What is a standard termination of a pension plan?

A standard termination is a termination of a plan that has enough money to pay all benefits owed to participants and beneficiaries.

Can a company terminate a pension plan?

Employers can end a pension plan through a process called “plan termination.” There are two ways an employer can terminate its pension plan. The employer can end the plan in a standard termination but only after showing PBGC that the plan has enough money to pay all benefits owed to participants.

What is a distress termination?

What is a distress termination? A plan that does not have enough money to pay all benefits owed participants and beneficiaries may be terminated only if the employer and the members of the employer’s “controlled group” of affiliated companies each meets one of the distress termination tests.

Can you terminate a defined benefit plan?

When defined benefit (DB) plan assets are sufficient to terminate, all the benefits plan participants have earned must be provided in full—a process known as final risk transfer. These benefits represent the amount owed to participants upon retirement or termination.

When to notify PBGC of standard termination notice?

The plan administrator should notify PBGC of a decision not to proceed with a termination after having filed a Form 500 (Standard Termination Notice) with the agency. PBGC will contact the plan administrator for information if the agency fails to receive all required filings.

How to request a PBGC coverage determination form?

To request a coverage determination, submit a completed Coverage Determination Form. PBGC also recommends you request a determination if you believe your previously covered plan is no longer covered by PBGC (e.g., if the only remaining participants are substantial owners).

What does PBGC do for pension plan terminations?

Learn more about PBGC’s program to help terminating plans distribute benefits to unlocatable participants.

When does PBGC randomly select plans for audit?

Currently, PBGC selects all plans with a participant count of more than 300 for audit. For plans with a participant count of 300 or fewer, PBGC randomly selects plans to audit. PBGC also may audit a plan when we have reason to believe there may be a problem (for example, when we receive a complaint by plan participants or a plan practitioner).