Source: https://www.federalregister.gov/documents/2004/01/15/04-874/required-interest-rate-assumption-for-determining-variable-rate-premium-interest-on-late-premium
Timestamp: 2018-07-21 04:33:42
Document Index: 322264870

Matched Legal Cases: ['art 4006', 'art 4281', 'art 4007', 'art 4062', 'art 4219', '§\u20094006', 'art 4006', '§\u20094007', 'art 4007', '§\u20094062', 'art 4062', 'art 4219', 'art 4281', 'art 4044', 'art 4044', 'art 4044', 'art 4044']

A Notice by the Pension Benefit Guaranty Corporation on 01/15/2004
The required interest rate for determining the variable-rate premium under part 4006 applies to premium payment years beginning in January 2004. The interest assumptions for performing multiemployer plan valuations following mass withdrawal under part 4281 apply to valuation dates occurring in February 2004. The interest rates for late premium payments under part 4007 and for underpayments and overpayments of single-employer plan termination liability under part 4062 and multiemployer withdrawal liability under part 4219 apply to interest accruing during the first quarter (January through March) of 2004.
69 FR 2365
2365-2366 (2 pages)
04-874
https://www.federalregister.gov/d/04-874 https://www.federalregister.gov/d/04-874
The PBGC notes that the provisions of the Job Creation and Worker Assistance Act of 2002 that temporarily increased the required interest rate to be used to determine the PBGC's variable-rate premium to 100% (from 85%) of the annual yield on 30-year Treasury securities expired at the end of 2003. Thus, the required interest rate announced in this notice for plan years beginning in January 2004 has been determined under prior law, and represents a significant decrease from the rate for plan years beginning in December 2003. Legislation has been proposed that would further change the rules for determining the required interest rate. If such legislation is adopted, and the change affects the required interest rate for plan years beginning in January 2004, the PBGC will promptly publish a Federal Register notice with the new required interest rate and post the change on the PBGC's Web site.
Section 4006(a)(3)(E)(iii)(II) of the Employee Retirement Income Security Act of 1974 (ERISA) and § 4006.4(b)(1) of the PBGC's regulation on Premium Rates (29 CFR part 4006) prescribe use of an assumed interest rate (the “required interest rate”) in determining a single-employer plan's variable-rate premium. The required interest rate is the “applicable percentage” (currently 85 percent) of the annual yield on 30-year Treasury securities for the month preceding the beginning of the plan year for which premiums are being paid (the “premium payment year”). (Although the Treasury Department has ceased issuing 30-year securities, the Internal Revenue Service announces a surrogate yield figure each month—based on the 30-year Treasury bond maturing in February 2031—which the PBGC uses to determine the required interest rate.) The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in January 2004 is 4.31 percent (i.e., 85 percent of the 5.07 percent yield figure for December 2003).
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The following table lists the required interest rates to be used in determining variable-rate premiums for premium payment years beginning between February 2003 and January 2004.
January 2004 4.31
Section 4007(b) of ERISA and § 4007.7(a) of the PBGC's regulation on Payment of Premiums (29 CFR part 4007) require the payment of interest on late premium payments at the rate established under section 6601 of the Internal Revenue Code. Similarly, § 4062.7 of the PBGC's regulation on Liability for Termination of Single-Employer Plans (29 CFR part 4062) requires that interest be charged or credited at the section 6601 rate on underpayments and overpayments of employer liability under section 4062 of ERISA. The section 6601 rate is established periodically (currently quarterly) by the Internal Revenue Service. The rate applicable to the first quarter (January through March) of 2004, as announced by the IRS, is 4 percent.
Section 4219.32(b) of the PBGC's regulation on Notice, Collection, and Redetermination of Withdrawal Liability (29 CFR part 4219) specifies the rate at which a multiemployer plan is to charge or credit interest on underpayments and overpayments of withdrawal liability under section 4219 of ERISA unless an applicable plan provision provides otherwise. For interest accruing during any calendar quarter, the specified rate is the average quoted prime rate on short-term commercial loans for the fifteenth day (or the next business day if the fifteenth day is not a business day) of the month preceding the beginning of the quarter, as reported by the Board of Governors of the Federal Reserve System in Statistical Release H.15 (“Selected Interest Rates”). The rate for the first quarter (January through March) of 2004 (i.e., the rate reported for December 15, 2003) is 4.00 percent.
10/1/03 3/31/04 4.00
The PBGC's regulation on Duties of Plan Sponsor Following Mass Withdrawal (29 CFR part 4281) prescribes the use of interest assumptions under the PBGC's regulation on Allocation of Assets in Single-Employer Plans (29 CFR part 4044). The interest assumptions applicable to valuation dates in February 2004 under part 4044 are contained in an amendment to part 4044 published elsewhere in today's Federal Register. Tables showing the assumptions applicable to prior periods are codified in appendix B to 29 CFR part 4044.
Issued in Washington, DC, on this 12th day of January, 2004.
[FR Doc. 04-874 Filed 1-14-04; 8:45 am]