United States: Reportable Event Changes For Pension Plans Effective January 1, 2016

Effective January 1, 2016, the Pension Benefit Guaranty Corporation (PBGC) altered the reportable event rules for defined benefit pension plans. Under new final regulations, the PBGC substantially reduced the reporting requirements for pension plan administrators, sponsors and contributing employers. In fact, the PBGC estimates that the final regulations will allow 82 percent of pension plans with more than 100 participants to utilize a reporting waiver.

As a background, the reportable event rules require pension plan administrators, sponsors and contributing employers to notify the PBGC either 30 days before or 30 days after a specified event occurs, including events such as extraordinary dividends or stock redemptions; changes in the controlled group or plan sponsor; termination or partial termination of a pension plan; active participant reductions; loan default; distributions to substantial owners; missed contributions; inability to pay benefits when due; application for a minimum funding waiver; insolvency; and transfers of benefit liabilities. The new rules, however, reduce the reporting burden in many of these circumstances. PBGC reporting now is automatically waived for certain reportable events if any of the following conditions are met: (1) the well-funded plan waiver, (2) the public company waiver, (3) the low-risk default waiver, and (4) small plan, foreign entity and de minimis waivers. In addition to these waivers, the new PBGC rules modify the definition of certain events that must be reported, and require electronic filing of all event notices. These new reportable event rules apply to post-event reports for events occurring on or after January 1, 2016, and apply to advance reports due on or after January 1, 2016.

Well-Funded Plan Waiver

During the plan year in which certain reportable events occur, a pension plan may utilize this waiver if no variable rate premium is due for the plan year prior to the reportable event. Generally, only a pension plan that is fully funded on an on-going basis (without smoothing) can avoid paying a variable rate premium to the PBGC. For example, if a pension plan does not pay a variable rate premium in 2016, the plan qualifies for the well-funded plan waiver for reportable events that occur in 2017 even if the plan is required to pay a variable rate premium in 2017.

Public Company Waiver

The public company waiver is available for certain reportable events if any contributing employer to the plan is a public company and files a SEC Form 8-K disclosing the reportable event. The waiver does not apply if the SEC Form 8-K disclosure is made under Item 2.02 (results of operations and financial condition) or under Item 9.01 (financial statements and exhibits).

Low-Default Risk Waiver

The low-default risk waiver is based on financial metrics that are readily available for most employers that contribute to a pension plan. Specifically, a pension plan's contributing employer and highest level U.S. parent (collectively, the company) can satisfy the low-default risk waiver for certain reportable events if either: (1) the company meets both of the first two below factors, or (2) the company meets at least four of the below seven factors:

  • The probability that the company will default on its financial obligations is not more than four percent over the next five years or not more than .4 percent over the next year, based on widely available financial information of credit worthiness
  • The company's secured debt (with some exceptions) does not exceed 10 percent of its total asset value
  • The company's ratio of total-debt-to-earnings before interest, taxes, depreciation and amortization (EBITDA) is 3.0 or less
  • The company's ratio of retained-earnings-to-total-assets is .25 or more
  • The company has positive net income for the two most recent completed fiscal years
  • The company has not experienced any loan default event in the past two years, regardless of whether reporting was waived
  • The sponsor has not experienced a missed contribution event in the past two years unless reporting was waived

The company must meet these factors during its annual financial reporting cycle, which generally begins on the date of a U.S. public company's 10-K filing, the closing date of a non-pubic company's accounting period for its audited or unaudited annual financial statements, and the date of the company's IRS Form 990 filing if there are no annual financial statements. The cycle then ends either on the earlier of the company's next financial reporting date or after 13 months. For example, assume a non-public U.S. company completes its audited financial statements on March 15, 2016, for the preceding calendar year. This company can rely on these financial statements to meet the low-default risk waiver during the period starting on March 15, 2016, and ending on April 15, 2017, provided that the audited financial statements for the company's fiscal year are available only after April 15, 2017.

Small Plan, Foreign Entity and De Minimis Waivers

For certain events, the PBGC's new regulations provide additional waivers for small pension plans with 100 or fewer participants and for foreign entities, if the foreign entity is not a direct or indirect parent of the contributing employer of the pension plan. Likewise, an entity that constitutes a de minimis percentage of the overall controlled group does not need to report certain events, where the entity: (1) has revenue that is 10 percent or less of the controlled group's revenue; (2) has annual operating income that does not exceed the greater of $5 million or 10 percent of the controlled group's annual operating income; and (3) has tangible net assets at the end of the fiscal year that does not exceed $5 million or 10 percent of the controlled group's net tangible assets.

Changes to Reportable Event Definitions

The final regulations also make a number of changes to the rules for determining whether and when a reportable event occurs. Some of these changes include the following:

  • An active participant reduction now occurs either by attrition during a plan year or rapidly due to a reorganization, discontinuance of an operation, natural disaster, mass layoff or an early retirement incentive program. The reporting deadline for a rapid active participant reduction is 30 days after the event, but the reporting deadline for an active participant reduction due to attrition is extended to the due date for the payment of the plan sponsor's PBGC premiums (generally October 15 for calendar year pension plans)
  • A bankruptcy filing is no longer a reportable event
  • A loan default was expanded to require reporting where there is an amendment or waiver of any loan covenant for the purpose of avoiding a default
  • A merger of one controlled group member into another is no longer a reportable event


Although the final PBGC reportable event rules add many welcome exemptions for pension plan administrators, sponsors and contributing employers, these rules remain very fact specific and complex. In addition, failure to comply with the reportable event requirements also can result in significant penalty exposure, with a potential penalty of up to $1,100 per day for as long as the reporting delinquency continues. Given that a reportable event likely occurs sporadically rather than on a normal cycle, pension plan administrators, sponsors and contributing employers need to diligently monitor any changes in their pension plans and related controlled group entities to avoid reportable event errors and penalties.

Reportable Event Changes For Pension Plans Effective January 1, 2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Fox Rothschild LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Fox Rothschild LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions