29 C.F.R. PART 4007—PAYMENT OF PREMIUMS
Title 29 - Labor
Authority: 29 U.S.C. 1302(b)(3), 1303(a), 1306, 1307.
Source: 61 FR 34020, July 1, 1996, unless otherwise noted.
This part, which applies to all plans that are covered by title IV of ERISA, provides procedures for paying the premiums imposed by sections 4006 and 4007 of ERISA. (See part 4006 of this chapter for premium rates and computational rules.) (a) The following terms are defined in §4001.2 of this chapter: Code, contributing sponsor, ERISA, insurer, IRS, multiemployer plan, notice of intent to terminate, PBGC, plan, plan administrator, plan year, and single-employer plan. (b) For purposes of this part, the following terms are defined in §4006.2 of this chapter: new plan, newly covered plan, participant, premium payment year, and short plan year. The estimation, declaration, reconciliation, and payment of premiums shall be made in accordance with the premium instructions on the PBGC's Web site (http://www.pbgc.gov). The plan administrator of each covered plan is responsible for filing prescribed premium information and payments. No later than the applicable due date(s) specified in §4007.11, a plan's required premium payment(s) and related information, certified as provided in the premium instructions, must be filed in the manner and format prescribed in the instructions. Information must be filed electronically except to the extent that the PBGC grants an exemption for good cause in appropriate circumstances. The requirement to file electronically applies to filings for plan years beginning in 2006 that are made on or after July 1, 2006, for plans with 500 or more participants for the prior plan year and to filings for all plans for plan years beginning after 2006. (The requirement to file electronically does not apply to information filed to comply with a PBGC request under (4007.10(c) (dealing with providing record information in connection with a premium compliance review).) [71 FR 31081, June 1, 2006] See §4000.4 of this chapter for information on where to file. [71 FR 31081, June 1, 2006] The PBGC applies the rules in subpart D of part 4000 of this chapter to compute any time period under this part. However, for purposes of determining the amount of a late payment interest charge under §4007.7 or of a late payment penalty charge under §4007.8, the rule in §4000.43(a) of this chapter governing periods ending on weekends or Federal holidays does not apply. [68 FR 61352, Oct. 28, 2003] (a) If any premium payment due under this part is not paid by the due date prescribed for such payment by §4007.11, an interest charge will accrue on the unpaid amount at the rate imposed under section 6601(a) of the Code for the period from the date payment is due to the date payment is made. Late payment interest charges are compounded daily. (b) When PBGC issues a bill for premium payments necessary to reconcile the premiums paid with the actual premium due, interest will be accrued on the unpaid premium until the date of the bill if paid no later than 30 days after the date of such bill. If the bill is not paid within the 30-day period following the date of such bill, interest will continue to accrue throughout such 30-day period and thereafter, until the date paid. (c) PBGC bills for interest assessed under this section will be deemed paid when due if paid no later than 30 days after the date of such bills. Otherwise, interest will accrue in accordance with paragraph (a) of this section on the amount of the bill from the date of the bill until the date of payment. (a) Penalty charge. If any premium payment due under this part is not paid by the due date under §4007.11, the PBGC will assess a late payment penalty charge as determined under this paragraph (a), except to the extent the charge is waived under paragraphs (b) through (g) of this section. The charge will be no more than 100% of the unpaid premium. The charge will be based on the number of months (counting any portion of a month as a whole month) from the due date to the date of payment and is subject to a floor of $25 (or, if less, the amount of the unpaid premium). (1) Penalty rate for post-1995 premium payment years. This paragraph (a)(1) applies to the premium for any premium payment year beginning after 1995. The penalty rate is— (i) 1% per month (for all months) on any amount of unpaid premium that is paid on or before the date the PBGC issues a written notice to any person liable for the plan's premium that there is or may be a premium delinquency (e.g., a premium bill, a letter initiating a premium compliance review, or a letter questioning a failure to make a premium filing); or (ii) 5% per month (for all months) on any amount of unpaid premium that is paid after that date. (2) Penalty rate for pre-1996 premium payment years. This paragraph (a)(2) applies to the premium for any premium payment year beginning before 1996. The penalty rate is 5% per month (for all months) on any amount of unpaid premium. (b) Hardship waiver. The PBGC may grant a waiver based upon a showing of substantial hardship as provided in section 4007(b) of ERISA. (c) Reasonable cause waiver. The PBGC may, upon any demonstration of reasonable cause, waive all or part of a late payment penalty charge. (d) Waiver on PBGC's own initiative. The PBGC may, on its own initiative, waive all or part of a late payment penalty charge. (e) Grace period. With respect to any PBGC bill for a premium underpayment, the PBGC will waive any late payment penalty charge accruing after the date of the bill, provided the premium underpayment is paid within 30 days after the date of the bill. (f) Safe-harbor relief for certain large plans. This waiver applies in the case of a plan for which a reconciliation filing is required under §4007.11(a)(2)(iii). The PBGC will waive the penalty on any underpayment of the flat-rate premium for the period that ends on the date the reconciliation filing is due if fewer than 500 participants are reported for the plan year preceding the premium payment year (determined in accordance with paragraph (h) of this section). (g) Safe-harbor relief for plans that make minimum estimated payment. This waiver applies in the case of a plan for which a reconciliation filing is required under §4007.11(a)(2)(iii). The PBGC will waive the penalty on any underpayment of the flat-rate premium for the period that ends on the date the reconciliation filing is due if, by the date the flat-rate premium for the premium payment year is due under §4007.11(a)(2)(i), the plan administrator pays at least the lesser of— (1) 90% of the flat-rate premium due for the premium payment year; or (2) 100% of the flat-rate premium that would be due for the premium payment year if the number of participants for that year were the lesser of— (i) The number of participants for whom premiums were required to be paid for the plan year preceding the premium payment year; or (ii) The number of participants reported for the plan year preceding the premium payment year (determined in accordance with paragraph (h) of this section). (h) Reported participant count. For purposes of paragraphs (f) and (g)(2)(ii) of this section, the number of participants reported for the plan year preceding the premium payment year is the number of participants last reported under this part to the PBGC (for the plan year preceding the premium payment year) by the date the flat-rate premium for the premium payment year is due under §4007.11(a)(2)(i). (i) Safe harbor relief for certain plan amendments prospectively changing plan year. This waiver applies in the case of a plan for which a reconciliation filing is required under §4007.11(a)(2)(iii). The PBGC will waive the penalty on any underpayment of the flat-rate premium for the period that ends on the date the reconciliation filing is due if, by the date the flat-rate premium for the premium payment year is due under §4007.11(a)(2)(i),— (1) The plan has been amended to change its plan year and the amendment as in effect on that date makes the premium payment year a short year that will end after that date; and (2) The plan administrator pays at least the lesser of— (i) The amount determined under §4007.8(g) based on the actual length of the premium payment year, or (ii) The amount determined under §4007.8(g) based on the length that the premium payment year would have if the new plan year cycle began as anticipated by the amendment. [64 FR 66385, Nov. 26, 1999, as amended at 65 FR 75164, Dec. 1, 2000] (a) The failure by a plan administrator to pay the premiums due under this part will not result in that plan's loss of coverage for basic benefits guaranteed under section 4022(a) or 4022A(a) of ERISA. (b) The payment of the premiums imposed by this part will not result in coverage for basic benefits guaranteed under section 4022(a) or 4022A(a) of ERISA for plans not covered under title IV of ERISA. (a) Retention of records to support premium payments—(1) In general. All plan records, including calculations and other data prepared by an enrolled actuary or, for a plan described in section 412(i) of the Code, by the insurer from which the insurance contracts are purchased, that are necessary to support or to validate premium payments under this part shall be retained by the plan administrator for a period of six years after the premium due date. Records that must be retained pursuant to this paragraph include, but are not limited to, records that establish the number of plan participants and that reconcile the calculation of the plan's unfunded vested benefits with the actuarial valuation upon which the calculation was based. (2) Electronic recordkeeping. The plan administrator may use electronic media for maintenance and retention of records required by this part in accordance with the requirements of subpart E of part 4000 of this chapter. (b) PBGC audit. Premium payments under this part are subject to audit by the PBGC. If, upon audit, the PBGC determines that a premium due under this part was underpaid, the late payment interest charges under §4007.7 and the late payment penalty charges under §4007.8 shall apply to the unpaid balance from the premium due date to the date of payment. In determining the premium due, if, in the judgment of the PBGC, the plan's records fail to establish the number of plan participants with respect to whom premiums were required for any premium payment year, the PBGC may rely on data it obtains from other sources (including the IRS and the Department of Labor) for presumptively establishing the number of plan participants for premium computation purposes. (c) Providing record information—(1) In general. The plan administrator shall make the records retained pursuant to paragraph (a) of this section available to the PBGC upon request for inspection and photocopying (or, for electronic records, inspection, electronic copying, and printout) at the location where they are kept (or another, mutually agreeable, location) and shall submit information in such records to the PBGC within 45 days of the date of the PBGC's written request therefor, or by a different time specified therein. (2) Extension. Except as provided in paragraph (c)(3) of this section, the plan administrator may automatically extend the period described in paragraph (c)(1) by submitting a certification to the PBGC prior to the expiration of that time period. The certification shall— (i) Specify a date to which the time period described in paragraph (c)(1) is extended that is no more than 90 days from the date of the PBGC's written request for information; and (ii) Contain a statement, certified to by the plan administrator under penalty of perjury (18 U.S.C. §1001), that, despite reasonable efforts, the additional time is necessary to comply with the PBGC's request. (3) Shortening of time period. The PBGC may in its discretion shorten the time period described in paragraph (c)(1) or (c)(2) of this section where it determines that collection of unpaid premiums (or any associated interest or penalties) would otherwise be jeopardized. If the PBGC shortens the time period described in paragraph (c)(1), no extension is available under paragraph (c)(2). (d) Address and timeliness. Information required to be submitted under paragraph (c) of this section shall be submitted to the address specified in the PBGC's request. The timeliness of a submission shall be determined in accordance with §§4007.5 and 4007.6. [61 FR 34020, July 1, 1996, as amended at 62 FR 36663, July 9, 1997; 68 FR 61352, Oct. 28, 2003] (a) In general. The premium filing due date for small plans is prescribed in paragraph (a)(1) of this section and the premium filing due dates for large plans are prescribed in paragraph (a)(2) of this section. (1) Plans with fewer than 500 participants. If the plan has fewer than 500 participants, as determined under paragraph (b) of this section, the due date is the fifteenth day of the tenth full calendar month following the end of the plan year preceding the premium payment year. (2) Plans with 500 or more participants. If the plan has 500 or more participants, as determined under paragraph (b) of this section— (i) The due date for the flat-rate premium required by §4006.3(a) is the last day of the second full calendar month following the close of the plan year preceding the premium payment year; and (ii) The due date for the variable-rate premium required by §4006.3(b) for single-employer plans is the fifteenth day of the tenth full calendar month following the end of the plan year preceding the premium payment year. (iii) If the number of plan participants on the last day of the plan year preceding the premium payment year is not known by the date specified in paragraph (a)(2)(i) of this section, a reconciliation filing (on the form prescribed by this part) and any required premium payment or request for refund shall be made by the date specified in paragraph (a)(2)(ii) of this section. (3) Plans that change plan years. For any plan that changes its plan year, the premium form or forms and payment or payments for the short plan year shall be filed by the applicable due date or dates specified in paragraphs (a)(1), (a)(2), or (c) of this section. For the plan year that follows a short plan year, the due date or dates for the premium forms and payments shall be, with respect to each such due date, the later of— (i) The applicable due date or dates specified in paragraph (a)(1) or (a)(2) of this section; or (ii) 30 days after the date on which the amendment changing the plan year was adopted. (b) Participant count rule for purposes of determining filing due dates. For purposes of determining under paragraph (a) of this section whether a plan has fewer than 500 participants, or 500 or more participants, the plan administrator shall use— (1) For a single-employer plan, the number of participants for whom premiums were payable for the plan year preceding the premium payment year, or (2) For a multiemployer plan, the number of participants determined as of the following date: (i) If the premium payment year is the plan's second plan year, the first day of the first plan year; or (ii) If the premium payment year is the plan's third or a subsequent plan year, the last day of the second preceding plan year. (c) Due dates for new and newly covered plans. Notwithstanding paragraph (a) of this section, the premium form and all premium payments due for the first plan year of coverage of any new plan or newly covered plan shall be filed on or before the latest of— (1) The fifteenth day of the tenth full calendar month that began on or after the later of— (i) The first day of the premium payment year; or (ii) The day on which the plan became effective for benefit accruals for future service; (2) 90 days after the date of the plan's adoption; or (3) 90 days after the date on which the plan became covered by title IV of ERISA. (d) Continuing obligation to file. The obligation to file the form or forms prescribed by this part and to pay any premiums due continues through the plan year in which all plan assets are distributed pursuant to a plan's termination or in which a trustee is appointed under section 4042 of ERISA, whichever occurs earlier. The entire premium computed under this part is due, irrespective of whether the plan is entitled to a refund for a short plan year pursuant to §4006.5(f). (e) Improper filings. Any form not filed in accordance with this part, not filed in accordance with the instructions, not accompanied by the required premium payment, or otherwise incomplete, may, in the discretion of the PBGC, be returned with any payment accompanying the form to the plan administrator, and such payment shall be treated as not having been made. [61 FR 34020, July 1, 1996, as amended at 63 FR 68685, Dec. 14, 1998; 71 FR 31081, June 1, 2006] (a) The designation under this part of the plan administrator as the person required to file the applicable forms and to submit the premium payment for a single-employer plan is a procedural requirement only and does not alter the liability for premium payments imposed by section 4007 of ERISA. Pursuant to section 4007(e) of ERISA, both the plan administrator and the contributing sponsor of a single-employer plan are liable for premium payments, and, if the contributing sponsor is a member of a controlled group, each member of the controlled group is jointly and severally liable for the required premiums. Any entity that is liable for required premiums is also liable for any interest and penalties assessed with respect to such premiums. (b) For any plan year in which a plan administrator issues (pursuant to section 4041(a)(2) of ERISA) notices of intent to terminate in a distress termination under section 4041(c) of ERISA or the PBGC initiates a termination proceeding under section 4042 of ERISA, and for each plan year thereafter, the obligation to pay the premiums (and any interest or penalties thereon) imposed by ERISA and this part for a single-employer plan shall be an obligation solely of the contributing sponsor and the members of its controlled group, if any.
Title 29: Labor
PART 4007—PAYMENT OF PREMIUMS
Section Contents
§ 4007.1 Purpose and scope.
§ 4007.2 Definitions.
§ 4007.3 Filing requirement; method of filing.
§ 4007.4 Where to file.
§ 4007.6 Computation of time.
§ 4007.7 Late payment interest charges.
§ 4007.8 Late payment penalty charges.
§ 4007.9 Coverage for guaranteed basic benefits.
§ 4007.10 Recordkeeping; audits; disclosure of information.
§ 4007.11 Due dates.
§ 4007.12 Liability for single-employer premiums.
§ 4007.1 Purpose and scope.
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§ 4007.2 Definitions.
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§ 4007.3 Filing requirement; method of filing.
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§ 4007.4 Where to file.
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§ 4007.6 Computation of time.
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§ 4007.7 Late payment interest charges.
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§ 4007.8 Late payment penalty charges.
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§ 4007.9 Coverage for guaranteed basic benefits.
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§ 4007.10 Recordkeeping; audits; disclosure of information.
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§ 4007.11 Due dates.
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§ 4007.12 Liability for single-employer premiums.
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