On April 3, 2025, the Department of Labor (DOL) issued Field Assistance Bulletin (FAB) 2025-02 and two new model Annual Funding Notices (AFNs), one each for single-employer and multiemployer pension plans. FAB 2025 was issued to provide guidance with respect to the changes made to section 101(f) of the Employee Retirement Income Security Act (“ERISA”) by section 343 of the SECURE 2.0 Act. This alert highlights the changes and the guidance in FAB 2025-02.

FAB 2025-02 can be found at Field Assistance Bulletin No. 2025-02. The new model notices can be found at Single-employer Model AFN, and Multiemployer Model AFN.

Background

ERISA section 101(f) generally requires the administrator of a defined benefit pension plan to provide the annual funding notice to participants, beneficiaries, the Pension Benefit Guaranty Corporation, and other persons (collectively, “the relevant parties”). The scope and content of the notice has evolved over time. DOL issued regulations under section 101(f) in 2015. (See section 2520.101-5.) The DOL regulations included two model notices, one for single-employer plans (Appendix A), and one for multiemployer plans (Appendix B). Those model notices have generally been used for plan years beginning on or after January 1, 2015.

For the plan year beginning in 2023 (the 2023 notice year), under the law and section 2520.101-5(b) of the DOL regulations, the annual funding notices were generally required to disclose the value of assets, plan liabilities, and participant numbers as of the valuation date for the notice year and the two preceding plan years. However, the fair market value of plan assets also had to be provided as of the last day of the notice year.

For multiemployer plans that received special financial assistance (SFA) from the PBGC, DOL FAB 2023-01 provided guidance on how the AFN was to reflect the funds received. In general, only the year end fair market value of plan assets was impacted by the receipt of the SFA.

Section 343 of the SECURE 2.0 Act amended section 101(f) of ERISA. For single-employer plans, the value of plan liabilities and funded percentage reported was changed from the funding target attainment percentage to a funded percentage based upon the value of the liabilities using a “market-related interest rate,” and the liability figures are to be reported as of the last day of the plan year. For all plans, the participant counts are now to be reported as of the last day of the plan year instead of as of the valuation date. Furthermore, all plans must now report the “average return on assets.”

The SECURE 2.0 Act changes are effective for plan years beginning on and after December 31, 2023. Plan administrators are generally required to provide the AFN within 120 days after the close of each plan year. Accordingly, the administrator of a plan with a calendar year plan year must furnish the first AFN under the SECURE 2.0 Act changes for 2024 not later than April 30, 2025.

Small plans (generally plans, when aggregated with other plans of the employer, with 100 or fewer participants on each day of the plan year preceding the notice year) have a different deadline for furnishing the annual funding notices. Small plans are required to send the annual notices not later than the earlier of the date on which the Form 5500 is filed or the filing deadline for the form with extensions.¹

FAB 2025-02 Guidance

FAB 2025-02 provides guidance in the form of questions and answers with respect to the changes to the AFN made by section 343 of the SECURE 2.0 Act. In addition, the Appendix 1 and Appendix 2 provide new model notices for single-employer and multiemployer plans respectively.

FAB 2025-02 makes it clear that employers may no longer rely upon the model notices in Appendix A and Appendix B to the 2015 regulations. (See Q2 and Q3 of the FAB.) FAB 2025-02 also provides:

• For a single-employer plan, the value of year-end plan liabilities for the notice year is determined using the spot segment rates for the last month of the notice year, and plan administrators may use reasonable estimates based upon standard actuarial techniques to determine year-end plan liabilities for the notice year but not the two preceding plan years (Q5),
• Plan administrators of single-employer plans that are “at-risk” (as defined in the law) no longer have to report “at-risk” liabilities (Q7),
• The law generally does not permit the year-end demographic information to be based upon estimated participant and beneficiary counts, however, large plans may (pending additional guidance) use a reasonable, good faith estimate of the number of participants and beneficiaries for the notice year but not the two preceding plan years (Q8),
• Small plans that make use of the Form 5500 filing date to furnish the AFN as allowed by the DOL regulations may not use estimates to report the year-end data (Q8),
• The “average return on assets” is not defined in the law, and plan administrators of both single-employer and multiemployer plans may use either one of two specified methods to determine the average return, but other methods may also fulfill the requirement (Q9), and
• Multiemployer plans that received SFA may continue to rely upon the guidance provided in FAB 2023-01 pending further guidance (Q4).

Plan administrators who have already prepared and/or mailed the 2024 annual funding notices are expected by the DOL to consider the guidance FAB 2025-02 and to determine whether or not the disclosures were reasonable, good faith interpretations of section 101(f), as amended, and to take corrective actions to the extent the administrators determine the plan disclosures did not meet that standard.

Cheiron Observations

The two model notices have significant differences from the prior model that go beyond incorporating the changes made by section 343 of the SECURE 2.0 Act. For example, the introductory language has been significantly revised. Plan administrators may want to consider whether they should adopt the new model notices right away or whether any notice that was about to be sent would be a reasonable alternative taking into account the latest guidance.

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.

¹See section 2520.101-5(d)(2) of the DOL regulations.