Model Defined Benefit Plan Annual Funding Notices Issued

        On February 10, 2009, the Department of Labor released Field Assistance Bulletin 2009-1 (FAB) providing model notices for disclosure of defined benefit plan funding status.  The Pension Protection Act of 2006 (PPA), requires defined benefit pension plans to provide participants and others with information about the plan's funding percentage, a statement of the value of the plan's assets and liabilities, a description of how the plan's assets are invested as of specific dates, and a description of the benefits under the plan that are eligible to be guaranteed by the Pension Benefit Guaranty Corporation (PBGC).

        A plan administrator is required to provide the annual funding notice to, among others, each plan participant, beneficiary, the PBGC and, for multi-employer plans, each contributing employer. The FAB provides guidance with respect to the contents of the notice, as well as interim guidance on a good faith enforcement policy.

        The FAB also provides two model notices (view the notice for single employer plans and the notice for multiemployer plans).  Use of these model notices is not mandatory; an administrator may use other notice forms.

        The DOL has yet to issue regulations or other guidance concerning compliance with the Section 101(f) annual funding notice requirements, as amended by the PPA.  Pending further guidance, the DOL will treat a plan administrator as satisfying the annual funding notice requirements, provided the administration has complied with the guidance contained in the FAB.  The FAB provides guidance on how a plan administrator, for purposes of the annual funding notice, should:

• calculate the "funding target attainment percentage"(Q/A-6);
• calculate the year-end assets and liabilities (Q/A-7);
• calculate the plan's funded percentage (Q/A-8);
• calculate the value of the plan's assets and liabilities (Q/A-9);
• count participants for purposes of the statement of number of participants required under the funding notice (Q/A-10); and
• state the asset allocation (Q/A-11).

        Plan administrators may add to the model notice any additional information that is necessary or helpful to understand the mandatory information, provided the added information does not mislead or misinform participants.  The annual funding notice may be sent in writing, electronically or any other appropriate form to the extent the notice is reasonably accessible to those individuals to whom the notice must be provided.  A plan administrator for a single-employer plan with liabilities that do not exceed plan assets by more than $50 million is also required to furnish the annual notice to the PBGC.  Pending further guidance, the DOL will not take any action regarding the failure to furnish the annual notice provided the administrator furnishes the notice within 30 days of receiving a written request from the PBGC.

        The new annual funding notice requirements apply for plan years beginning on or after January 1, 2008.  Plans generally must furnish the annual funding notice no later than 120 days after the close of the plan year.  Thus, calendar year plans have until the end of April to provide the first PPA funding notice.

        For more information about FAB 2009-1 and the model notices, please contact Rich Ciambrone, Eric Dawes or the Ice Miller LLP employee benefits attorney with whom you work.