Acceleration of PBGC Premium Payments for 2025

In order to allow the federal government to include an extra year of defined benefit retirement plan premium payments within their 10 year budget window, Congress created section 502 within the Bipartisan Budget Act of 2015 (“BBA”).  As a result, with respect to plan years beginning in 2025, Section 502 of BBA accelerates the premium filing due date for all defined benefit plans by 30 days from the 15^th day of the 10^th calendar month of the plan year to the 15^th day of the 9^th calendar month of the plan year.   This change also supersedes certain special premium filing due dates that might otherwise apply to new plans or plans that are completing a standard termination.

For 2025, the following chart demonstrates the premium filing due date as determined by the first day of the plan at issue’s plan year:

* If the 15^th day of the month falls on a weekend or federal holiday, the deadline is adjusted to the next business day.

Notwithstanding the changes described above, the President’s Budget has called for the repeal of section 502 of the BBA for the past eight years in order to prevent plan sponsors from incurring unnecessary costs and burdens in preparation for making the accelerated premium payments.  The fiscal year 2025 budget characterized the repeal as “urgent” and noted that Congressional action was necessary to repeal the provision before fiscal year 2025 (which began on 10/1/2024).  While the provision was not repealed, it remains possible that the provision will be repealed during the 2025 fiscal year.  If that were to occur, the government will revise the premium filing instructions and notify industry practitioners as soon as possible.

We hope that this article helped you to better understand this topic and that it encourages plan sponsors to be prepared to comply with the new rule.  However, please be advised that this article is not intended to serve as financial, tax or legal advice so it should not be construed as such.  If you have questions about this topic, we strongly urge you to further discuss it with a qualified retirement plan professional.  For more information about this topic, please contact our marketing department at 484-483-1044 or your administrator at Legacy.