Expanded zone status for actuarial certifications for multiemployer plans

The Multiemployer Pension Reform Act of 2014 (MPRA), enacted on December 16, 2014, revised the annual funding certification requirements for multiemployer plans by:

• adding a new zone status, and
• providing special rules for entering into and emerging from certain zones.

The revisions generally apply to certifications for 2015 and subsequent plan years. For calendar year plans, the 2015 certification is due by March 31, 2015. MPRA also amended certain provisions of the Pension Protection Act of 2006 (PPA).

Pension protection act changes

MPRA made the following changes for zone certifications:

• Made permanent the annual requirement to certify a plan’s funding zone. Before MPRA was passed, the annual certification requirement was scheduled to “sunset” on or after December 31, 2014.
• Election of Critical status: Plans projected to be in Critical status in any of the succeeding five plan years may elect to be in Critical status in the current plan year. Plans may bypass Endangered status by making this election.
• Changes made to emergence from Critical status: This was amended to include a condition for projected insolvency and special rules for plans with automatic amortization extensions.

Zone status changes

MPRA added a new zone status available for a plan actuary’s annual certification. MPRA also added special rules allowing a plan to be treated as being in a particular zone when, before enactment, the plan would have been in a different zone. The new zone and special rules are indicated in bold below.

• Neither Endangered nor Critical (new special rule): A plan is treated as Neither Endangered nor Critical if it’s projected to be in that status as of the end of the 10th plan year following the current plan year. The plan must not have been in either Critical status or Endangered status in the immediately preceding plan year.
• Endangered.
• Seriously Endangered.
• Critical (new special rule): A plan can elect to be treated as Critical if the plan is projected to be in Critical status in any of the succeeding five plan years, but not in Critical status in the current plan year.
• Critical and Declining: This is the new zone status that applies if the plan is in Critical status for the current plan year and is projected to become insolvent in the current year or any of the succeeding 14 plan years. The period in which the plan is projected to become insolvent is extended from 14 plan years to 19 plan years if the ratio of inactive participants to active participants exceeds 2:1, or if the funded percentage is less than 80%.

Email and e-fax available for certifications

Actuaries can submit the Annual Actuarial Certification by email, e-fax or regular mail. Certifications must be filed by 90 days after the beginning of the plan year (March 31, 2015, for calendar year plans). The Employee Plans Compliance Unit (EPCU) doesn’t provide return-receipt acknowledgements.

File a certification using only one of the following methods:

• Email: epcu@irs.gov
  (Note: IRS cannot guarantee internet security for incoming email submissions)
   
• E-fax: 855-215-7122
   
• Mail:

EPCU offers more information on submission requirements and the actions taken if certifications are not received.