Single-Employer DB Funding Extension is Now January 4, 2021

Background on the extended contribution date and related IRS guidance

The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) had delayed the contribution due date to January 1, 2021. Notice 2020-61, issued by the IRS on March 27, 2020, clarified that the CARES Act extension applied to minimum required contributions made to single-employer DB plans, as well as contributions in excess of the amount needed to satisfy the minimum required contribution for the plan year. The Notice also provided that delayed contribution payments must include interest. We summarized that guidance in a compliance insight.

The new IRS guidance, Notice 2020-82, which was issued on November 16, 2020, clarifies that the IRS will consider a contribution with an extended due date of January 1, 2021, to be timely if it is made by January 4, 2021.

PBGC guidance

In response to the special funding rules under the CARES Act, PBGC issued Technical Update 20-2 on September 23, 2020, to provide relief to plan sponsors as to the timing of contributions included in determining the PBGC variable-rate premium for 2020. For premium filings due after March 1, 2020 and before January 1, 2021, the PBGC adopted the IRS January 1, 2021 date.

On November 16, 2021, the PBGC modified the Technical Update to adopt the IRS’s new January 4, 2021 date.

What’s required of plan sponsors?

No plan amendments are necessary. However, to take advantage of the PBGC this relief, plan sponsors must amend their PBGC premium filing by February 1, 2021, to reflect the inclusion of these later contributions in the variable-rate premium calculation.  

What will happen next?

The excess of the original PBGC premium payment over the revised premium will be refunded or credited to premium payments due in subsequent years.