When the Internal Revenue Service (IRS) provides relief to taxpayers that are unable to meet a filing deadline because of a major disaster, such as a hurricane, the Pension Benefit Guaranty Corporation (PBGC) also provides relief.
This week, PBGC made a major change to its process for granting disaster relief by issuing a Federal Register Notice, explaining that rather than issuing standalone announcements each time IRS grants disaster relief, PBGC will rely on a “one-time announcement regarding the PBGC disaster relief that comes into play each time IRS grants relief in response to a particular disaster.”
The one-time announcement in the Federal Register explains which types of filings and notices are covered, what the relief entails, how/when to notify PBGC that a plan qualifies for the relief, and more. Importantly, the relief described in the one-time announcement is applicable for disasters covered by an IRS disaster relief news release issued on or after July 2, 2018.
Detail from the Disaster Relief Announcement
As the PBGC explains, its own relief provisions rely on data from IRS announcements, and so historically, PBGC has followed the tax authority’s lead when announcing relief. With this new announcement, unless a filing is on the Exceptions List, “filers can be assured that PBGC grants disaster relief when, where, and for the same relief period that IRS grants relief for taxpayers affected by a disaster.”
One major upshot here for pension plans is that filers will not have to wait for PBGC to issue a separate announcement. Furthermore, PBGC also may grant case-by-case relief for filings and actions on the Exceptions List. PBGC directs readers to the Requesting Case-by-Case Relief guide for information on how to request such relief.
Further explaining this development, PBGC notes that, except for filings and actions on the Exceptions List, it intends to provide relief “where there is a disaster for which the IRS announces that tax relief is being granted for affected taxpayers that includes filing extensions for the Form 5500 series returns.”
Generally speaking, the IRS announces tax relief for a disaster in a news release that states the following: the identifying number of the announcement; the disaster for which relief is granted; the disaster area covered by the announcement (typically counties within a state); and the starting and ending dates of the relief period covered by the announcement.
“Each news release may be updated periodically by the IRS to broaden the disaster area to include places subsequently affected by the same disaster and covered by the relief,” PBGC explains. “IRS news releases announcing tax relief for disasters are listed on IRS’ website. Select the applicable news release on the list to see the text of the announcement.”
PBGC warns that the usual requirements for disaster relief are not fundamentally being shifted here. As such, the disaster relief in the new announcement applies only if all the following requirements are met:
- The person responsible for a filing, payment, or other action under PBGC regulations, e.g., a plan administrator or contributing sponsor, is located in the disaster area. Or, a person responsible for providing information or other assistance needed for the filing, payment, or other action, e.g., a service provider (such as the plan’s enrolled actuary) or bank, is located in the disaster area.
- The due date of the filing, payment, or other action falls within the relief period.
- The filer notifies PBGC of the filer’s eligibility for disaster relief on or before the last day of the relief period. See Notifying PBGC of Your Eligibility for Disaster Relief for additional information.
- The filing or action is not described in the Exceptions List.
The full Disaster Relief Announcement includes more detailed information on all of these matters, along with examples of how disaster relief works. Perhaps most interesting is the Exceptions List. This centers on filings that involve particularly important or time-sensitive information where there may be a high risk of substantial harm to participants or PBGC’s insurance program. Some of these include: Advance notices of reportable events under ERISA section 4043 (Form 10-Advance); notices of large missed contributions under ERISA section 303(k) (Form 200); post-event notices for certain reportable events under ERISA section 4043; and actions related to distress terminations for which PBGC has issued a distribution notice.
In its announcement, PBGC provides the following list of links to documents and filing information related to its new policy: Overview; Disaster Relief Announcement; Reporting Disaster Relief Eligibility on 2018 Premium Filings; and Prior Stand-Alone Disaster Relief Announcements.