Late payment charges

Late Payment Charges
General
If you file a premium payment after the due date, we will bill the plan for late charges. The late charges include
both interest and penalty charges. The charges are based on the outstanding premium amount due on the due
date. If your due date is extended because it falls on a weekend or federal holiday, and your premium payment
is filed after the extended due date, interest and penalty will be computed from the actual (unextended) due
date. PBGC also may assess penalties under ERISA section 4071 for failure to timely provide premium-related
information.
Late Payment Interest Charges
The late payment interest charge is set by ERISA, and we cannot waive it. Interest accrues at the rate imposed
under section 6601(a) of the Code (the rate for late payment of taxes) and is compounded daily. These rates are
published by IRS quarterly and are also posted on the “Interest Rates and Factors” section of the Practitioners
Page of PBGC’s website.
Late Payment Penalty Charges
The amount of the late payment penalty charge depends on whether the premium underpayment is
“self-corrected” and how late the payment is.
If the late payment is made on or before the date when PBGC issues a written notification indicating that there
is or may be a premium delinquency (for example, a statement of account (premium invoice), a past-due-filing
notice, or a letter initiating an audit), the penalty rate is ½1% of the late premium payment per month capped at
2550% of the unpaid amount.
If the late payment is made after that date, the penalty rate is 2½5% per month capped at 50100% of the unpaid
amount.
In both cases, the penalty before reflecting the applicable cap is subject to a $25 minimum.
Minimizing Late Payment Charges
If you cannot make a filing by the due date because you are having difficulty determining some of the required
information, you can minimize late payment charges by submitting payment (the amount due or an estimate)
without submitting the certified filing. If you choose to do this, you must pay outside of My PAA, either via
www.Pay.gov, or by check or wire transfer. You should then submit your certified filing as soon as possible.
Additional information on payment options is included in Appendix 3.
PBGC does not recommend this procedure. We may assess a penalty under ERISA section 4071 for failure to
furnish premium-related information by the required due date, and making a premium payment without an
accompanying premium information filing may cause significant delay in providing a statement of account for
the plan. However, when the information filing is ultimately made, the payment will be credited as of the date it
was filed and thus stop the accrual of late payment charges on the amount paid.
Saturday, Sunday, and Federal Holidays
As explained in the “When to File” section, if your premium filing due date falls on a Saturday, Sunday or Federal
Holiday, it is extended automatically to the next business day. However, if your premium payment is filed after
the extended due date, interest and penalties will be computed from the actual (unextended) due date.

Late Payment Charges
Example –The Normal Due Date for a plan with a plan year beginning on February 1, 2016 would normally be
November 15, 2016. Because that day is a Sunday, the due date is Monday, November 16, 2016. If the filing is
made after November 16th, late payment charges, if applicable, will be computed from Sunday, November 15,
2016, not November 16th.

Notices from PBGC
Past Due Filing Notices
If our records indicate that a premium filing is missing for a particular plan year, we will send a “Past Due Filing
Notice” to the address reported on the most recent filing. If you receive a Past Due Filing Notice that appears to
be in error, contact our customer service representatives (see Appendix 2 for contact information). If a filing was
in fact required, after we receive the late filing, we will send a statement of account assessing late payment
charges.
Statements of Account
If your payment is late or less than the required amount, we will send a “Statement of Account” (SOA). The SOA
is, in essence, an invoice for premium, penalty, and interest amounts owed to PBGC. To ensure that the amount
due does not increase, the premium and interest must be paid within 30 days of the SOA's issue date. If you
receive an SOA that appears to be in error, contact our customer service representative (see Appendix 2 for
contact information).

Penalty Waivers
Case-by-Case Waivers
If you receive an SOA (see above) that includes a penalty charge, but you believe there is a reason why all or a
portion of the penalty should be waived (e.g., reasonable cause), you may request a waiver. Information about
what constitutes reasonable cause as well as information about other situations where a penalty waiver might
be warranted can be found in § 21 of the appendix to PBGC’s premium payment regulation, 29 CFR Part 4007,
available on the “Law and Regulations” page of the Practitioners Page of PBGC’s website.
The instructions and timeframe for requesting a waiver will be provided in the SOA. Be sure to follow the
instructions carefully. Requests that are submitted past the allotted timeframe will not be granted.
Hardship (i.e., “Statutory”) Waivers
If, before the filing due date, you can show substantial hardship and that you will be able to pay the premium
within 60 days after the filing due date, you may request that we waive the late payment penalty charge. If we
grant your request, we will waive the late payment penalty charge for up to 60 days. To request a waiver,
contact PBGC at least 30 days before the filing due date. Be sure to include specific information and documents
to demonstrate both that it will be a substantial hardship to make the payment on or before the filing due date
and that you will have the ability to make the payment within 60 days after the filing due date.
Automatic Penalty Waiver for Premiums paid Within Seven Days of Due Date
If the sole reason a late payment penalty charge applies is because a premium was paid after the due date, but
within seven calendar days of the due date, the late payment penalty charge will automatically be waived.

Late Payment Charges
Automatic Penalty Waiver for Certain Compliant Plans
PBGC will automatically waive 80% of the penalties assessed at the 2½% rate if the plan:
 Corrects the underpayment within 30 days of PBGC’s initial notice, and
 Has a good premium compliance history.

For this purpose, a “good premium compliance history” generally means that the plan paid required premiums
timely for the five plan years immediately preceding the premium payment year. In addition, if, during the 5year period, the plan paid its premium late, but was not required to pay a late payment penalty (e.g., the
penalty was waived), the plan is treated as paying timely for that year.
Automatic Penalty Waiver for Certain Late Variable-Rate Premiums
As explained in the “When to File” section, in rare circumstances (e.g., a mid-year merger or change in actuary),
the Premium Funding Target might not be calculated or finalized by the premium due date. PBGC allows plans
in this situation to file timely and pay an estimated Variable-rate Premium by the due date and then submit an
amended filing at a later date to reconcile the actual Variable-rate Premium with the estimate.
Because a plan’s full Variable-rate Premium (not merely an estimate) is due by the due date, if the full amount is
not paid by that date, the plan will be subject to late payment interest charges and may also be subject to late
payment penalty charges.
If the actual Variable-rate Premium is greater than the estimate, penalties for late payment will be waived if:


the reconciliation filing is made and any additional required Variable-rate Premium paid by the end of the
sixth calendar month that begins on or after the premium due date (generally April 30th after year-end for
calendar year plans), and



by the premium due date, you report:



-

the fair market value of the plan’s assets, and

-

an estimate of the Premium Funding Target that is certified by an enrolled actuary to be a reasonable
estimate that:
o

takes into account the most current data available to the enrolled actuary;

o

has been determined in accordance with generally accepted actuarial principles and practices; and

o

uses the calculation methodology (alternative or standard) in effect for the plan year; and

by the premium due date, you pay at least the amount of Variable-rate Premium determined from the value
of assets and estimated Premium Funding Target so reported.

Note that this waiver applies only to estimated Premium Funding Targets, not estimated asset values. If the
asset value reported in the reconciliation filing differs from what was reported in the original (i.e., estimated)
filing, this automatic penalty relief will be lost. However, PBGC will consider a request for an appropriate penalty
waiver in such a situation and, in acting on the request, will consider such facts and circumstances as the reason
for the mistake, whether assets were over- or understated, and, if assets were overstated, the extent of the
overstatement.
If you know the final Premium Funding Target by the time the Variable-rate Premium is due, you should pay the
amount owed by that date. If you do so, you will avoid the interest charge and any penalty charge. If you report
that you are making a filing based on an estimated Premium Funding Target, you will be required to make an
amended filing reflecting the actual Premium Funding Target by the date the variable-rate reconciliation filing is
due.