Source: https://www.federalregister.gov/documents/2007/07/13/E7-13595/required-interest-rate-assumption-for-determining-variable-rate-premium-for-single-employer-plans
Timestamp: 2017-10-20 15:03:03
Document Index: 399094164

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

Federal Register :: Required Interest Rate Assumption for Determining Variable-Rate Premium for Single-Employer Plans; Interest on Late Premium Payments; Interest on Underpayments and Overpayments of Single-Employer Plan Termination Liability and Multiemployer Withdrawal Liability; Interest Assumptions for Multiemployer Plan Valuations Following Mass Withdrawal
Required Interest Rate Assumption for Determining Variable-Rate Premium for Single-Employer Plans; Interest on Late Premium Payments; Interest on Underpayments and Overpayments of Single-Employer Plan Termination Liability and Multiemployer Withdrawal Liability; Interest Assumptions for Multiemployer Plan Valuations Following Mass Withdrawal
A Notice by the Pension Benefit Guaranty Corporation on 07/13/2007
The required interest rate for determining the variable-rate premium under part 4006 applies to premium payment years beginning in July 2007. The interest assumptions for performing multiemployer plan valuations following mass withdrawal under part 4281 apply to valuation dates occurring in August 2007. 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 third quarter (July through September) of 2007.
72 FR 38631
38631-38632 (2 pages)
E7-13595
https://www.federalregister.gov/d/E7-13595 https://www.federalregister.gov/d/E7-13595
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. Pursuant to the Pension Protection Act of 2006, for premium payment years beginning in 2006 or 2007, the required interest rate is the “applicable percentage” of the annual rate of interest determined by the Secretary of the Treasury on amounts invested conservatively in long-term investment grade corporate bonds for the month preceding the beginning of the plan year for which premiums are being paid (the “premium payment year”).
On February 2, 2007 (at 72 FR 4955), the Internal Revenue Service (IRS) published final regulations containing updated mortality tables for determining current liability under section 412(l)(7) of the Code and section 302(d)(7) of ERISA for plan years beginning on or after January 1, 2007. As a result, in accordance with section 4006(a)(3)(E)(iii)(II) of ERISA, the “applicable percentage” to be used in determining the required interest rate for plan years beginning in 2007 is 100 percent.
The required interest rate to be used in determining variable-rate premiums for premium payment years beginning in July 2007 is 6.32 percent (i.e., 100 percent of the 6.32 percent composite corporate bond rate for June 2007 as determined by the Treasury).Start Printed Page 38632
The following table lists the required interest rates to be used in determining variable-rate premiums for premium payment years beginning between August 2006 and July 2007.
August 2006 5.36
September 2006 5.19
October 2006 5.06
November 2006 5.05
December 2006 4.90
January 2007 5.75
February 2007 5.89
March 2007 5.85
April 2007 5.84
May 2007 5.98
June 2007 6.01
July 2007 6.32
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 third quarter (July through September) of 2007, as announced by the IRS, is 8 percent.
10/1/03 3/31/04 4
4/1/04 6/30/04 5
7/1/04 9/30/04 4
10/1/04 3/31/05 5
4/1/05 9/30/05 6
10/1/05 6/30/06 7
7/1/06 9/30/07 8
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 third quarter (July through September) of 2007 (i.e., the rate reported for June 15, 2007) is 8.25 percent.
10/1/03 9/30/04 4.00
10/1/04 12/31/04 4.50
1/1/05 3/31/05 5.25
4/1/05 6/30/05 5.50
7/1/05 9/30/05 6.00
10/1/05 12/31/05 6.50
1/1/06 3/31/06 7.25
4/1/06 6/30/06 7.50
7/1/06 9/30/06 8.00
10/1/06 9/30/07 8.25
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 August 2007 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.
[FR Doc. E7-13595 Filed 7-12-07; 8:45 am]