PBGC Proposes Changes to Schedule R Reporting for Multiemployer Plans

The Pension Benefit Guaranty Corporation (PBGC) is proposing modifications to Schedule R of the 2020 Form 5500 that will affect multiemployer defined benefit plans covered by title IV of ERISA. The modifications concern the method to determine the number of inactive participants to report on line 14. A copy of the proposal is found at this link.

To Provide Comments:

Sponsors can submit comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Pension Benefit Guaranty Corporation, via electronic mail at OIRA_submission@omb.eop.gov or by fax to (202) 395-6974. Comments are due by December 13, 2019.


Annual reporting to the Internal Revenue Service (IRS), the Employee Benefits Security Administration (EBSA), and the PBGC is required by law for most employee benefit plans. To accommodate these filing requirements, IRS, EBSA and PBGC have jointly promulgated the Form 5500 Series.

Section 103(f)(2)(C) of ERISA requires that a multiemployer defined benefit plan include in its annual report, "[t]he number of participants under the plan on whose behalf no contributions were made by an employer as an employer of the participant for such plan year and for each of the 2 preceding plan years." Line 14a of Schedule R requires the plan to report such inactive participant counts for the current plan year's filing. Lines 14b and 14c require the plan to report such inactive participant counts for the previous two respective plan years.

Presently, multiemployer plans are required to count inactive participants using the last contributing employer counting method, which counts only those inactive participants whose last contributing employer withdrew from the plan by the beginning of the relevant plan year for which the Form 5500 relates. The plan does not count any inactive participants whose employers had not withdrawn from the plan. PBGC believes a majority of plans that are required to report do not provide accurate information on line 14 of Schedule R.

Proposed Changes to Schedule R Reporting

PBGC proposes to modify Schedule R instructions to provide multiemployer plans with a choice of the last contributing employer counting method (described above) and two other counting methods - the alternative method and the reasonable approximation method:

  • Alternative Method: Under the alternative method, a plan would count only those inactive participants whose last contributing employer and all prior contributing employers had withdrawn from the plan by the beginning of the relevant plan year. Under this method, the plan would review the list of all contributing employers (employers that had not withdrawn from the plan by the beginning of the relevant plan year), and include on Line 14 only those inactive participants who had no covered service with any of these employers.
  • Reasonable Approximation Method: Under the reasonable approximation method, a plan that is unable to use the other two counting methods must make a reasonable, good faith effort to count inactive participants to satisfy the requirements of section 103(f)(2)(C) of ERISA. The plan would also be required to provide an attachment that explains the plan's approximation method, including a description of the data and a breakdown describing the number of clearly identified inactive participants and the number of estimated inactive participants.

PBGC anticipates that providing plans with three available counting methods will allow each plan to choose the counting method that will be most accurate and least burdensome for the plan.

In addition, PBGC proposes that when a plan reports a number on line 14b or 14c that differs from the number it reported for the immediately preceding plan year, the plan would be required to submit an attachment with an explanation of the reason for the change.

CHEIRON OBSERVATION: For calendar year plans, reporting using the new methods would not take place until July 31, 2021, (or October 15, 2021, under an extension) when the 2020 Form 5500 is due. The flexibility to choose among three counting methods should enable multiemployer plans to better cope with the burden of providing the required inactive participant counts.

If you have any questions about these changes or other Form 5500 reporting questions, please contact your Cheiron consultant.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.