[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Rules and Regulations]
[Pages 16387-16388]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8808]



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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 2610 and 2622


Late Premium Payments and Employer Liability Underpayments and 
Overpayments; Interest Rate for Determining Variable Rate Premium; 
Amendments to Interest Rates

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: This document notifies the public of the interest rate 
applicable to late premium payments and employer liability 
underpayments and overpayments for the calendar quarter beginning April 
1, 1996. This interest rate is established quarterly by the Internal 
Revenue Service. This document also sets forth the interest rates for 
valuing unfunded vested benefits for premium purposes for plan years 
beginning in February through April 1996. These interest rates are 
established pursuant to section 4006 of the Employee Retirement Income 
Security Act of 1974, as amended. The effect of these amendments is to 
advise plan sponsors and pension practitioners of these new interest 
rates.

EFFECTIVE DATE: April 1, 1996.

FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General 
Counsel, Office of the General Counsel, Pension Benefit Guaranty 
Corporation, 1200 K Street, NW., Washington, DC 20005-4026; telephone 
202-326-4024 (202-326-4179 for TTY and TTD). These are not toll-free 
numbers.

SUPPLEMENTARY INFORMATION: As part of title IV of the Employee 
Retirement Income Security Act of 1974, as amended, the Pension Benefit 
Guaranty Corporation collects premiums from ongoing plans to support 
the single-employer and multiemployer insurance programs. Under the 
single-employer program, the PBGC also collects employer liability from 
those persons described in ERISA section 4062(a). Under ERISA section 
4007 and 29 CFR Sec. 2610.7, the interest rate to be charged on unpaid 
premiums is the rate established under section 6601 of the Internal 
Revenue Code (``Code''). Similarly, under 29 CFR 2622.7, the interest 
rate to be credited or charged with respect to overpayments or 
underpayments of employer liability is the section 6601 rate. These 
interest rates are published by the PBGC in appendix A to the premium 
regulation and appendix A to the employer liability regulation.
    The Internal Revenue Service has announced that for the quarter 
beginning April 1, 1996, the interest charged on the underpayment of 
taxes will be at a rate of 8 percent. Accordingly, the PBGC is amending 
appendix A to 29 CFR part 2610 and appendix A to 29 CFR part 2622 to 
set forth this rate for the April 1, 1996, through June 30, 1996, 
quarter.
    Under ERISA section 4006(a)(3)(E)(iii)(II), in determining a 
single-employer plan's unfunded vested benefits for premium computation 
purposes, plans must use an interest rate equal to 80% of the annual 
yield on 30-year Treasury securities for the month preceding the 
beginning of the plan year for which premiums are being paid. Under 
Sec. 2610.23(b)(1) of the premium regulation, this value is determined 
by reference to 30-year Treasury constant maturities as reported

[[Page 16388]]

in Federal Reserve Statistical Releases G.13 and H.15. The PBGC 
publishes these rates in appendix B to the regulation.
    The PBGC publishes these monthly interest rates in appendix B on a 
quarterly basis to coincide with the publication of the late payment 
interest rate set forth in appendix A. (The PBGC publishes the appendix 
A rates every quarter, regardless of whether the rate has changed.) 
Unlike the appendix A rate, which is determined prospectively, the 
appendix B rate is not known until a short time after the first of the 
month for which it applies. Accordingly, the PBGC is hereby amending 
appendix B to part 2610 to add the vested benefits valuation rates for 
plan years beginning in February through April of 1996.
    The appendices to 29 CFR parts 2610 and 2622 do not prescribe the 
interest rates under these regulations. Under both regulations, the 
appendix A rates are the rates determined under section 6601(a) of the 
Code. The interest rates in appendix B to part 2610 are prescribed by 
ERISA section 4006(a)(3)(E)(iii)(II) and Sec. 2610.23(b)(1) of the 
regulation. These appendices merely collect and republish the interest 
rates in a convenient place. Thus, the interest rates in the appendices 
are informational only. Accordingly, the PBGC finds that notice of and 
public comment on these amendments would be unnecessary and contrary to 
the public interest. For the above reasons, the PBGC also believes that 
good cause exists for making these amendments effective immediately.
    The PBGC has determined that none of these actions is a 
``significant regulatory action'' under the criteria set forth in 
Executive Order 12866.
    Because no general notice of proposed rulemaking is required for 
these amendments, the Regulatory Flexibility Act of 1980 does not 
apply. See 5 U.S.C. 601(2).

List of Subjects

29 CFR Part 2610

    Employee benefit plans, Penalties, Pension insurance, Pensions, and 
Reporting and recordkeeping requirements.

29 CFR Part 2622

    Business and industry, Employee benefit plans, Pension insurance, 
Pensions, Reporting and recordkeeping requirements, and Small 
businesses.

    In consideration of the foregoing, part 2610 and part 2622 of 
chapter XXVI of title 29, Code of Federal Regulations, are hereby 
amended as follows:

PART 2610--PAYMENT OF PREMIUMS

    1. The authority citation for part 2610 continues to read as 
follows:

    Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.

    2. Appendix A to part 2610 is amended by adding a new entry for the 
quarter beginning April 1, 1996, to read as follows. The introductory 
text is republished for the convenience of the reader and remains 
unchanged.

Appendix A to Part 2610--Late Payment Interest Rates

    The following table lists the late payment interest rates under 
Sec. 2610.7(a) for the specified time periods:

------------------------------------------------------------------------
                                                                Interest
               From--                        Through--            rate  
                                                               (percent)
------------------------------------------------------------------------
                  *        *        *        *        *                 
April 1, 1996.......................  June 30, 1996..........       8.00
------------------------------------------------------------------------

    3. Appendix B to part 2610 is amended by adding to the table of 
interest rates new entries for premium payment years beginning in 
February through April of 1996, to read as follows. The introductory 
text is republished for the convenience of the reader and remains 
unchanged.

Appendix B to Part 2610--Interest Rates for Valuing Vested Benefits

    The following table lists the required interest rates to be used in 
valuing a plan's vested benefits under Sec. 2610.23(b) and in 
calculating a plan's adjusted vested benefits under Sec. 2610.23(c)(1):

------------------------------------------------------------------------
                                                               Required 
          For premium payment years beginning in--             interest 
                                                               rate \1\ 
------------------------------------------------------------------------
                  *        *        *        *        *                 
February 1996..............................................         4.84
March 1996.................................................         4.99
April 1996.................................................         5.28
------------------------------------------------------------------------
\1\ The required interest rate listed above is equal to 80% of the      
  annual yield for 30-year Treasury constant maturities, as reported in 
  Federal Reserve Statistical Release G.13 and H.15 for the calendar    
  month preceding the calendar month in which the premium payment year  
  begins.                                                               

PART 2622--EMPLOYER LIABILITY FOR WITHDRAWALS FROM AND TERMINATIONS 
OF SINGLE-EMPLOYER PLANS

    4. The authority citation for part 2622 continues to read as 
follows:

    Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367-68.

    5. Appendix A to part 2622 is amended by adding a new entry for the 
quarter beginning April 1, 1996, to read as follows. The introductory 
text is republished for the convenience of the reader and remains 
unchanged.

Appendix A to Part 2622--Late Payment and Overpayment Interest Rates

    The following table lists the late payment and overpayment interest 
rates under Sec. 2622.7 for the specified time periods:

------------------------------------------------------------------------
                                                                Interest
                From                          Through             rate  
                                                               (percent)
------------------------------------------------------------------------
                  *        *        *        *        *                 
April 1, 1996.......................  June 30, 1996..........       8.00
------------------------------------------------------------------------

    Issued in Washington, DC, this 3d day of April 1996.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 96-8808 Filed 4-12-96; 8:45 am]
BILLING CODE 7708-01-P