Regs. ¶ 31,091, clarified, Order No. 637–A, FERC Stats. & Regs. ¶ 31,099, reh’g denied, Order No. 637–B, 92 FERC ¶ 61,062 (2000), aff’d in part and remanded in part sub nom. Interstate Natural Gas Ass’n of America v. FERC, 285 F.3d 18 (D.C. Cir. 2002), order on remand, 101 FERC ¶ 61,127 (2002), order on reh’g, 106 FERC ¶ 61,088 (2004), aff’d sub nom. American Gas Ass’n v. FERC, 428 F.3d 255 (D.C. Cir. 2005). VerDate Sep<11>2014 17:25 Mar 22, 2016 Jkt 238001 the price or the receipt and delivery points until nominations are made. The Commission, therefore, removed the requirement to post the receipt and delivery points ‘‘covered by the contract’’ from the posting requirements, so that pipelines will post the actual points used for transporting natural gas: This language [covered by the contract] implies that the receipt or delivery points should be those in the master contract, rather than the points in the subsequent agreement to provide interruptible service. Section 284.13(b)(2)(iv) will be revised to require the posting of the receipt and delivery points over which the shipper is entitled to transport gas at the rate charged to make clear that the pipeline should post the receipt and delivery points in each individual agreement to provide interruptible service, not simply the receipt and delivery points in the master contract.4 6. Accordingly, we will grant rehearing and revise the regulatory text to require pipelines to post the receipt and delivery points between which the shipper is entitled to transport gas at the rate charged, including the location name and code adopted by the pipeline in conformance with paragraph (f) of the section for each point, zone, or segment. 7. The Paperwork Reduction Act (PRA) provides that an agency may not conduct or sponsor the collection of information unless the agency has published an estimate of the burden that shall result from the information collection in advance of adopting or revising such collection. Agency rules that require information collection are subject to review and approval by the Office of Management and Budget (OMB), in accordance with the requirements of the PRA. The reporting requirements imposed in Order No. 587–W (Docket No. RM96–1–038) were submitted to and approved (on December 9, 2015) by OMB.5 The revisions made in this Order merely clarify those reporting requirements and are not expected to modify the burden estimates. This Order will be submitted to OMB for information only. List of Subjects in 18 CFR Part 284 Incorporation by reference, Natural gas, Reporting and recordkeeping requirements. By the Commission. 4 Order No. 637–A, FERC Stats. & Regs. ¶ 31,099 at 31,619–20. 5 FERC–545 (Gas Pipeline Rates: Rate Change (Non-Formal)) is covered under OMB Control No. 1902–0154, and FERC–549C (Standards for Business Practices of Interstate Natural Gas Pipelines) is covered under 1902–0174. PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 Issued: March 17, 2016. Nathaniel J. Davis, Sr., Deputy Secretary. In consideration of the foregoing, the Commission amends part 284, chapter I, title 18, Code of Federal Regulations, as follows: PART 284—CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES 1. The authority citation for part 284 continues to read as follows: ■ Authority: 15 U.S.C. 717–717z, 3301–3432; 42 U.S.C. 7101–7352; 43 U.S.C. 1331–1356. 2. Section 284.13 is amended by revising paragraph (b)(2)(iv) to read as follows: ■ § 284.13 Reporting requirements for interstate pipelines. * * * * * (b) * * * (2) * * * (iv) The receipt and delivery points between which the shipper is entitled to transport gas at the rate charged, including the location name and code adopted by the pipeline in conformance with paragraph (f) of this section for each point, zone, or segment; * * * * * [FR Doc. 2016–06510 Filed 3–22–16; 8:45 am] BILLING CODE 6717–01–P PENSION BENEFIT GUARANTY CORPORATION 29 CFR Part 4010 RIN 1212–AB30 Annual Financial and Actuarial Information Reporting Pension Benefit Guaranty Corporation. ACTION: Final rule. AGENCY: The Pension Benefit Guaranty Corporation (‘‘PBGC’’) is amending its regulation on Annual Financial and Actuarial Information Reporting to codify provisions of recent legislation and related guidance that affect reporting under ERISA section 4010. The final rule modifies the reporting waiver under the current regulation tied to aggregate plan underfunding of $15 million or less to be based on nonstabilized interest rates. In addition, the final rule adds new reporting waivers for smaller plans and for plans that must file solely on the basis of either a statutory lien resulting from missed SUMMARY: E:\FR\FM\23MRR1.SGM 23MRR1 Federal Register / Vol. 81, No. 56 / Wednesday, March 23, 2016 / Rules and Regulations contributions over $1 million or outstanding minimum funding waivers exceeding the same amount (provided the missed contributions or applications for minimum funding waivers were previously reported to PBGC). The final rule also provides alternative methods of compliance for reporting certain actuarial information and makes a few technical changes to the regulation. DATES: Effective April 22, 2016. See Applicability in SUPPLEMENTARY INFORMATION. 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 tollfree 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 recent statutory changes— under the Moving Ahead for Progress in the 21st Century Act (‘‘MAP–21’’),1 the Highway Transportation and Funding Act of 2014 (‘‘HATFA’’) 2 and the Bipartisan Budget Act of 2015 (‘‘BBA’’) 3—that affect reporting under PBGC’s regulation on Annual Financial and Actuarial Information Reporting (29 CFR part 4010), to modify the regulation’s waivers and information requirements 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. jstallworth on DSK7TPTVN1PROD with RULES Executive Summary—Major Provisions of the Regulatory Action Interest Rate Stabilization 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 1 Public Law 112–141, enacted July 6, 2012. Law 113–159, enacted August 8, 2014. 3 Public Law 114–74, enacted November 3, 2015. 2 Public VerDate Sep<11>2014 15:23 Mar 22, 2016 Jkt 238001 referred to as ‘‘stabilized rates.’’ HATFA extended the period during which the narrowest range applies. BBA further extended that period, generally effective for plan years beginning after December 31, 2015. MAP–21 included statutory provisions regarding the application of the stabilized rates to ERISA section 4010 reporting requirements. The final rule codifies the statutory changes and PBGC guidance on when stabilized rates are and are not taken into account for purposes of 4010 reporting. Changes to $15 Million Aggregate Underfunding Waiver Section 4010.11(a) of the regulation provides a waiver from reporting if the aggregate underfunding (the ‘‘4010 funding shortfall’’) of pension plans in a controlled group does not exceed $15 million. PBGC’s experience with this waiver under the old regulation, especially since MAP–21, was that it resulted 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 was significantly undermined. To address this issue, PBGC proposed to limit the waiver to smaller plans. In response to public comments, the final rule permits plans of any size to use this waiver (as was the case under the old rule), but modifies how the 4010 funding shortfall is determined and, as explained below, provides a separate waiver based solely on plan size to ensure that smaller plans qualify for a waiver. New Waivers The final rule adds a waiver from reporting for plans with controlled groups with fewer than 500 participants, regardless of plan underfunding. Further, 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 other new waivers. As in the proposed rule, the final rule waives 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 applications for 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. PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 15433 Other Changes In response to comments, the final rule provides alternative methods of compliance for reporting certain actuarial information and 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.4 4010 Regulation PBGC’s regulation on Annual Financial and Actuarial Information Reporting (29 CFR part 4010) 5 implements ERISA section 4010. Under § 4010.4(a), reporting is required if any of the following conditions exist: 1. The funding target attainment percentage (‘‘FTAP’’) 6 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). 2. The conditions 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. Filings under part 4010 play a major role in PBGC’s ability to protect 4 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. 5 For ease of reference, this preamble refers to the regulation as it exists before the final rule becomes applicable as the ‘‘old regulation’’ and the regulation as amended by this final rule as the ‘‘new regulation’’. If a statement is true for both the old and new regulations, this preamble will simply refer to the ‘‘regulation.’’ 6 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). E:\FR\FM\23MRR1.SGM 23MRR1 15434 Federal Register / Vol. 81, No. 56 / Wednesday, March 23, 2016 / Rules and Regulations jstallworth on DSK7TPTVN1PROD with RULES 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 and older data, is less accurate, which may negatively impact asset recoveries and participant benefits if the plan terminates underfunded. 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 § 4010.11(a) of the 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 2006.7 MAP–21 and Statutory Extensions of Interest Rate Stabilization Rules MAP–21 provided relief from the minimum funding requirements that apply to plan sponsors of singleemployer 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 7 74 FR 11022 (Mar. 16, 2009), http:// www.gpo.gov/fdsys/pkg/FR-2009-03-16/pdf/E95741.pdf. VerDate Sep<11>2014 15:23 Mar 22, 2016 Jkt 238001 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, under MAP–21, the stabilized rates are otherwise extended to all other 4010 requirements involving minimum funding-related determinations, including those requirements created solely by regulation, such as the 4010 funding shortfall waiver. MAP–21 provided that the stabilized interest rate corridor would begin phasing-out in 2013. HATFA delayed the start of that phase-out until 2018. BBA further delayed the start of the phase-out until 2020, thereby further extending the period for which the interest rate stabilization rules are likely to impact 4010 filings (by making it more likely that the $15 million aggregate underfunding waiver will apply). IRS issued Notice 2012–61 providing guidance on pension funding stabilization under MAP–21.8 PBGC issued two Technical Updates providing guidance on applying the statutory rate stabilization provisions that began with MAP–21 to 4010 reporting.9 the statutory stabilized interest rate provisions related to 4010 reporting, made changes to the waiver structure, and other technical changes. The proposed rule limited the $15 million aggregate underfunding waiver to smaller plans and added 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 applications for minimum funding waivers were previously reported to PBGC). PBGC received ten comment letters (from a total of twelve entities) on the proposed rule.11 The commenters represented several professional and business trade organizations, pension plan consultants, plan sponsors, and a law firm. Generally, commenters opposed the proposal to limit the $15 million aggregate underfunding waiver to small plans while supporting PBGC’s effort to add other waivers. Commenters provided suggestions on the proposal and on other matters under the regulation. The comments on the proposed rule and PBGC’s responses are discussed below with the topics to which they relate. Regulatory Review Regulatory Changes 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,10 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. MAP–21 Interest Rate Stabilization 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 interest rate stabilization rules, the FTAP used for the 80-percent Gateway Test is also determined without regard to such rules.12 To codify the statutory change and the guidance in Technical Updates 12–2 and 14–2, the final rule revises the definition of ‘‘funding target attainment percentage’’ in § 4010.2 to provide that it is determined without regard to the interest rate stabilization rules and rename it the ‘‘4010 funding target attainment percentage.’’ The final rule includes conforming changes in §§ 4010.4(a)(1), 4010.4(b), and 4010.8(a)(6). In addition, the final rule Proposed Rule On July 27, 2015 (at 80 FR 44312), PBGC published in the Federal Register a proposed rule (the ‘‘proposed rule’’) for notice and comment that codified 8 http://www.pbgc.gov/Documents/n-12-61.pdf. 9 Technical Update 12–2: Effect of MAP–21 on 4010 Reporting (Sept. 11, 2012), http:// www.pbgc.gov/prac/other-guidance/tu/tu12-2.html; Technical Update 14–2: Effect of HATFA on 4010 Reporting (Oct. 17, 2014), http://www.pbgc.gov/ prac/other-guidance/tu/tu14-2.html. 10 See http://www.pbgc.gov/documents/plan-forregulatory-review.pdf. PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 11 See comments at http://www.pbgc.gov/prac/pg/ other/guidance/pending-proposed-rules.html. 12 Thus, the FTAP used for purposes of the 80percent Gateway Test might not be the same as the FTAP reported on line 14 of the 2014 Schedule SB of Form 5500. E:\FR\FM\23MRR1.SGM 23MRR1 Federal Register / Vol. 81, No. 56 / Wednesday, March 23, 2016 / Rules and Regulations revises § 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 interest rate stabilization rules. To reduce the administrative burden of determining whether a 4010 filing is required, Technical Update 12–2 waived reporting if the FTAP of each plan maintained by the filer’s controlled group, determined without regard to the statutory stabilized interest rate provisions, 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–3.13 (See Technical Update 12–2 for more explanation.) The final rule effectively codifies this waiver from reporting and extends the relief to the related information requirement. jstallworth on DSK7TPTVN1PROD with RULES Changes to $15 Million Aggregate Underfunding Waiver As mentioned above, PBGC added the $15 million aggregate underfunding waiver to the 4010 regulation in 2009. The preamble to the 2009 final rule 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.’’ 14 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 rule (see footnote 7) stated that ‘‘the waiver will generally exempt controlled groups maintaining only small plans from section 4010 reporting.’’ Because of the impact of stabilized interest rates that began with MAP–21, PBGC believes that further refinement of the $15 million aggregate underfunding waiver is necessary. Under the old regulation, many sponsors that would not have qualified for the waiver prior to MAP–21 were waived from reporting 13 https://www.irs.gov/irb/2012-42_IRB/ar10.html. 14 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. http:// www.jct.gov/x-38-06.pdf. VerDate Sep<11>2014 15:23 Mar 22, 2016 Jkt 238001 because underfunding was under $15 million based on stabilized rates. As a result, PBGC was 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 stabilized rates resulted in aggregate underfunding being less than $15 million).15 To put that number in context, it is comparable to the 207 filings PBGC received for 2014. 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. The vast majority of plans for which 4010 reporting would be required if not for the statutory stabilized interest rate provisions cover more than 1,000 participants and have very large unfunded benefit liabilities measured on a termination basis. Thus, the old regulation did 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 has not been receiving information it would otherwise receive solely because plans that were never intended to qualify for the regulatory waiver were, in fact, qualifying as a result of the statutory stabilized interest rate provisions that began with MAP–21. In the preamble to the proposed rule, PBGC stated that because Congress provided that stabilized rates are disregarded for purposes of determining whether a 4010 filing is required, it was 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 nonstabilized rates, but concluded at the time that doing so would be overly complicated and administratively 15 PBGC was 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 80percent funded, but the aggregate underfunding was below $15 million. PBGC believes the total number of reports it was not receiving solely due to the stabilized rates applicable to the $15 million aggregate underfunding waiver test was much greater than 200. Besides the 200 prior filers, PBGC was aware of other controlled groups that did not have to file in the past, but would have been required to file if not for the fact that the waiver is based on stabilized rates. PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 15435 burdensome. PBGC was also concerned that this approach might make it more difficult to verify compliance because the liability underlying the shortfall calculation would not be reported on Schedule SB to Form 5500. 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 proposed 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 was fewer than 500. All commenters opposed limiting the availability of the $15 million aggregate underfunding waiver to controlled groups with fewer than 500 participants and reported that such limitation would unnecessarily burden many large plans by requiring 4010 reporting. Some commenters pointed out instances in which the proposed waiver would be unavailable due to circumstances that were incidental to the aims of the regulation (e.g., recent acquisitions of small plans where additional funding may not have yet occurred or multiple employer plans that have over 500 participants but where individual employers may not have control over plan funding). Some commenters suggested that the proposed change would result in lower funding contributions for large plans by eliminating the incentive under the old rule to fund up to qualify for the waiver. In addition, several commenters believed that the proposed participant count limit would be a permanent change to the regulation to address a temporary condition that would impact reporting long after stabilized rates no longer had an impact on plan liabilities.16 As an alternative to the proposal to limit the $15 million aggregate underfunding waiver to controlled groups with fewer than 500 participants, six commenters (including three who commented in one letter) suggested that PBGC’s concerns could be addressed if potential filers were required to use non-stabilized rates (instead of stabilized rates) to determine the 4010 funding shortfall instead of stabilized rates. Two of these commenters pointed out that sponsors still use non-stabilized 16 PBGC received comments on the proposed rule before BBA was enacted. Although BBA does not make stabilized interest rates permanent, it still lengthens the amount of time such rates impact 4010 reporting. E:\FR\FM\23MRR1.SGM 23MRR1 15436 Federal Register / Vol. 81, No. 56 / Wednesday, March 23, 2016 / Rules and Regulations jstallworth on DSK7TPTVN1PROD with RULES rates for other purposes and therefore, basing the 4010 funding shortfall determination on non-stabilized rates would not be overly burdensome.17 These same commenters suggested that if PBGC were to have a participant count limit, the threshold should be increased (with suggested limits ranging from 1,000 or 3,000 participants). Two other commenters recommended that PBGC consider incorporating the lowdefault risk waiver from PBGC’s 2015 final rule on Reportable Events 18 into the 4010 regulation as an effective way to tie risk to reporting. Other suggestions for alternatives included incorporating funding ratios of at least 90 percent on a stabilized interest rate basis, allowing for simplified reporting if the waiver under the proposed rule were to be retained, and increasing the participant count threshold. PBGC was interested to learn that commenters were not concerned that basing the determination of the waiver on non-stabilized rates would result in overly burdensome reporting requirements. Given that a substantial segment of the commenters supported this suggestion and the fact that statutory stabilized interest rate provisions are scheduled to eventually phase-out, PBGC believes making this modification to the waiver is appropriate to reduce potential filer burden even though the data underlying the calculation does not get reported on Schedule SB. PBGC will be able to estimate the 4010 funding shortfall to evaluate compliance with the filing requirements using other information sponsors routinely file. As a result, the final rule eliminates the participant count limit for purposes of the $15 million aggregate underfunding waiver and instead requires that the liability used to determine the 4010 funding shortfall be determined using nonstabilized rates. The final rule does not change how the asset portion of the 4010 funding shortfall is calculated (i.e., the asset value used for this purpose is the asset value used for funding purposes, including averaging, if applicable, with no reduction for prefunding or carryover balances). PBGC acknowledges that under this change, some smaller plans that would have qualified for the waiver under the proposed rule would not qualify for the waiver under the final rule. 17 These uses include: 4010 Funding Target Attainment Percentage, Variable Rate Premium under the alternative method, annual funding notice supplement, and Code section 404 deduction limits. 18 80 FR 54979 (Sept. 11, 2015), http:// www.gpo.gov/fdsys/pkg/FR-2015-09-11/pdf/201522941.pdf. VerDate Sep<11>2014 15:23 Mar 22, 2016 Jkt 238001 Accordingly, as described below, the final rule adds a new waiver for controlled groups with less than 500 participants, regardless of plan underfunding. With the final rule modification to the $15 million aggregate underfunding waiver and the new smaller plans waiver, PBGC believes that most of the commenters’ concerns about modifying the waiver have been addressed. However, PBGC may reconsider suggestions from commenters that are not incorporated into the final rule, as well as other possibilities, as it gains experience with reporting under the new regulation. New Waivers—Smaller Plans PBGC concluded that it could provide burden relief for smaller plans without compromising the pension insurance system. Thus, the final rule provides that 4010 reporting is waived for controlled groups where the aggregate number of participants in all plans (including any exempt plans) is fewer than 500 (the ‘‘smaller plans waiver’’). The final regulation provides that for purposes of the new smaller plans waiver, the aggregate number of participants in all plans maintained by a person’s controlled group includes any participants covered by a multiple employer plan in which the person participates (including participants covered by the multiple employer plan who are not or were not employed by the person). In other words, the person is treating as ‘‘maintaining’’ the whole multiple employer plan. For example, in the case of a multiple employer plan where each contributing sponsor has fewer than 500 participants in all of its plans, but the multiple employer plan as a whole covers 500 or more participants, the smaller plans waiver would not apply. This treatment is analogous to how the aggregate funding shortfall of a multiple employer plan is determined for purposes of the $15 million aggregate underfunding waiver under the current regulation; for that purpose, the multiple employer plan’s entire shortfall is taken into account. New Waivers—Missed Contributions Resulting in a Lien or Outstanding Minimum Funding Waivers As part of PBGC’s implementation of its Plan for Regulatory Review (which included public comment on how PBGC could reduce reporting burden), PBGC reviewed part 4010 to see how it could reduce burden while preserving its ability to receive critical information. As part of this process, PBGC proposed to waive reporting for plans that must file 4010 information solely on the basis of PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 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 2014, there were 10 such filers. PBGC can look to reportable events filings 19 to obtain information similar to that reported in 4010 filings required solely because of these reporting triggers. 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 $16,000 in actuarial costs (depending in part on whether it was a first-time filing). Based on 2014 data, the aggregate actuarial cost savings for all filers could be over $160,000. Therefore, to reduce the burden of duplicative reporting, the proposed rule added waivers from reporting for persons that must file a 4010 report solely on the basis of either a reporting trigger under § 4010.4(a)(2) for a statutory lien resulting from missed required contributions of over $1 million or under § 4010.4(a)(3) for outstanding minimum funding waivers exceeding the same amount, provided that the missed contributions or applications for minimum funding waivers were reported under part 4043 by the due date for the 4010 filing. PBGC did not receive any comments on these proposed new waivers. The final rule retains these waivers as proposed. Alternative Methods of Compliance for Reporting Certain Actuarial Information ERISA section 4010(d) requires that certain information be reported to PBGC when a filer makes a report under ERISA section 4010, including the funding target of the plan determined as if the plan has been in at-risk status for at least five plan years and determined without regard to the interest rate stabilization rules.20 Section 4010.8 of the regulation implements the statutory information requirements. While not addressed in the proposed rule, three comment letters (representing five entities) suggested that PBGC either 19 PBGC receives reports for missed funding contributions under §§ 4043.25 and 4043.81 (Form 200) and applications for minimum funding waivers under § 4043.33. 20 See ERISA section 4010(d)(1)(B). Under § 4010.2, at-risk status means, with respect to a plan for a plan year, at-risk status as defined in ERISA section 303(i)(4) and Code section 430(i)(4). E:\FR\FM\23MRR1.SGM 23MRR1 jstallworth on DSK7TPTVN1PROD with RULES Federal Register / Vol. 81, No. 56 / Wednesday, March 23, 2016 / Rules and Regulations eliminate the requirement for plans that are not in at-risk status or provide a simpler alternative method of compliance for such plans. These commenters stated that PBGC does not need that information and that plans are not required to do the calculation for any purpose other than 4010 reporting. In addition, commenters noted that due to the complications of the at-risk rules, doing the calculation substantially increases the costs of preparing a 4010 filing. PBGC finds these comments credible and agrees that PBGC generally does not need this information from plans that are not in at-risk status. And although PBGC does need information about the at-risk funding target from plans that are in at-risk status, the relevant information for PBGC is the at-risk funding target determined using stabilized rates, not the statutorilyrequired information determined without regard to the stabilization rules. However, because it is possible that PBGC might need the statutorilyrequired information from a particular plan or that Congress might request that information, PBGC concluded that providing an alternate method of compliance is preferable to waiving the requirement altogether. Therefore, the final rule provides that plans are not required to provide the at-risk funding target information (determined without regard to the stabilization rules) unless PBGC makes a written request for the information. In that event, the plan would have at least 30 days after PBGC’s written request to provide the information. In addition, to ensure that PBGC receives relevant and timely information about the at-risk funding target from plans that are in at-risk status (i.e., determined using stabilized rates), PBGC is adding that information to the list in § 4010.8(a)(11) of information required to be reported in an attachment to the 4010 filing (the valuation report). Some of these same commenters also suggested that PBGC eliminate or provide for an alternate method of compliance for reporting the year-end plan termination liability calculation information required under ERISA section 4010(d)(1)(A) and § 4010.8(a)(3) of the regulation. PBGC needs this information to run its analysis of whether a 4010 filer poses a risk to the pension insurance system. Thus, PBGC is not modifying or eliminating the yearend plan termination liability calculation in the final rule. One commenter expressed its appreciation for the proposed rule’s codification of relief provided in Technical Update 12–2, under which VerDate Sep<11>2014 15:23 Mar 22, 2016 Jkt 238001 reporting would be waived if the 4010 FTAP of each plan maintained by a 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 interest rate stabilization rules (i.e., the amount determined in accordance with IRS notice 2012–61, Q&A NA 3). However, under the proposed rule, if reporting were required, a filer would still need to calculate asset values without regard to the interest rate stabilization rules (in accordance with IRS notice 2012–61) for purposes of determining the 4010 FTAP to be reported in the filing. This commenter believed that this calculation should not be required at all since the difference in values (i.e., the value of assets determined without regard to the interest rate stabilization rules compared to the value of plan assets used for minimum funding purposes) would generally be small. The commenter also noted that IRS and the Department of Labor (‘‘DOL’’) do not require this calculation and that if PBGC were to require it, then two sets of asset values would need to be reported in the Annual Funding Notice (under ERISA section 101(f)) resulting in complexity and participant confusion. PBGC agrees that requiring this calculation for a 4010 report is unnecessary. Thus, the final rule provides that for purposes of determining the 4010 FTAP, the value of plan assets used for minimum funding purposes may be substituted for the asset value determined without regard to interest rate stabilization rules. By doing so, there is no need to provide for the alternative 4010 FTAP waiver that was included in the proposed rule and thus, that waiver has been eliminated from the final rule. Other Changes The final rule revises § 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 final rule deletes transition rules in current §§ 4010.4(b)(3) and (4) and 4010.8(h) that are no longer necessary and updates provisions regarding special funding rules. Finally, the final rule makes two corrections to the regulation. First, the final rule amends § 4010.8(b)(1) to correct a cross reference from § 4010.11(b) to § 4010.10(b). Second, the final rule amends § 4010.8(d)(2) to provide that the form- PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 15437 of-payment assumption used when determining benefit liabilities for purposes of 4010 reporting is the assumption prescribed in § 4044.51 of PBGC’s regulation on Allocation of Assets in Single-Employer Plans (part 4044) and make a related conforming change. This change conforms the regulation to the statutory requirement. As a result of a drafting error in the 2009 final rule, the old regulation provided that, for purposes of determining a plan’s benefit liabilities, the form-ofpayment assumption must be the same as that used to determine the minimum required contribution. Although this assumption has had 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-ofpayment assumption prescribed in § 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.21 Three commenters suggested that PBGC retain the option of using the § 4044.51 assumption. However it appeared to PBGC that none of these commenters held a particularly strong belief in this regard and that making any software program changes would not be too difficult. Further, PBGC has concluded that this information will help PBGC to conduct its analysis of the impact of a 4010 filing on the pension insurance system more effectively. For these reasons, and to conform to the statutory requirement, PBGC decided not to retain this provision from the proposed rule. Thus, the final rule requires the use of the § 4044.51 assumption for purposes of § 4010.8(d)(2). Timing PBGC proposed that the final rule would be applicable to information years beginning after December 31, 2015. Three commenters urged PBGC to allow a longer transition period/ effective date so that controlled groups can plan for, or take action to avoid, 4010 filings (such as making funding contribution). One of these commenters specifically recommended that the effective date be no earlier than information years beginning 18 months after the final rule is published. Another 21 Technical Update 09–2: ERISA section 4010 reporting; Alternative form-of-payment assumption for determining benefit liabilities (Mar. 25, 2009), http://www.pbgc.gov/prac/other-guidance/tu/tu092.html. E:\FR\FM\23MRR1.SGM 23MRR1 15438 Federal Register / Vol. 81, No. 56 / Wednesday, March 23, 2016 / Rules and Regulations commenter recommended that the ‘‘effective date be changed to information years beginning one year after the final rule is final or at [a] minimum allow plans to substitute their 2016 FTAP for applicable 4010 calculations if necessary to avoid filing.’’ PBGC did not change the applicability date from the proposed rule. PBGC believes sponsors will have sufficient time to make additional contributions in order to qualify for the $15 million aggregate underfunding waiver or make additional contributions or waive carryover or prefunding balances to increase the 4010 FTAP to above 80 percent.22 Moreover, as always, PBGC will consider case-by-case waivers in the case of unusual situations. Finally, PBGC has been without 4010 information from certain plans since MAP–21 and needs that information from those plans as soon as practicable to better understand their current status and its impact on the pension insurance system. Accordingly, PBGC did not change the proposed applicability date in the final rule. Applicability The regulatory changes in the final rule are applicable to information years beginning after December 31, 2015. The first filings under the new regulation are due April 17, 2017.23 Compliance With Rulemaking Guidelines jstallworth on DSK7TPTVN1PROD with RULES 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 22 PBGC is aware that in the case of a controlled group with a calendar year information year that includes a plan with a non-calendar year plan year, that plan may have needed to make decisions about funding or contributions before this final rule was published. However, PBGC believes that in such a case the plan had sufficient notice in the proposed rule that it would likely need to fund up to avoid a 4010 filing for the 2016 information year. 23 April 15, 2017, is a Saturday. In the rare case of a short information year beginning in 2016, the due date would be earlier; filers in that situation should contact PBGC. VerDate Sep<11>2014 15:23 Mar 22, 2016 Jkt 238001 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 final 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 final 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 final 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 final 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 final rule changes would far be less than $100 million. See discussion under Paperwork Reduction Act. This final 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. PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 Unless an agency determines that a final rule is not likely to have a significant economic impact on a substantial number of small entities, section 604 of the Regulatory Flexibility Act requires that the agency present a final regulatory flexibility analysis at the time of the publication of the final rule describing the impact of the rule on small entities and steps taken to minimize the impact. Small entities include small businesses, organizations and governmental jurisdictions. For purposes of the Regulatory Flexibility Act requirements with respect to the 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 24 and is consistent with certain requirements in Title I of ERISA 25 and the Internal Revenue Code,26 as well as the definition of a small entity that DOL has used for purposes of the Regulatory Flexibility Act.27 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 final 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 requested comments on the appropriateness of the size standard used in the proposed rule. PBGC received no comments on this point. PBGC certifies under section 605(b) of the Regulatory Flexibility Act that the amendments in this final rule would not have a significant economic impact on a substantial number of small entities. 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. 24 See e.g., special rules for small plans under part 4007 (Payment of Premiums). 25 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. 26 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. 27 See, e.g., DOL’s final rule on Prohibited Transaction Exemption Procedures, 76 FR 66637, 66644 (Oct. 27, 2011). E:\FR\FM\23MRR1.SGM 23MRR1 Federal Register / Vol. 81, No. 56 / Wednesday, March 23, 2016 / Rules and Regulations 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, 2018). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. PBGC estimates that once the final rule takes effect it will receive 4010 filings from about 410 contributing sponsors or controlled group members annually and that the total annual burden of the collection of information will be about 3,600 hours and $6,560,000. List of Subjects in 29 CFR Part 4010 Pension insurance, Pensions, Reporting and recordkeeping requirements. For the reasons given above, PBGC is amending 29 CFR part 4010 as follows: PART 4010—ANNUAL FINANCIAL AND ACTUARIAL INFORMATION REPORTING 1. The authority citation for part 4010 continues to read as follows: ■ Authority: 29 U.S.C. 1302(b)(3), 1310. 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: ■ § 4010.2 Definitions. jstallworth on DSK7TPTVN1PROD with RULES * * * * * 4010 funding target attainment percentage means, with respect to a plan for a plan year, the percentage as determined under § 4010.4(b) for the plan year. * * * * * ■ 3. In § 4010.4: ■ a. Paragraph (a) introductory text is amended by removing the words ‘‘A contributing sponsor’’ and adding in their place the words ‘‘Unless a waiver in § 4010.11 of this part applies, a contributing sponsor’’. ■ b. Paragraph (a)(1) is amended by adding ‘‘4010’’ before the phrase ‘‘funding target attainment percentage’’. ■ c. Paragraph (a)(2) is amended by adding the words ‘‘or 306(g)’’ after the word ‘‘303(k)’’ and adding the words ‘‘or 433(g)’’ after the word ‘‘430(k)’’. ■ d. Paragraph (b) is revised. VerDate Sep<11>2014 15:23 Mar 22, 2016 e. Paragraph (d) is removed, and paragraphs (e) and (f) are redesignated as paragraphs (d) and (e), respectively. ■ f. Newly redesignated paragraph (e) is revised. The revisions read as follows: ■ Jkt 238001 § 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 without regard to the interest rate stabilization provisions of ERISA section 303(h)(2)(C)(iv) and Code section 430(h)(2)(C)(iv). (2) Assets used to determine 4010 funding target attainment percentage. For purposes of determining the 4010 funding target attainment percentage for a plan for the plan year, the value of plan assets determined under ERISA section 303(g)(3) and Code section 430(g)(3) may (but need not) be substituted for the asset value determined without regard to the interest rate stabilization provisions of ERISA section 303(h)(2)(C)(iv) and Code section 430(h)(2)(C)(iv). (3) 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 § 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 PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 15439 Act, Public Law 113–97, dealing with certain defined benefit pension plans maintained by certain cooperatives and charities. ■ 4. In § 4010.8: ■ a. Paragraph (a)(5) is revised. ■ b. Paragraph (a)(6) is amended by adding ‘‘4010’’ before ‘‘funding target attainment percentage.’’ ■ c. Paragraph (a)(9) is amended by adding the words ‘‘or 306(g)’’ after the word ‘‘303(k)’’ and adding the words ‘‘or 433(g)’’ after the word ‘‘430(k)’’. ■ d. Paragraph (a)(11)(vi) is amended by adding ‘‘and funding target’’ after ‘‘the target normal cost.’’ ■ e. Paragraph (b) is revised. ■ f. Paragraph (c)(1)(i) is amended by removing the reference ‘‘§ 4010.11(c)’’ and adding in its place the reference ‘‘§ 4010.11(a)(1)’’. ■ g. Paragraph (d)(2)(i) is amended by adding the words ‘‘form of payment,’’ after ‘‘Interest,’’. ■ h. Paragraph (d)(2)(ii) is amended by removing the words ‘‘form of payment’’ from the parenthetical and adding the words ‘‘form of payment’’ after ‘‘interest,’’. ■ i. Paragraph (h) is removed and paragraph (i) is redesignated as paragraph (h) and revised. The revisions read as follows: § 4010.8 Plan actuarial information. (a) * * * (5) The at-risk funding target for the plan year ending within the information year determined under ERISA section 303(i) and Code section 430(i)— (i) As if the plan has been in at-risk status for a consecutive period of at least five years, and (ii) Without regard to the interest rate stabilization provisions of ERISA section 303(h)(2)(C)(iv) and Code section 430(h)(2)(C)(iv); * * * * * (b) Alternative methods of compliance—(1) At-risk funding target. Notwithstanding any other provision of this section, a filer is not required to provide the information specified in paragraph (a)(5) of this section for the plan year for which actuarial information is being reported unless PBGC requests in writing that the information be provided, in which case the filer must provide the information within 30 days of such request or such later date as PBGC specifies in the request. (2) Actuarial valuation report. If any of the information specified in paragraph (a)(11) of this section is not available by the date specified in § 4010.10(a), a filer may satisfy the requirement to provide such information by— E:\FR\FM\23MRR1.SGM 23MRR1 15440 Federal Register / Vol. 81, No. 56 / Wednesday, March 23, 2016 / Rules and Regulations (i) Including a statement, with the material that is submitted to PBGC, that the filer will file the unavailable information by the alternative due date specified in § 4010.10(b), and (ii) Filing such information (along with a certification by an enrolled actuary under paragraph (a)(12) of this section) with PBGC by that alternative due date. * * * * * (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, http:// 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 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, http://www.pbgc.gov. ■ 5. Section 4010.11 is revised to read as follows: jstallworth on DSK7TPTVN1PROD with RULES § 4010.11 Waivers. (a) Aggregate funding shortfall not in excess of $15 million waiver. Unless reporting is required by § 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, 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, VerDate Sep<11>2014 15:23 Mar 22, 2016 Jkt 238001 as determined under paragraphs (a)(1) and (2) of this section. (1) 4010 funding shortfall; in general. A plan’s 4010 funding shortfall for a plan year equals the funding shortfall for the plan year as provided under ERISA section 303(c)(4) and Code section 430(c)(4), with the following exceptions: (i) The funding target used to calculate the 4010 funding shortfall is determined without regard to the interest rate stabilization provisions of ERISA section 303(h)(2)(C)(iv) and Code section 430(h)(2)(C)(iv). (ii) The value of plan assets used to calculate the 4010 funding shortfall 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 § 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. (b) Smaller plans waiver—(1) General. Unless reporting is required by § 4010.4(a)(2) or (a)(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, 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. (2) Multiple employer plans. For purposes of this paragraph (b), the aggregate number of participants in all plans maintained by a person’s controlled group includes any participants covered by a multiple employer plan in which the person participates (including participants covered by the multiple employer plan who are not or were not employed by the person). (c) 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 § 4010.4(a)(2) or (3), provided that the missed contributions or applications for minimum funding waivers (as applicable) were reported to PBGC PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 under part 4043 of this chapter by the due date for the 4010 filing. (d) 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 § 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 § 4010.10(c) no later than 15 days before the applicable due date specified in § 4010.10, and must state the facts and circumstances on which the request is based. Issued in Washington, DC, this 17th day of March, 2016. W. Thomas Reeder, Director, Pension Benefit Guaranty Corporation. [FR Doc. 2016–06470 Filed 3–22–16; 8:45 am] BILLING CODE 7709–02–P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 271 [EPA–R09–RCRA–2015–0822; FRL–9943– 99–Region 9] Nevada: Final Authorization of State Hazardous Waste Management Program Revisions Environmental Protection Agency (EPA). ACTION: Direct final rule. AGENCY: Nevada has applied to the Environmental Protection Agency (EPA) for final authorization of changes to its hazardous waste program under the Resource Conservation and Recovery Act (RCRA). EPA has determined that these changes satisfy all requirements needed to qualify for final authorization, and is authorizing the State’s changes through this direct final rule. In the ‘‘Proposed Rules’’ section of today’s Federal Register, EPA is also publishing a separate document that serves as the proposal to authorize these changes. EPA believes this action is not controversial and does not expect comments that oppose it. Unless EPA receives written comments that oppose this authorization during the comment period, the decision to authorize Nevada’s changes to its hazardous waste program will take effect. If EPA receives comments that oppose this action, EPA will publish a document in the Federal Register withdrawing today’s direct SUMMARY: E:\FR\FM\23MRR1.SGM 23MRR1

Agencies

[Federal Register Volume 81, Number 56 (Wednesday, March 23, 2016)]
[Rules and Regulations]
[Pages 15432-15440]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-06470]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 4010

RIN 1212-AB30


Annual Financial and Actuarial Information Reporting

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: The Pension Benefit Guaranty Corporation (``PBGC'') is 
amending its regulation on Annual Financial and Actuarial Information 
Reporting to codify provisions of recent legislation and related 
guidance that affect reporting under ERISA section 4010. The final rule 
modifies the reporting waiver under the current regulation tied to 
aggregate plan underfunding of $15 million or less to be based on non-
stabilized interest rates. In addition, the final rule adds new 
reporting waivers for smaller plans and for plans that must file solely 
on the basis of either a statutory lien resulting from missed

[[Page 15433]]

contributions over $1 million or outstanding minimum funding waivers 
exceeding the same amount (provided the missed contributions or 
applications for minimum funding waivers were previously reported to 
PBGC). The final rule also provides alternative methods of compliance 
for reporting certain actuarial information and makes a few technical 
changes to the regulation.

DATES: Effective April 22, 2016. See Applicability in SUPPLEMENTARY 
INFORMATION.

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 recent statutory 
changes--under the Moving Ahead for Progress in the 21st Century Act 
(``MAP-21''),\1\ the Highway Transportation and Funding Act of 2014 
(``HATFA'') \2\ and the Bipartisan Budget Act of 2015 (``BBA'') \3\--
that affect reporting under PBGC's regulation on Annual Financial and 
Actuarial Information Reporting (29 CFR part 4010), to modify the 
regulation's waivers and information requirements to better balance the 
burden of reporting with PBGC's need for information, and to make 
certain technical changes.
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    \1\ Public Law 112-141, enacted July 6, 2012.
    \2\ Public Law 113-159, enacted August 8, 2014.
    \3\ Public Law 114-74, enacted November 3, 2015.
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    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

Interest Rate Stabilization 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. BBA further extended that period, generally 
effective for plan years beginning after December 31, 2015. MAP-21 
included statutory provisions regarding the application of the 
stabilized rates to ERISA section 4010 reporting requirements. The 
final rule codifies the statutory changes and PBGC guidance on when 
stabilized rates are and are not taken into account for purposes of 
4010 reporting.

Changes to $15 Million Aggregate Underfunding Waiver

    Section 4010.11(a) of the regulation provides a waiver from 
reporting if the aggregate underfunding (the ``4010 funding 
shortfall'') of pension plans in a controlled group does not exceed $15 
million. PBGC's experience with this waiver under the old regulation, 
especially since MAP-21, was that it resulted 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 was significantly undermined. To address this 
issue, PBGC proposed to limit the waiver to smaller plans. In response 
to public comments, the final rule permits plans of any size to use 
this waiver (as was the case under the old rule), but modifies how the 
4010 funding shortfall is determined and, as explained below, provides 
a separate waiver based solely on plan size to ensure that smaller 
plans qualify for a waiver.

New Waivers

    The final rule adds a waiver from reporting for plans with 
controlled groups with fewer than 500 participants, regardless of plan 
underfunding. Further, 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 
other new waivers. As in the proposed rule, the final rule waives 
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 applications for 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

    In response to comments, the final rule provides alternative 
methods of compliance for reporting certain actuarial information and 
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.\4\
---------------------------------------------------------------------------

    \4\ 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.
---------------------------------------------------------------------------

4010 Regulation

    PBGC's regulation on Annual Financial and Actuarial Information 
Reporting (29 CFR part 4010) \5\ implements ERISA section 4010. Under 
Sec.  4010.4(a), reporting is required if any of the following 
conditions exist:
---------------------------------------------------------------------------

    \5\ For ease of reference, this preamble refers to the 
regulation as it exists before the final rule becomes applicable as 
the ``old regulation'' and the regulation as amended by this final 
rule as the ``new regulation''. If a statement is true for both the 
old and new regulations, this preamble will simply refer to the 
``regulation.''
---------------------------------------------------------------------------

    1. The funding target attainment percentage (``FTAP'') \6\ 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).
---------------------------------------------------------------------------

    \6\ 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).
---------------------------------------------------------------------------

    2. The conditions 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. Filings under part 4010 play a major role in PBGC's 
ability to protect

[[Page 15434]]

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 and older data, is less accurate, 
which may negatively impact asset recoveries and participant benefits 
if the plan terminates underfunded.
    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 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.\7\
---------------------------------------------------------------------------

    \7\ 74 FR 11022 (Mar. 16, 2009), http://www.gpo.gov/fdsys/pkg/FR-2009-03-16/pdf/E9-5741.pdf.
---------------------------------------------------------------------------

MAP-21 and Statutory Extensions of Interest Rate Stabilization Rules

    MAP-21 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, under MAP-21, the 
stabilized rates are otherwise extended to all other 4010 requirements 
involving minimum funding-related determinations, including those 
requirements created solely by regulation, such as the 4010 funding 
shortfall waiver.
    MAP-21 provided that the stabilized interest rate corridor would 
begin phasing-out in 2013. HATFA delayed the start of that phase-out 
until 2018. BBA further delayed the start of the phase-out until 2020, 
thereby further extending the period for which the interest rate 
stabilization rules are likely to impact 4010 filings (by making it 
more likely that the $15 million aggregate underfunding waiver will 
apply).
    IRS issued Notice 2012-61 providing guidance on pension funding 
stabilization under MAP-21.\8\
---------------------------------------------------------------------------

    \8\ http://www.pbgc.gov/Documents/n-12-61.pdf.
---------------------------------------------------------------------------

    PBGC issued two Technical Updates providing guidance on applying 
the statutory rate stabilization provisions that began with MAP-21 to 
4010 reporting.\9\
---------------------------------------------------------------------------

    \9\ Technical Update 12-2: Effect of MAP-21 on 4010 Reporting 
(Sept. 11, 2012), http://www.pbgc.gov/prac/other-guidance/tu/tu12-2.html; Technical Update 14-2: Effect of HATFA on 4010 Reporting 
(Oct. 17, 2014), http://www.pbgc.gov/prac/other-guidance/tu/tu14-2.html.
---------------------------------------------------------------------------

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,\10\ 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.
---------------------------------------------------------------------------

    \10\ See http://www.pbgc.gov/documents/plan-for-regulatory-review.pdf.
---------------------------------------------------------------------------

Proposed Rule

    On July 27, 2015 (at 80 FR 44312), PBGC published in the Federal 
Register a proposed rule (the ``proposed rule'') for notice and comment 
that codified the statutory stabilized interest rate provisions related 
to 4010 reporting, made changes to the waiver structure, and other 
technical changes. The proposed rule limited the $15 million aggregate 
underfunding waiver to smaller plans and added 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 applications for minimum funding waivers were 
previously reported to PBGC).
    PBGC received ten comment letters (from a total of twelve entities) 
on the proposed rule.\11\ The commenters represented several 
professional and business trade organizations, pension plan 
consultants, plan sponsors, and a law firm. Generally, commenters 
opposed the proposal to limit the $15 million aggregate underfunding 
waiver to small plans while supporting PBGC's effort to add other 
waivers. Commenters provided suggestions on the proposal and on other 
matters under the regulation. The comments on the proposed rule and 
PBGC's responses are discussed below with the topics to which they 
relate.
---------------------------------------------------------------------------

    \11\ See comments at http://www.pbgc.gov/prac/pg/other/guidance/pending-proposed-rules.html.
---------------------------------------------------------------------------

Regulatory Changes

MAP-21 Interest Rate Stabilization 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 interest rate stabilization rules, 
the FTAP used for the 80-percent Gateway Test is also determined 
without regard to such rules.\12\
---------------------------------------------------------------------------

    \12\ 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.
---------------------------------------------------------------------------

    To codify the statutory change and the guidance in Technical 
Updates 12-2 and 14-2, the final rule revises the definition of 
``funding target attainment percentage'' in Sec.  4010.2 to provide 
that it is determined without regard to the interest rate stabilization 
rules and rename it the ``4010 funding target attainment percentage.'' 
The final rule includes conforming changes in Sec. Sec.  4010.4(a)(1), 
4010.4(b), and 4010.8(a)(6). In addition, the final rule

[[Page 15435]]

revises 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 interest rate stabilization rules.
    To reduce the administrative burden of determining whether a 4010 
filing is required, Technical Update 12-2 waived reporting if the FTAP 
of each plan maintained by the filer's controlled group, determined 
without regard to the statutory stabilized interest rate provisions, 
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.\13\ (See Technical Update 12-2 for more 
explanation.) The final rule effectively codifies this waiver from 
reporting and extends the relief to the related information 
requirement.
---------------------------------------------------------------------------

    \13\ https://www.irs.gov/irb/2012-42_IRB/ar10.html.
---------------------------------------------------------------------------

Changes to $15 Million Aggregate Underfunding Waiver

    As mentioned above, PBGC added the $15 million aggregate 
underfunding waiver to the 4010 regulation in 2009. The preamble to the 
2009 final rule 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.'' \14\
---------------------------------------------------------------------------

    \14\ 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. http://www.jct.gov/x-38-06.pdf.
---------------------------------------------------------------------------

    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 rule (see 
footnote 7) stated that ``the waiver will generally exempt controlled 
groups maintaining only small plans from section 4010 reporting.''
    Because of the impact of stabilized interest rates that began with 
MAP-21, PBGC believes that further refinement of the $15 million 
aggregate underfunding waiver is necessary. Under the old regulation, 
many sponsors that would not have qualified for the waiver prior to 
MAP-21 were waived from reporting because underfunding was under $15 
million based on stabilized rates.
    As a result, PBGC was 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 stabilized rates 
resulted in aggregate underfunding being less than $15 million).\15\ To 
put that number in context, it is comparable to the 207 filings PBGC 
received for 2014. 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.
---------------------------------------------------------------------------

    \15\ PBGC was 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 was not 
receiving solely due to the stabilized rates applicable to the $15 
million aggregate underfunding waiver test was much greater than 
200. Besides the 200 prior filers, PBGC was aware of other 
controlled groups that did not have to file in the past, but would 
have been required to file if not for the fact that the waiver is 
based on stabilized rates.
---------------------------------------------------------------------------

    The vast majority of plans for which 4010 reporting would be 
required if not for the statutory stabilized interest rate provisions 
cover more than 1,000 participants and have very large unfunded benefit 
liabilities measured on a termination basis. Thus, the old regulation 
did 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 has 
not been receiving information it would otherwise receive solely 
because plans that were never intended to qualify for the regulatory 
waiver were, in fact, qualifying as a result of the statutory 
stabilized interest rate provisions that began with MAP-21.
    In the preamble to the proposed rule, PBGC stated that because 
Congress provided that stabilized rates are disregarded for purposes of 
determining whether a 4010 filing is required, it was 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 at the time that doing so would be 
overly complicated and administratively burdensome. PBGC was also 
concerned that this approach might make it more difficult to verify 
compliance because the liability underlying the shortfall calculation 
would not be reported on Schedule SB to Form 5500. 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 proposed 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 was fewer than 500.
    All commenters opposed limiting the availability of the $15 million 
aggregate underfunding waiver to controlled groups with fewer than 500 
participants and reported that such limitation would unnecessarily 
burden many large plans by requiring 4010 reporting. Some commenters 
pointed out instances in which the proposed waiver would be unavailable 
due to circumstances that were incidental to the aims of the regulation 
(e.g., recent acquisitions of small plans where additional funding may 
not have yet occurred or multiple employer plans that have over 500 
participants but where individual employers may not have control over 
plan funding). Some commenters suggested that the proposed change would 
result in lower funding contributions for large plans by eliminating 
the incentive under the old rule to fund up to qualify for the waiver. 
In addition, several commenters believed that the proposed participant 
count limit would be a permanent change to the regulation to address a 
temporary condition that would impact reporting long after stabilized 
rates no longer had an impact on plan liabilities.\16\
---------------------------------------------------------------------------

    \16\ PBGC received comments on the proposed rule before BBA was 
enacted. Although BBA does not make stabilized interest rates 
permanent, it still lengthens the amount of time such rates impact 
4010 reporting.
---------------------------------------------------------------------------

    As an alternative to the proposal to limit the $15 million 
aggregate underfunding waiver to controlled groups with fewer than 500 
participants, six commenters (including three who commented in one 
letter) suggested that PBGC's concerns could be addressed if potential 
filers were required to use non-stabilized rates (instead of stabilized 
rates) to determine the 4010 funding shortfall instead of stabilized 
rates. Two of these commenters pointed out that sponsors still use non-
stabilized

[[Page 15436]]

rates for other purposes and therefore, basing the 4010 funding 
shortfall determination on non-stabilized rates would not be overly 
burdensome.\17\ These same commenters suggested that if PBGC were to 
have a participant count limit, the threshold should be increased (with 
suggested limits ranging from 1,000 or 3,000 participants). Two other 
commenters recommended that PBGC consider incorporating the low-default 
risk waiver from PBGC's 2015 final rule on Reportable Events \18\ into 
the 4010 regulation as an effective way to tie risk to reporting. Other 
suggestions for alternatives included incorporating funding ratios of 
at least 90 percent on a stabilized interest rate basis, allowing for 
simplified reporting if the waiver under the proposed rule were to be 
retained, and increasing the participant count threshold.
---------------------------------------------------------------------------

    \17\ These uses include: 4010 Funding Target Attainment 
Percentage, Variable Rate Premium under the alternative method, 
annual funding notice supplement, and Code section 404 deduction 
limits.
    \18\ 80 FR 54979 (Sept. 11, 2015), http://www.gpo.gov/fdsys/pkg/FR-2015-09-11/pdf/2015-22941.pdf.
---------------------------------------------------------------------------

    PBGC was interested to learn that commenters were not concerned 
that basing the determination of the waiver on non-stabilized rates 
would result in overly burdensome reporting requirements. Given that a 
substantial segment of the commenters supported this suggestion and the 
fact that statutory stabilized interest rate provisions are scheduled 
to eventually phase-out, PBGC believes making this modification to the 
waiver is appropriate to reduce potential filer burden even though the 
data underlying the calculation does not get reported on Schedule SB. 
PBGC will be able to estimate the 4010 funding shortfall to evaluate 
compliance with the filing requirements using other information 
sponsors routinely file. As a result, the final rule eliminates the 
participant count limit for purposes of the $15 million aggregate 
underfunding waiver and instead requires that the liability used to 
determine the 4010 funding shortfall be determined using non-stabilized 
rates. The final rule does not change how the asset portion of the 4010 
funding shortfall is calculated (i.e., the asset value used for this 
purpose is the asset value used for funding purposes, including 
averaging, if applicable, with no reduction for prefunding or carryover 
balances).
    PBGC acknowledges that under this change, some smaller plans that 
would have qualified for the waiver under the proposed rule would not 
qualify for the waiver under the final rule. Accordingly, as described 
below, the final rule adds a new waiver for controlled groups with less 
than 500 participants, regardless of plan underfunding.
    With the final rule modification to the $15 million aggregate 
underfunding waiver and the new smaller plans waiver, PBGC believes 
that most of the commenters' concerns about modifying the waiver have 
been addressed. However, PBGC may reconsider suggestions from 
commenters that are not incorporated into the final rule, as well as 
other possibilities, as it gains experience with reporting under the 
new regulation.

New Waivers--Smaller Plans

    PBGC concluded that it could provide burden relief for smaller 
plans without compromising the pension insurance system. Thus, the 
final rule provides that 4010 reporting is waived for controlled groups 
where the aggregate number of participants in all plans (including any 
exempt plans) is fewer than 500 (the ``smaller plans waiver'').
    The final regulation provides that for purposes of the new smaller 
plans waiver, the aggregate number of participants in all plans 
maintained by a person's controlled group includes any participants 
covered by a multiple employer plan in which the person participates 
(including participants covered by the multiple employer plan who are 
not or were not employed by the person). In other words, the person is 
treating as ``maintaining'' the whole multiple employer plan. For 
example, in the case of a multiple employer plan where each 
contributing sponsor has fewer than 500 participants in all of its 
plans, but the multiple employer plan as a whole covers 500 or more 
participants, the smaller plans waiver would not apply. This treatment 
is analogous to how the aggregate funding shortfall of a multiple 
employer plan is determined for purposes of the $15 million aggregate 
underfunding waiver under the current regulation; for that purpose, the 
multiple employer plan's entire shortfall is taken into account.

New Waivers--Missed Contributions Resulting in a Lien or Outstanding 
Minimum Funding Waivers

    As part of PBGC's implementation of its Plan for Regulatory Review 
(which included public comment on how PBGC could reduce reporting 
burden), PBGC reviewed part 4010 to see how it could reduce burden 
while preserving its ability to receive critical information. As part 
of this process, PBGC proposed to waive 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 2014, there were 
10 such filers. PBGC can look to reportable events filings \19\ to 
obtain information similar to that reported in 4010 filings required 
solely because of these reporting triggers.
---------------------------------------------------------------------------

    \19\ 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.
---------------------------------------------------------------------------

    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 $16,000 
in actuarial costs (depending in part on whether it was a first-time 
filing). Based on 2014 data, the aggregate actuarial cost savings for 
all filers could be over $160,000.
    Therefore, to reduce the burden of duplicative reporting, the 
proposed rule added 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 applications for minimum funding 
waivers were reported under part 4043 by the due date for the 4010 
filing.
    PBGC did not receive any comments on these proposed new waivers. 
The final rule retains these waivers as proposed.

Alternative Methods of Compliance for Reporting Certain Actuarial 
Information

    ERISA section 4010(d) requires that certain information be reported 
to PBGC when a filer makes a report under ERISA section 4010, including 
the funding target of the plan determined as if the plan has been in 
at-risk status for at least five plan years and determined without 
regard to the interest rate stabilization rules.\20\ Section 4010.8 of 
the regulation implements the statutory information requirements. While 
not addressed in the proposed rule, three comment letters (representing 
five entities) suggested that PBGC either

[[Page 15437]]

eliminate the requirement for plans that are not in at-risk status or 
provide a simpler alternative method of compliance for such plans. 
These commenters stated that PBGC does not need that information and 
that plans are not required to do the calculation for any purpose other 
than 4010 reporting. In addition, commenters noted that due to the 
complications of the at-risk rules, doing the calculation substantially 
increases the costs of preparing a 4010 filing.
---------------------------------------------------------------------------

    \20\ See ERISA section 4010(d)(1)(B). Under Sec.  4010.2, at-
risk status means, with respect to a plan for a plan year, at-risk 
status as defined in ERISA section 303(i)(4) and Code section 
430(i)(4).
---------------------------------------------------------------------------

    PBGC finds these comments credible and agrees that PBGC generally 
does not need this information from plans that are not in at-risk 
status. And although PBGC does need information about the at-risk 
funding target from plans that are in at-risk status, the relevant 
information for PBGC is the at-risk funding target determined using 
stabilized rates, not the statutorily-required information determined 
without regard to the stabilization rules. However, because it is 
possible that PBGC might need the statutorily-required information from 
a particular plan or that Congress might request that information, PBGC 
concluded that providing an alternate method of compliance is 
preferable to waiving the requirement altogether. Therefore, the final 
rule provides that plans are not required to provide the at-risk 
funding target information (determined without regard to the 
stabilization rules) unless PBGC makes a written request for the 
information. In that event, the plan would have at least 30 days after 
PBGC's written request to provide the information. In addition, to 
ensure that PBGC receives relevant and timely information about the at-
risk funding target from plans that are in at-risk status (i.e., 
determined using stabilized rates), PBGC is adding that information to 
the list in Sec.  4010.8(a)(11) of information required to be reported 
in an attachment to the 4010 filing (the valuation report).
    Some of these same commenters also suggested that PBGC eliminate or 
provide for an alternate method of compliance for reporting the year-
end plan termination liability calculation information required under 
ERISA section 4010(d)(1)(A) and Sec.  4010.8(a)(3) of the regulation. 
PBGC needs this information to run its analysis of whether a 4010 filer 
poses a risk to the pension insurance system. Thus, PBGC is not 
modifying or eliminating the year-end plan termination liability 
calculation in the final rule.
    One commenter expressed its appreciation for the proposed rule's 
codification of relief provided in Technical Update 12-2, under which 
reporting would be waived if the 4010 FTAP of each plan maintained by a 
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 interest rate 
stabilization rules (i.e., the amount determined in accordance with IRS 
notice 2012-61, Q&A NA 3). However, under the proposed rule, if 
reporting were required, a filer would still need to calculate asset 
values without regard to the interest rate stabilization rules (in 
accordance with IRS notice 2012-61) for purposes of determining the 
4010 FTAP to be reported in the filing. This commenter believed that 
this calculation should not be required at all since the difference in 
values (i.e., the value of assets determined without regard to the 
interest rate stabilization rules compared to the value of plan assets 
used for minimum funding purposes) would generally be small. The 
commenter also noted that IRS and the Department of Labor (``DOL'') do 
not require this calculation and that if PBGC were to require it, then 
two sets of asset values would need to be reported in the Annual 
Funding Notice (under ERISA section 101(f)) resulting in complexity and 
participant confusion.
    PBGC agrees that requiring this calculation for a 4010 report is 
unnecessary. Thus, the final rule provides that for purposes of 
determining the 4010 FTAP, the value of plan assets used for minimum 
funding purposes may be substituted for the asset value determined 
without regard to interest rate stabilization rules. By doing so, there 
is no need to provide for the alternative 4010 FTAP waiver that was 
included in the proposed rule and thus, that waiver has been eliminated 
from the final rule.

Other Changes

    The final 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 final 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 final rule makes two corrections to the regulation.
    First, the final rule amends Sec.  4010.8(b)(1) to correct a cross 
reference from Sec.  4010.11(b) to Sec.  4010.10(b).
    Second, the final 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) and make a related conforming change. 
This change conforms the regulation to the statutory requirement. As a 
result of a drafting error in the 2009 final rule, the old regulation 
provided that, for purposes of determining a plan's benefit 
liabilities, the form-of-payment assumption must be the same as that 
used to determine the minimum required contribution. Although this 
assumption has had 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.\21\
---------------------------------------------------------------------------

    \21\ Technical Update 09-2: ERISA section 4010 reporting; 
Alternative form-of-payment assumption for determining benefit 
liabilities (Mar. 25, 2009), http://www.pbgc.gov/prac/other-guidance/tu/tu09-2.html.
---------------------------------------------------------------------------

    Three commenters suggested that PBGC retain the option of using the 
Sec.  4044.51 assumption. However it appeared to PBGC that none of 
these commenters held a particularly strong belief in this regard and 
that making any software program changes would not be too difficult. 
Further, PBGC has concluded that this information will help PBGC to 
conduct its analysis of the impact of a 4010 filing on the pension 
insurance system more effectively. For these reasons, and to conform to 
the statutory requirement, PBGC decided not to retain this provision 
from the proposed rule. Thus, the final rule requires the use of the 
Sec.  4044.51 assumption for purposes of Sec.  4010.8(d)(2).

Timing

    PBGC proposed that the final rule would be applicable to 
information years beginning after December 31, 2015. Three commenters 
urged PBGC to allow a longer transition period/effective date so that 
controlled groups can plan for, or take action to avoid, 4010 filings 
(such as making funding contribution). One of these commenters 
specifically recommended that the effective date be no earlier than 
information years beginning 18 months after the final rule is 
published. Another

[[Page 15438]]

commenter recommended that the ``effective date be changed to 
information years beginning one year after the final rule is final or 
at [a] minimum allow plans to substitute their 2016 FTAP for applicable 
4010 calculations if necessary to avoid filing.''
    PBGC did not change the applicability date from the proposed rule. 
PBGC believes sponsors will have sufficient time to make additional 
contributions in order to qualify for the $15 million aggregate 
underfunding waiver or make additional contributions or waive carryover 
or prefunding balances to increase the 4010 FTAP to above 80 
percent.\22\ Moreover, as always, PBGC will consider case-by-case 
waivers in the case of unusual situations. Finally, PBGC has been 
without 4010 information from certain plans since MAP-21 and needs that 
information from those plans as soon as practicable to better 
understand their current status and its impact on the pension insurance 
system. Accordingly, PBGC did not change the proposed applicability 
date in the final rule.
---------------------------------------------------------------------------

    \22\ PBGC is aware that in the case of a controlled group with a 
calendar year information year that includes a plan with a non-
calendar year plan year, that plan may have needed to make decisions 
about funding or contributions before this final rule was published. 
However, PBGC believes that in such a case the plan had sufficient 
notice in the proposed rule that it would likely need to fund up to 
avoid a 4010 filing for the 2016 information year.
---------------------------------------------------------------------------

Applicability

    The regulatory changes in the final rule are applicable to 
information years beginning after December 31, 2015. The first filings 
under the new regulation are due April 17, 2017.\23\
---------------------------------------------------------------------------

    \23\ April 15, 2017, is a Saturday. In the rare case of a short 
information year beginning in 2016, the due date would be earlier; 
filers in that situation should contact PBGC.
---------------------------------------------------------------------------

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 final 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 final 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 final 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 final 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 final rule changes would far be less than $100 million. See 
discussion under Paperwork Reduction Act.
    This final 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 final rule 
is not likely to have a significant economic impact on a substantial 
number of small entities, section 604 of the Regulatory Flexibility Act 
requires that the agency present a final regulatory flexibility 
analysis at the time of the publication of the final rule describing 
the impact of the rule on small entities and steps taken to minimize 
the impact. Small entities include small businesses, organizations and 
governmental jurisdictions.
    For purposes of the Regulatory Flexibility Act requirements with 
respect to the 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 \24\ and is consistent with 
certain requirements in Title I of ERISA \25\ and the Internal Revenue 
Code,\26\ as well as the definition of a small entity that DOL has used 
for purposes of the Regulatory Flexibility Act.\27\
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    \24\ See e.g., special rules for small plans under part 4007 
(Payment of Premiums).
    \25\ 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.
    \26\ 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.
    \27\ See, e.g., DOL's final rule on Prohibited Transaction 
Exemption Procedures, 76 FR 66637, 66644 (Oct. 27, 2011).
---------------------------------------------------------------------------

    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 final 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 requested 
comments on the appropriateness of the size standard used in the 
proposed rule. PBGC received no comments on this point.
    PBGC certifies under section 605(b) of the Regulatory Flexibility 
Act that the amendments in this final rule would not have a significant 
economic impact on a substantial number of small entities. 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.

[[Page 15439]]

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, 2018). An agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number.
    PBGC estimates that once the final rule takes effect it will 
receive 4010 filings from about 410 contributing sponsors or controlled 
group members annually and that the total annual burden of the 
collection of information will be about 3,600 hours and $6,560,000.

List of Subjects in 29 CFR Part 4010

    Pension insurance, Pensions, Reporting and recordkeeping 
requirements.

    For the reasons given above, PBGC is amending 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 ``Unless a 
waiver in Sec.  4010.11 of this part applies, a contributing sponsor''.
0
b. Paragraph (a)(1) is amended by adding ``4010'' before the phrase 
``funding target attainment percentage''.
0
c. Paragraph (a)(2) is amended by adding the words ``or 306(g)'' after 
the word ``303(k)'' and adding the words ``or 433(g)'' after the word 
``430(k)''.
0
d. Paragraph (b) is revised.
0
e. Paragraph (d) is removed, and paragraphs (e) and (f) are 
redesignated as paragraphs (d) and (e), respectively.
0
f. Newly redesignated paragraph (e) is revised.
    The revisions 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 without regard 
to the interest rate stabilization provisions of ERISA section 
303(h)(2)(C)(iv) and Code section 430(h)(2)(C)(iv).
    (2) Assets used to determine 4010 funding target attainment 
percentage. For purposes of determining the 4010 funding target 
attainment percentage for a plan for the plan year, the value of plan 
assets determined under ERISA section 303(g)(3) and Code section 
430(g)(3) may (but need not) be substituted for the asset value 
determined without regard to the interest rate stabilization provisions 
of ERISA section 303(h)(2)(C)(iv) and Code section 430(h)(2)(C)(iv).
    (3) 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 certain cooperatives and charities.

0
4. In Sec.  4010.8:
0
a. Paragraph (a)(5) is revised.
0
b. Paragraph (a)(6) is amended by adding ``4010'' before ``funding 
target attainment percentage.''
0
c. Paragraph (a)(9) is amended by adding the words ``or 306(g)'' after 
the word ``303(k)'' and adding the words ``or 433(g)'' after the word 
``430(k)''.
0
d. Paragraph (a)(11)(vi) is amended by adding ``and funding target'' 
after ``the target normal cost.''
0
e. Paragraph (b) is revised.
0
f. Paragraph (c)(1)(i) is amended by removing the reference ``Sec.  
4010.11(c)'' and adding in its place the reference ``Sec.  
4010.11(a)(1)''.
0
g. Paragraph (d)(2)(i) is amended by adding the words ``form of 
payment,'' after ``Interest,''.
0
h. Paragraph (d)(2)(ii) is amended by removing the words ``form of 
payment'' from the parenthetical and adding the words ``form of 
payment'' after ``interest,''.
0
i. Paragraph (h) is removed and paragraph (i) is redesignated as 
paragraph (h) and revised.
    The revisions read as follows:


Sec.  4010.8  Plan actuarial information.

    (a) * * *
    (5) The at-risk funding target for the plan year ending within the 
information year determined under ERISA section 303(i) and Code section 
430(i)--
    (i) As if the plan has been in at-risk status for a consecutive 
period of at least five years, and
    (ii) Without regard to the interest rate stabilization provisions 
of ERISA section 303(h)(2)(C)(iv) and Code section 430(h)(2)(C)(iv);
* * * * *
    (b) Alternative methods of compliance--(1) At-risk funding target. 
Notwithstanding any other provision of this section, a filer is not 
required to provide the information specified in paragraph (a)(5) of 
this section for the plan year for which actuarial information is being 
reported unless PBGC requests in writing that the information be 
provided, in which case the filer must provide the information within 
30 days of such request or such later date as PBGC specifies in the 
request.
    (2) Actuarial valuation report. If any of the information specified 
in paragraph (a)(11) of this section is not available by the date 
specified in Sec.  4010.10(a), a filer may satisfy the requirement to 
provide such information by--

[[Page 15440]]

    (i) Including a statement, with the material that is submitted to 
PBGC, that the filer will file the unavailable information by the 
alternative due date specified in Sec.  4010.10(b), and
    (ii) Filing such information (along with a certification by an 
enrolled actuary under paragraph (a)(12) of this section) with PBGC by 
that alternative due date.
* * * * *
    (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, http://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 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, http://www.pbgc.gov.

0
5. Section 4010.11 is revised to read as follows:


Sec.  4010.11  Waivers.

    (a) Aggregate funding shortfall not in excess of $15 million 
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, 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, as determined under paragraphs (a)(1) and (2) 
of this section.
    (1) 4010 funding shortfall; in general. A plan's 4010 funding 
shortfall for a plan year equals the funding shortfall for the plan 
year as provided under ERISA section 303(c)(4) and Code section 
430(c)(4), with the following exceptions:
    (i) The funding target used to calculate the 4010 funding shortfall 
is determined without regard to the interest rate stabilization 
provisions of ERISA section 303(h)(2)(C)(iv) and Code section 
430(h)(2)(C)(iv).
    (ii) The value of plan assets used to calculate the 4010 funding 
shortfall 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.
    (b) Smaller plans waiver--(1) General. Unless reporting is required 
by Sec.  4010.4(a)(2) or (a)(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, 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.
    (2) Multiple employer plans. For purposes of this paragraph (b), 
the aggregate number of participants in all plans maintained by a 
person's controlled group includes any participants covered by a 
multiple employer plan in which the person participates (including 
participants covered by the multiple employer plan who are not or were 
not employed by the person).
    (c) 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 applications for minimum funding waivers (as 
applicable) were reported to PBGC under part 4043 of this chapter by 
the due date for the 4010 filing.
    (d) 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 March, 2016.
W. Thomas Reeder,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2016-06470 Filed 3-22-16; 8:45 am]
BILLING CODE 7709-02-P