Corporate defined benefit plan sponsors will need to alert participants regarding new plan underfunding calculations resulting from the MAP-21 law, according to interim guidance from the Department of Labor's Employee Benefits Security Administration on Friday.
The federal highway law known as MAP-21 changed the three segment rates sponsors use to determine plan liabilities and allowed for a range based on 25-year averaging of rates.
Plans with funding levels less than 95% of their pre-MAP-21 standing or a new funding shortfall greater than $500,000 have to disclose their funded status by April 30. Plans that are 95% or closer to their pre-MAP-21 funding level do not have to change their annual funding notices. The interim guidance includes a model disclosure agreement.
Members of the Committee on Investment of Employee Benefit Assets, who represent more than 100 large corporate retirement plans and $1.5 trillion in assets, “appreciate the department's guidance, especially the model notice,” said Deborah Forbes, executive director, in an interview.
In a March 8 memo to EBSA regional directors, John Canary, director of regulations and interpretations, said that pending further guidance, plan sponsors will be considered in compliance if they have acted “in accordance with a good faith, reasonable interpretation” of the new law and the guidance memorandum. The guidance document and sample notice are available on the DOL's website.