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WASHINGTON—Under a new temporary voluntary compliance program, the Pension Benefit Guaranty Corp. will waive penalties on employers who have never paid federally required pension insurance premiums.
To qualify for the relief, employers will have to contact the PBGC by July 31 to discuss how they can comply and then pay the required amount by Aug. 31.
In announcing the program, the PBGC said that, once plan administrators realized they should have been paying premiums, one reason they didn't pay them is because the penalties for late premiums can be substantial—up to 100% of the unpaid premium.
“Sponsors of PBGC-covered plans that have not paid PBGC premiums have a clear incentive to take advantage of this opportunity for a complete waiver of penalties,” said Harold Ashner, a partner with Keightley & Ashner L.L.P. in Washington and a former PBGC assistant general counsel.
However, in fairness to “compliant” plan sponsors, the PBGC warns that after the relief program ends it will step up its efforts to enforce premium requirements for covered plans that have not paid required premiums.
The current base annual premium is $35 per plan participant. Employers with underfunded plans pay an additional premium of $9 per $1,000 of plan underfunding. In fiscal 2011, employers paid just over $2 billion in premiums to the PBGC, which reported a $26 billion deficit.
For more information, plan administrators should contact Robert Callahan, email@example.com, or Bill O’Neill, firstname.lastname@example.org, at the PBGC’s Financial Operations Department, or call 202-346-4067.