Overview: The Pension Benefit Guaranty Corporation (PBGC), created by the Employee Retirement Income Security Act, was established to encourage the expansion and continuation of defined benefit pension plans, to provide timely and uninterrupted payment of pension benefits, and to keep pension insurance premiums to a minimum. The PBGC protects the retirement incomes of more than 44 million American workers.
The PBGC collects insurance premiums from employers that sponsor insured pension plans. If a plan covers 500 or more participants, the employer must file two premium-related documents annually. The first, the Estimated Premium Filing (Form 1-ES), provides the PBGC with the employers estimate of its annual premium. This filing must be accompanied by the employer's estimated premium payment. The second is the Comprehensive Premium Filing which must be accompanied by the remainder of the premium payment after the end of the year.
Plans that cover less than 500 employees are only required to file the comprehensive filing and payment.
If an employer-sponsored retirement plan does not have sufficient funds to pay the promised benefits, the PBGC guarantees payment of such benefits up to a maximum amount. The PBGC does not insure retirement plans that do not promise a determinable benefit upon retirement (e.g. defined contribution plans).
Author: Tracy Morley, SPHR, Legal Editor
Employee benefits, such as health insurance, sick pay, disability pay, workers' compensation insurance and retirement savings plans, may be subject to withholding for federal income taxes (FIT), Social Security and Medicare (FICA) taxes or federal unemployment (FUTA) taxes. This section assists HR professionals in understanding how each particular type of benefit plan must be structured and how to properly tax and report contributions, reimbursements and distributions in order to ensure compliance with the Internal Revenue Code.
In-depth review of the spectrum of employment law requirements HR must follow with respect to Compliance, Reporting and Disclosure Requirements
In-depth review of the spectrum of employment law requirements HR must follow with respect to Retirement Benefits
Employment glossary definition of PBGC (Pension Benefit Guaranty Corporation).
HR guidance on understanding PBGC insurance premium requirements.
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