[Federal Register Volume 60, Number 72 (Friday, April 14, 1995)] [Rules and Regulations] [Pages 18994-18995] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 95-9237] ======================================================================= ----------------------------------------------------------------------- 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. ----------------------------------------------------------------------- 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, 1995. 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 1995 through April 1995. 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, 1995. 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 (``ERISA''), the Pension Benefit Guaranty Corporation (``PBGC'') 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 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. [[Page 18995]] The Internal Revenue Service has announced that for the quarter beginning April 1, 1995, the interest charged on the underpayment of taxes will be at a rate of 10 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, 1995, through June 30, 1995, 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 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 of 1995 through April of 1995. 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 they will not have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles 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, 1995, 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, 1995................ June 30, 1995............... 10 ------------------------------------------------------------------------ 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 of 1995 through April of 1995, 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 1995.............................................. 6.28 March 1995................................................. 6.09 April 1995................................................. 5.96 ------------------------------------------------------------------------ \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, 1995, 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, 1995................ June 30, 1995............... 10 ------------------------------------------------------------------------ Issued in Washington, DC, this 11th day of April 1995. Martin Slate, Executive Director, Pension Benefit Guaranty Corporation. [FR Doc. 95-9237 Filed 4-13-95; 8:45 am] BILLING CODE 7708-01-M