Pbgc who is covered

Multiemployer pension plans are set up pursuant to collective bargaining agreements involving more than one unrelated employer, generally in one industry. To find out if your single employer or multi-employer pension plan is insured, please visit the Insured Pensions Search. Eastern Time, Monday - Friday: toll free or You can also find an unclaimed pension by using the Unclaimed Pension Search.

Are you or your spouse, parents or children currently receiving, or possibly eligible to receive, benefits from any of the following programs? Check all that apply. For additional information on this benefit or to contact the program, please see below. Federal government websites always use a. Toggle navigation. Browse by Agency. Browse by Category. Other Resources. About Us. Help Center. Privacy and Terms of Use. Video Guides. Quick Info. While the PBGC is concerned about the length and complexity of study, it is reasonable to conclude that state licensing is likely to make the PBGC lean toward professional status.

However, many licensed individuals with significant technical training were not found to be professionals by the PBGC. It is hard to discern how the PBGC determines whether an individual is a professional. For example, it seems reasonable to conclude that a real estate broker, insurance agent, optician, or funeral director does not involve primarily mechanical and nonintellectual activities, with little to no exercise of discretion.

A real estate broker offers buyers a view of houses for sale, while an insurance broker sells guaranteed investment contracts and annuities. However, the PBGC ruled that both real estate brokers and insurance brokers are not professionals. Among many businesses, the level of discretion differs only slightly but the PBGC does not have consistent rulings.

Recently, the PBGC determined that an investment advisor is a professional. In this case, the investment advisor sponsored both a defined benefit plan and a 40l k plan. During an IRS audit of the retirement plans, the IRS examiner took the position that the defined benefit plan was not PBGC-covered and the sponsor was not entitled to the full deduction taken for the relevant years. The examiner argued that the plan sponsor was an investment advisor and investment advisors were professionals.

The PBGC initially determined that the financial advisor is a professional. Even though 68 percent of the Forms for defined benefit plans filed in by employers with fewer than 25 employees and with an industry code for investment advisors or insurance sales reflected that the plan was covered by the PBGC, on appeal, the PBGC again ruled that the investment advisor was a professional.

Several of the factors noted by the PBGC in its determination on appeal are subjective in nature. For example, would the determination have been different if:. Rather than clarifying the analysis to determine whether someone is a professional, this ruling calls into question the professional status of many others that previously were likely not to fall within PBGC coverage. For example, whether:. On the webpage, the PBGC states that it determines on a case-by-case basis whether a person in an occupation not listed in the statute is a professional and lists factors including among others subjective standards, such as years of work experience, educational background which is separate from the education required for the position , and public trust and ethical standards.

However, those rulings are typically subjectively decided. It is unlikely that a plan, particularly a small plan, will ever actually collect any benefits from the PBGC due to a plan insolvency, because the law provides that the PBGC may seek restitution for these payments from the business owner 29 U.

This means that the payment of PBGC premiums is often wasted for small plans, with very little opportunity to collect on the insurance. Therefore, resolving the issue of PBGC coverage may be critical to a plan sponsor. This is something of a consolation prize, as the value of the lost tax deduction is likely to be much larger than the refunded premiums, but the premiums should still be sought.

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Back to Article Archives. This Practice Note: Explains the favorable tax treatment that the Code provides to certain small defined benefit plans. Explains how the PBGC determines the professional status for plan sponsors of defined benefit plans.

Discusses examples of how the PBGC has applied those factors to specific plan sponsors. Discusses the practical implications of the PBGC rulings. Under Code Section a 7 A , the maximum deduction for a contribution to a defined benefit plan not covered by the PBGC, in combination with a defined contribution plan, is the greater of: Twenty-five percent of eligible compensation.

The minimum funding requirement for the defined benefit plan. Top-hat plans. Owner-only plans. Individual account defined contribution plans. Government Audits Being selected for an audit can feel overwhelming, but the process doesn't have to be. DWC has a long history of successfully partnering with investment advisors.

Downloadable Resources. Our Team. Meet the Team. Join the k Experts. Learn More. Facts Our company is thinking of setting up a cash balance plan. Answer The first part of your question is pretty straight-forward, but the second part is a little more involved. What is the PBGC? Which Plans Are Covered? Probably the easiest way to answer this question is to say that all non-governmental defined benefit plans are covered by the PBGC unless they qualify for one of the following exceptions: Plans sponsored by small, professional services firms, Plans covering only substantial owners, Certain plans that cover only Puerto-Rico residents; or Certain church plans.

Defined contribution plans, such as k plans, are never subject to PBGC coverage. Substantial Owner Plans Plans that cover only substantial owners of the company sponsoring the plan are also exempt from PBGC coverage. Still Not Sure? Recent Post. Only the Best Retirement Industry Content. Get our k and defined benefits content delivered directly to your inbox. Subscribe for Updates. Certificate of Fiduciary Excellence.