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The Pension Benefit Guaranty Corporation (PBGC) issued final rules in 1997 with respect to filing, distribution, and post-distribution certification deadlines associated with standard terminations of single-employer defined benefit plans.

The rules describe the procedures a plan sponsor must undertake to terminate a qualified defined benefit plan as a standard termination (one in which plan assets are sufficient to satisfy all benefit liabilities).

The deadline to file a PBGC Form 500 Plan Termination Notice has been increased from l 20 days to 180 days after the proposed termination date. The distribution deadline remains the same at 61 to 240 days after PBGC receives the plan termination notice. However, if a request for a favorable termination letter from the IRS is filed not later than the date the plan termination notice is submitted to PBGC, then the distribution deadline is extended to 120 days (formerly 60 days) after the determination letter is issued by the IRS. In addition, the requirement to notify PBGC of the need for this extension has been eliminated.

Under ERISA, a post-distribution certification is required to be filed with PBGC no later than 30 days after the date of the final distribution of assets. However, under its own rules, PBGC will assess a penalty for the late filing of a post-distribution certification only to the extent that the certification is filed more than 90 days after the distribution deadline.

To simplify the termination process, PBGC developed a model Notice of Intent to Terminate that plan administrators may use to inform plan participants of the proposed plan termination. Under the new rule, the Notice of Plan Benefits must inform plan participants of the mortality and interest assumptions that will be used to determine the lump sum distributions.

The changes in the final rules will generally be effective for plan terminations for which a Notice of Intent to Terminate is distributed to plan participants after December 31, 1997.