It is established and maintained by a “professional service employer.”įor this purpose, an organization, partnership, etc.It has not covered more than 25 active participants at any time since ERISA was enacted (September 2, 1974), and.Small professional service employer plansĪ private-sector qualified defined benefit plan is exempt from PBGC coverage if: However, there are some exceptions as explained below.
Whether a private-sector defined benefit plan is, or is not, covered by PBGC is based on the law (See ERISA Section 4021). In most cases, if such a plan satisfies the section 401(a) tax requirements of the Internal Revenue Code (i.e., if it is a “qualified defined benefit plan”), it is covered by PBGC. If a plan is not covered by PBGC, paying PBGC premiums will not trigger coverage. Sponsors of covered plans cannot waive coverage. Similarly, with very few exceptions (i.e., church plans and certain plans based in Puerto Rico), non-covered plans cannot elect to be covered. Covered plans must comply with PBGC’s rules and requirements, including paying PBGC premiums. When a PBGC-covered multiemployer plan becomes insolvent, PBGC provides financial assistance so that the plan can pay benefits up to certain legal limits. When a PBGC-covered single-employer plan fails, PBGC pays participants their earned benefits up to certain legal limits. PBGC insures most private-sector (i.e., non-governmental) defined benefit pension plans. Pilot program for employers considering establishing a plan.When to request a coverage determination.Private-sector defined benefit plans that are not covered by PBGC Coverage Determination Form and Instructions Now Available
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