Late Premium Payments and Employer Liability Underpayments and Overpayments; Interest Rate for Determining Variable Rate Premium; Amendments to Interest Rates

PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 2610 and 2622

Late Premium Payments and Employer Liability Underpayments and

Overpayments; Interest Rate for Determining Variable Rate Premium;

Amendments to Interest Rates

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: This document notifies the public of the interest rate

applicable to late premium payments and employer liability

underpayments and overpayments for the calendar quarter beginning

January 1, 1994. This interest rate is established quarterly by the

Internal Revenue Service. This document also sets forth the interest

rates for valuing unfunded vested benefits for premium purposes for

plan years beginning in November 1993 through January 1994. These

interest rates are established pursuant to section 4006 of the Employee

Retirement Income Security Act of 1974, as amended. The effect of these

amendments is to advise plan sponsors and pension practitioners of

these new interest rates.

EFFECTIVE DATE: January 1, 1994.

FOR FURTHER INFORMATION CONTACT:Harold J. Ashner, Assistant General

Counsel, Office of the General Counsel, Pension Benefit Guaranty

Corporation, 1200 K Street, NW., Washington, DC 20005, 202-326-4024

(202-326-4179 for TTY and TDD). (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION: As part of title IV of the Employee

Retirement Income Security Act of 1974, as amended (``ERISA''), the

Pension Benefit Guaranty Corporation (``PBGC'') collects premiums from

ongoing plans to support the single-employer and multiemployer

insurance programs. Under the single-employer program, the PBGC also

collects employer liability from those persons described in ERISA

section 4062(a). Under ERISA section 4007 and 29 CFR 2610.7, the

interest rate to be charged on unpaid premiums is the rate established

under section 6601 of the Internal Revenue Code (``Code''). Similarly,

under 29 CFR 2622.7, the interest rate to be credited or charged with

respect to overpayments or underpayments of employer liability is the

section 6601 rate. These interest rates are published by the PBGC in

appendix A to the premium regulation and appendix A to the employer

liability regulation.

The Internal Revenue Service has announced that for the quarter

beginning January 1, 1994, the interest charged on the underpayment of

taxes will be at a rate of 7 percent. Accordingly, the PBGC is amending

appendix A to 29 CFR part 2610 and appendix A to 29 CFR part 2622 to

set forth this rate for the January 1, 1994, through March 31, 1994,

quarter.

Under ERISA section 4006(a)(3)(E)(iii)(II), in determining a

single-employer plan's unfunded vested benefits for premium computation

purposes, plans must use an interest rate equal to 80% of the annual

yield on 30-year Treasury securities for the month preceding the

beginning of the plan year for which premiums are being paid. Under

Sec. 2610.23(b)(1) of the premium regulation, this value is determined

by reference to 30-year Treasury constant maturities as reported in

Federal Reserve Statistical Releases G.13 and H.15. The PBGC publishes

these rates in appendix B to the regulation.

The PBGC publishes these monthly interest rates in appendix B on a

quarterly basis to coincide with the publication of the late payment

interest rate set forth in appendix A. (The PBGC publishes the appendix

A rates every quarter, regardless of whether the rate has changed.)

Unlike the appendix A rate, which is determined prospectively, the

appendix B rate is not known until a short time after the first of the

month for which it applies. Accordingly, the PBGC is hereby amending

appendix B to part 2610 to add the vested benefits valuation rates for

plan years beginning in November 1993 through January 1994.

The appendices to 29 CFR parts 2610 and 2622 do not prescribe the

interest rates under these regulations. Under both regulations, the

appendix A rates are the rates determined under section 6601(a) of the

Code. The interest rates in appendix B to part 2610 are prescribed by

ERISA section 4006(a)(3)(E)(iii)(II) and Sec. 2610.23(b)(1) of the

regulation. These appendices merely collect and republish the interest

rates in a convenient place. Thus, the interest rates in the appendices

are informational only. Accordingly, the PBGC finds that notice of and

public comment on these amendments would be unnecessary and contrary to

the public interest. For the above reasons, the PBGC also believes that

good cause exists for making these amendments effective immediately.

The PBGC has determined that none of these actions is a

``significant regulatory action'' under the criteria set forth in

Executive Order 12866, because they will not have an annual effect on

the economy of $100 million or more or adversely affect in a material

way the economy, a sector of the economy, productivity, competition,

jobs, the environment, public health or safety, or State, local, or

tribal governments or communities; create a serious inconsistency or

otherwise interfere with an action taken or planned by another agency;

materially alter the budgetary impact of entitlements, grants, user

fees, or loan programs or the rights and obligations of recipients

thereof; or raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

Executive Order 12866.

Because no general notice of proposed rulemaking is required for

these amendments, the Regulatory Flexibility Act of 1980 does not

apply. See 5 U.S.C. 601(2).

List of Subjects

29 CFR Part 2610

Employee benefit plans, Penalties, Pension insurance, Pensions,

Reporting and recordkeeping requirements.

29 CFR Part 2622

Business and industry, Employee benefit plans, Pension insurance,

Pensions, Reporting and recordkeeping requirements, Small businesses.

In consideration of the foregoing, part 2610 and part 2622 of

chapter XXVI of title 29, Code of Federal Regulations, are hereby

amended as follows:

PART 2610--PAYMENT OF PREMIUMS

1. The authority citation for part 2610 continues to read as

follows:

Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.

2. Appendix A to part 2610 is amended by adding a new entry for the

quarter beginning January 1, 1994, to read as follows. The introductory

text is republished for the convenience of the reader and remains

unchanged.

Appendix A to Part 2610--Late Payment Interest Rates

The following table lists the late payment interest rates under

Sec. 2610.7(a) for the specified time periods:

------------------------------------------------------------------------

Interest

From-- Through-- rate

(percent)

------------------------------------------------------------------------

*****

Jan. 1, 1994................. Mar. 31, 1994............... 7

------------------------------------------------------------------------

3. Appendix B to part 2610 is amended by adding to the table of

interest rates new entries for premium payment years beginning in

November of 1993 through January of 1994, to read as follows. The

introductory text is republished for the convenience of the reader and

remains unchanged.

Appendix B to Part 2610--Interest Rates for Valuing Vested Benefits

The following table lists the required interest rates to be used in

valuing a plan's vested benefits under Sec. 2610.23(b) and in

calculating a plan's adjusted vested benefits under Sec. 2610.23(c)(1):

------------------------------------------------------------------------

Required

For premium payment years beginning in-- interest

rate\1\

------------------------------------------------------------------------

*****

Nov. 1993.................................................. 4.75

Dec. 1993.................................................. 4.97

Jan. 1994.................................................. 5.00

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\1\The required interest rate listed above is equal to 80% of the annual

yield for 30-year Treasury constant maturities, as reported in Federal

Reserve Statistical Release G.13 and H.15 for the calendar month

preceding the calendar month in which the premium payment year begins.

PART 2622--EMPLOYER LIABILITY FOR WITHDRAWALS FROM AND TERMINATIONS

OF SINGLE-EMPLOYER PLANS

4. The authority citation for part 2622 continues to read as

follows:

Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367-68.

5. Appendix A to part 2622 is amended by adding a new entry for the

quarter beginning January 1, 1994, to read as follows. The introductory

text is republished for the convenience of the reader and remains

unchanged.

Appendix A to Part 2622--Late Payment and Overpayment Interest

Rates

The following table lists the late payment and overpayment interest

rates under Sec. 2622.7 for the specified time periods:

------------------------------------------------------------------------

Interest

From-- Through-- rate

(percent)

------------------------------------------------------------------------

*****

Jan. 1, 1994................. Mar. 31, 1994............... 7

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Issued in Washington, DC, this 11th day of January 1994.

Martin Slate,

Executive Director, Pension Benefit Guaranty Corporation.

[FR Doc. 94-1031 Filed 1-14-94; 8:45 am]

BILLING CODE 7708-01-M