The Pension Benefit Guaranty Corporation (PBGC) has issued Technical Update 25-1 to provide guidance on the timing of premium payments for plan years beginning in 2025. As stated in the update, because of a provision in the Bipartisan Budget Act of 2015, premiums for plan years beginning in 2025 are generally due a month earlier than usual. For example, the premium filing and payment for a plan with a calendar plan year will be due September 15, 2025, instead of the normal due date of October 15, 2025. This acceleration of premium dues dates applies only for plan years that begin in 2025.

Background

Section 4007 of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, provides that premiums are due at the time determined by the PBGC. PBGC regulation section 4007.11 generally provides that premiums are due on the fifteenth (15^th) day of the tenth calendar month that begins on or after the first day of the plan year, which is October 15 for a calendar year plan. Other due dates apply in special circumstances.

Section 502 of the Bipartisan Budget Act of 2015 (BBA of 2015) provides that for plan years beginning in 2025 the premium due date shall be the fifteenth (15^th) day of the ninth calendar month that begins on or after the first day of the plan year. This was a one time change that caused the premium payments to count as revenue in an earlier government fiscal year.

Technical Update 25-1

The technical update provides a special table of premium due dates solely for plan years that begin in 2025. These premium due dates also supersede the special due dates that might otherwise apply except for due dates under PBGC’s disaster relief policy or if the due date falls on a weekend or Federal Holiday. Both the premium filing and the payment of the premiums are due at the earlier due dates.

The PBGC will incorporate the revised due dates into the 2025 Comprehensive Premium Filing Instructions that will be issued in the near future. The technical update also notes that, for the past eight years, the President’s Budget has called for the repeal of section 502 of the BBA of 2015, which did not happen. However, if the provision is repealed during the current year, the PBGC will revise the premium instructions and notify practitioners as soon as possible.

Cheiron Observation: Although the provision for the earlier payment of premiums has been known for some time, the practical impact is now here. In particular, a single-employer plan with a calendar plan year that is subject to a variable rate premium will have trouble taking into account a contribution made on September 15, 2025, for the 2024 plan year in computing the premium due in 2025. It is likely that the variable rate premium will need to be determined and paid without taking into account the contribution, and then an amended premium filing made once the contribution is made.

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.