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# One-time 4010 Filing Waiver

August 7, 2023

This Technical Update 23-1 provides Pension Benefit Guaranty Corporation (PBGC) guidance on compliance with the annual financial and actuarial information reporting requirements under section 4010 of ERISA and 29 CFR part 4010 of PBGC's regulations.

In recognition of the atypical market conditions of late 2022 and early 2023, and the way those conditions impact assets and liabilities for purposes of determining whether a 4010 filing is required, this Technical Update provides a one-time waiver of the 4010 filing requirement for filers meeting specified criteria.

### Background

*Filing requirement*

Section 4010 of ERISA requires a contributing sponsor of certain underfunded single-employer plans and members of the contributing sponsor’s controlled group to report identifying, financial and actuarial information to PBGC. In general, this reporting is required if one or more plans sponsored by a member of the controlled group has a funding target attainment percentage (4010 FTAP) below 80%.

For a given plan year, the 4010 FTAP is determined the same way that the funding target attainment percentage provided under section 303(d)(2) of ERISA and section 430(d)(2) of the Internal Revenue Code (Code) is determined except that:
                          - The interest rate stabilization provisions of section 303(h)(2)(C)(iv) of ERISA and section 430(h)(2)(C)(iv) of the Code are disregarded. 
                          - The value of plan assets determined under section 303(g)(3) of ERISA and section 430(g)(3) of the Code may (but need not) be substituted for the asset value determined without regard to the interest rate stabilization provisions; and
                          - With respect to the requirement that assets be reduced by any prefunding or carryover balance, any elections (or deemed elections) under section 303(f) of ERISA and section 430(f) of the Code that affect the value of such balances as of the beginning of the plan year must be reflected, regardless of when the elections (or deemed elections) are made.

PBGC waives the reporting requirement if the aggregate 4010 funding shortfall1 does not exceed $15 million. See 29 CFR § 4210.11(a). The 4010 funding shortfall is determined using the same methods and assumptions as the 4010 FTAP except that the requirement that assets be reduced by any prefunding or carryover balance is disregarded.

### Atypical Market Conditions

As noted above, a 4010 FTAP below 80% as of the valuation date typically triggers the 4010 filing requirement. Given the atypical and almost unprecedented interaction of market conditions of late 2022/early 2023, and the way those conditions impact the liability and asset measures used to determine the 4010 FTAP (e.g., smoothed discount rates, smoothed assets capped at 110% of market value), PBGC expects that many plans with valuation dates during that time will, for the first time in a long time (or perhaps ever), have a 4010 FTAP well below 80%. PBGC also expects that the 4010 FTAP for many of those plans would be significantly higher, even over 100% in some cases, if the 4010 FTAP was required to be determined without regard to asset or discount rate smoothing (i.e., using a market-based approach).

### Waiver

In recognition of the atypical market conditions described above and the way those conditions impact assets and liabilities for purposes of determining whether a 4010 filing is required, PBGC is providing a one-time waiver of the 4010 filing requirement for filers meeting specified criteria.

For purposes of this one-time waiver:
                          - “Applicable information year” means the information year 2  for which a 4010 filing would be required if not for this waiver. 
                          - “Includable plan” means a plan maintained by the members of a contributing sponsor's controlled group on the last day of the applicable information year.
                          - “Market-based 4010 FTAP” and “Market-based aggregate 4010 funding shortfall” have the same meaning as 4010 FTAP and aggregate 4010 funding shortfall described in § 4010.4(b) and § 4010.11(a) of PBGC’s regulation, respectively, except that:                             - Asset smoothing is disregarded, and  
                            - Liabilities are determined using the spot segment rates (as described in section 417(e)(3)(C) of the Code) for the month preceding the month in which the plan year begins (i.e., the interest assumption that would be used to determine the standard premium funding target 3  for same plan year). 

Section 4010.11(d) of PBGC’s regulation gives PBGC the authority to waive the requirement to submit information with respect to one or more filers or plans. Under that authority, PBGC is waiving the 4010 filing requirement for filers for an applicable information year if all of the following criteria are satisfied:
                          - The 4010 filing requirement did not apply for the five consecutive information years immediately preceding the applicable information year.
                          - Either:                             - None of the includable plans has a market-based 4010 FTAP 4  below 85%, or
                            - The market-based aggregate 4010 funding shortfall does not exceed $15 million. 
                          - Every includable plan with a 4010 FTAP below 80% 5  (i.e., a plan that would trigger the 4010 filing requirement if not for this waiver) has a valuation date on or after October 1, 2022 and on or before March 1, 2023.

*Criterion 3 Examples*

For example, consider an employer with a calendar year information year that sponsors two DB plans: Plan A, a calendar year plan and Plan B, a plan with a July 1 – June 30 plan year, both with beginning of year valuation dates.

With respect to the 2023 information year, the 4010 FTAP that is used to determine whether a 4010 filing is required (and whether this criterion is satisfied), is the 4010 FTAP for the plan year ending within the 2023 information year.  Thus, for Plan A, the relevant plan year is the January 1, 2023 – December 31, 2023 plan year, and for Plan B it is the July 1, 2022 – June 30, 2023 plan year.
                          - Scenario 1 – Plan A’s 4010 FTAP is below 80% and Plan B’s 4010 FTAP is above 80%.  	In this scenario, Criterion 3 is satisfied because Plan A is the only includable plan with a 4010 FTAP below 80%, and for Plan A, the relevant valuation date, January 1, 2023, falls within the specified time period.
                          - Scenario 2 – The 4010 FTAP for both plans is below 80%.  	In this scenario, Criterion 3 is not satisfied because one of the includable plans with a 4010 FTAP below 80% has a valuation date outside of the specified time period (i.e., Plan B’s relevant valuation date, July 1, 2022 is before October 1, 2022).
                          - Scenario 3 – Plan A’s 4010 FTAP is above 80% and Plan B’s 4010 FTAP is below 80%.  	In this scenario, Criterion 3 is not satisfied because Plan B is the only includable plan with a 4010 FTAP below 80% and Plan B’s relevant valuation date (July 1, 2022) does not fall within the specified time period (i.e., it is before October 1, 2022).

### Notification Requirement

Entities using this waiver must notify PBGC no later than 15 days before the date the 4010 filing would have been due if not for the waiver. To do so, send an email to ERISA.4010@pbgc.gov with the subject line “Technical Update 23-1 Waiver.” In the body of the email, include the name of the ultimate parent6 and the date the applicable information year ends.

### Contact and Other Information

If you have any questions about this Technical Update, contact Amy Viener or Ellen Itkin by phone at (202) 229-3919 or (202) 229-3075, respectively, or send an email to ERISA.4010@pbgc.gov.

Additional information about filing can be found on PBGC’s 4010 reporting webpage.

This guidance represents PBGC’s current thinking on this topic. It does not operate to bind the public. If an alternative approach satisfies the requirements of the applicable statutes and regulations, you can use that approach. If you want to discuss an alternative approach (which you are not required to do), you may contact PBGC.

 

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[1] As described in 29 CFR § 4010.11(a)(1).[2] See 29 CFR § 4010.2 for definition.[3] As described in 29 CFR § 4006.4(b)(2).[4] For the plan year ending within the applicable information year.[5] For the plan year ending within the applicable information year.[6] Ultimate parent means the parent at the highest level in the chain of corporations and/or other organizations constituting a parent-subsidiary controlled group. See 29 CFR § 4001.2.