PART 4007—PAYMENT OF PREMIUMS Authority: 29 U.S.C. 1302(b)(3), 1303(a), 1306, 1307. Source: 61 FR 34020, July 1, 1996, unless otherwise noted. § 4007.1 Purpose and scope. This part, which applies to all plans that are covered by title IV of ERISA, provides procedures for paying the premiums imposed by sections 4006 and 4007 of ERISA. (See part 4006 of this chapter for premium rates and computational rules.) § 4007.2 Definitions. (a) The following terms are defined in § 4001.2 of this chapter: Code, contributing sponsor, ERISA, IRS, notice of intent to terminate, PBGC, plan, plan administrator, plan year, single-employer plan, and termination date. (b) For purposes of this part, the following terms are defined in § 4006.2 of this chapter: continuation plan, new plan, newly covered plan, participant, participant count, premium funding target, premium payment year short plan year, small plan, and UVB valuation date. [61 FR 34020, July 1, 1996, as amended at 73 FR 15076, Mar. 21, 2008; 79 FR 13561, Mar. 11, 2014] § 4007.3 Filing requirement; method of filing. (a) In general. www.pbgc.gov (b) Electronic filing. [71 FR 31081, June 1, 2006, as amended at 72 FR 71229, Dec. 17, 2007; 73 FR 15076, Mar. 21, 2008; 79 FR 13561, Mar. 11, 2014] § 4007.4 Where to file. See § 4000.4 of this chapter for information on where to file. [71 FR 31081, June 1, 2006] § 4007.5 Date of filing. The PBGC applies the rules in subpart C of part 4000 of this chapter to determine the date that a submission under this part was filed with the PBGC. [68 FR 61352, Oct. 28, 2003] § 4007.6 Computation of time. The PBGC applies the rules in subpart D of part 4000 of this chapter to compute any time period under this part. However, for purposes of determining the amount of a late payment interest charge under § 4007.7 or of a late payment penalty charge under § 4007.8, the rule in § 4000.43(a) of this chapter governing periods ending on weekends or Federal holidays does not apply. [68 FR 61352, Oct. 28, 2003] § 4007.7 Late payment interest charges. (a) If any premium payment due under this part is not paid by the due date prescribed for such payment by this part, an interest charge will accrue on the unpaid amount at the rate imposed under section 6601(a) of the Code for the period from the date payment is due to the date payment is made. Late payment interest charges are compounded daily. (b) With respect to any PBGC bill for a premium underpayment and/or interest thereon, interest will accrue only until the date of the bill if the premium underpayment and interest billed are paid within 30 days after the date of the bill. [61 FR 34020, July 1, 1996, as amended at 72 FR 71229, Dec. 17, 2007; 73 FR 15076, Mar. 21, 2008] § 4007.8 Late payment penalty charges. (a) Penalty charge. (1) For any amount of unpaid premium that is paid on or before the date PBGC issues the first written notice to any person liable for the premium that there is or may be a premium delinquency (for example, a premium bill, a letter initiating a premium compliance review, a notice of filing error in premium determination, or a letter questioning a failure to make a premium filing), 1/2 (2) For any amount of unpaid premium that is paid after that date, 2 1/2 (b) Hardship waiver. (c) Reasonable cause waivers. (d) Other waivers. (e) Grace period. (f) Filings not more than 7 days late. (g) Variable-rate premium penalty relief. (1) The plan administrator reports— (i) The fair market value of the plan's assets for the premium payment year, and (ii) An estimate of the plan's premium funding target for the premium payment year that is certified by an enrolled actuary to be a reasonable estimate that takes into account the most current data available to the enrolled actuary and that has been determined in accordance with generally accepted actuarial principles and practices; and (2) The plan administrator pays at least the amount of variable-rate premium determined from the value of assets and estimated premium funding target so reported. (h) Demonstrated compliance. (1) For each plan year within the last five plan years of coverage preceding the plan year for which the penalty rate is being determined,— (i) Any required premium filing for the plan has been made; and (ii) PBGC has not required payment of a penalty for the plan under this section. (2) For the plan year for which the penalty rate is being determined, the total amount of premium is paid no later than 30 days after PBGC issues the first written notice as described in paragraph (a)(1) of this section. [64 FR 66385, Nov. 26, 1999, as amended at 65 FR 75164, Dec. 1, 2000; 71 FR 66869, Nov. 17, 2006; 72 FR 71229, Dec. 17, 2007; 73 FR 15076, Mar. 21, 2008; 79 FR 350, Jan. 3, 2014; 79 FR 13561, Mar. 11, 2014; 81 FR 65545, Sept. 23, 2016] § 4007.9 Coverage for guaranteed basic benefits. (a) The failure to pay the premiums due under this part will not result in a plan's loss of coverage for basic benefits guaranteed under section 4022(a) or 4022A(a) of ERISA. (b) The payment of the premiums imposed by this part will not result in coverage for basic benefits guaranteed under section 4022(a) or 4022A(a) of ERISA for plans not covered under title IV of ERISA. [61 FR 34020, July 1, 1996, as amended at 72 FR 71229, Dec. 17, 2007] § 4007.10 Recordkeeping; audits; disclosure of information. (a) Retention of records to support premium payments In general. (2) Electronic recordkeeping. (3) Designated recordkeepers. (ii) With respect to the premium for certain terminated single-employer plans described in § 4006.7 of this chapter, each person who was a contributing sponsor of such a plan, or was a member of a contributing sponsor's controlled group, as of the day before the plan's termination date is a designated recordkeeper. (4) Records. (ii) For purposes of this section, “records” include, but are not limited to, plan documents; participant data records; personnel and payroll records; actuarial tables, worksheets, and reports; records of computations, projections, and estimates; benefit statements, disclosures, and applications; financial and tax records; insurance contracts; records of plan procedures and practices; and any other records, whether in written, electronic, or other format, that are relevant to the determination of the amount of any premium required to be paid or any premium-related information required to be reported. (iii) When a record to be produced for PBGC inspection and copying exists in more than one format, it must be produced in the format specified by PBGC. (b) PBGC audit In general. (i) Audit any premium filing, (ii) Inspect and copy any records that are relevant to the determination of the amount of any premium required to be paid and any premium-related information required to be reported, including (without limitation) the records described in paragraph (a) of this section, and (iii) Require disclosure of any manual or automated system or process used to determine any premium paid or premium-related information reported, and demonstration of its operation in order to permit PBGC to determine the effectiveness of the system or process and the reliability of information produced by the system or process. (2) Deficiencies found on audit. (3) Insufficient records. (c) Providing record information In general. (2) Extension. (i) Specify a date to which the time period described in paragraph (c)(1) is extended that is no more than 90 days from the date of the PBGC's written request for information; and (ii) Contain a statement, certified to by the designated recordkeeper under penalty of perjury (18 U.S.C. § 1001), that, despite reasonable efforts, the additional time is necessary to comply with the PBGC's request. (3) Shortening of time period. (d) Address and timeliness. [61 FR 34020, July 1, 1996, as amended at 62 FR 36663, July 9, 1997; 68 FR 61352, Oct. 28, 2003; 72 FR 71229, Dec. 17, 2007; 73 FR 15077, Mar. 21, 2008] § 4007.11 Due dates. (a) In general. (1) The flat-rate and variable-rate premium filing due date is the fifteenth day of the tenth calendar month that begins on or after the first day of the premium payment year. (2) If the variable-rate premium paid by the premium filing due date is estimated as described in § 4007.8(g)(1)(ii), a reconciliation filing and any required variable-rate premium payment must be made by the end of the sixth calendar month that begins on or after the premium filing due date. (3) Small plan transition rule. (b) Plans that change plan years. (1) The due date specified in paragraph (a) of this section, or (2) 30 days after the date on which the amendment changing the plan year was adopted. (c) New and newly covered plans. (1) The due date specified in paragraph (a) of this section, or (2) 90 days after the date of the plan's adoption, or (3) 90 days after the date on which the plan became covered by title IV of ERISA, or (4) In the case of a small plan that is a continuation plan, 90 days after the plan's UVB valuation date. (d) Terminating plans. (1) The due date specified in paragraph (a) of this section, or (2) Forty-five (45) days after the date the post-distribution certification under § 4041.29 of this chapter is filed. (e) Continuing obligation to file. [79 FR 13561, Mar. 11, 2014, as amended at 90 FR 39327, Aug. 15, 2025] § 4007.12 Liability for single-employer premiums. (a) The designation under this part of the plan administrator as the person required to make flat-rate and variable-rate premium filings and payments under this part for a single-employer plan is a procedural requirement only and does not alter the liability for premium payments imposed by section 4007 of ERISA. Pursuant to section 4007(e) of ERISA, both the plan administrator and the contributing sponsor of a single-employer plan are liable for flat-rate and variable-rate premium payments, and, if the contributing sponsor is a member of a controlled group, each member of the controlled group is jointly and severally liable for the required premiums. Any entity that is liable for required premiums is also liable for any interest and penalties assessed with respect to such premiums. (b) After a plan administrator issues (pursuant to section 4041(a)(2) of ERISA) the first notice of intent to terminate in a distress termination under section 4041(c) of ERISA or PBGC issues a notice of determination under section 4042(a) of ERISA, the obligation to pay the premiums (and any interest or penalties thereon) imposed by ERISA and this part for a single-employer plan shall be an obligation solely of the contributing sponsor and the members of its controlled group, if any. [61 FR 34020, July 1, 1996, as amended at 72 FR 71229, Dec. 17, 2007; 79 FR 13562, Mar. 11, 2014; 90 FR 39327, Aug. 15, 2025] § 4007.13 Premiums for certain terminated single-employer plans. (a) Applicability In general. (i) The plan terminates under section 4042 of ERISA, or (ii) The plan terminates under section 4041(c) of ERISA and at least one contributing sponsor or member of a contributing sponsor's controlled group meets the requirements of section 4041(c)(2)(B)(ii) or (iii) of ERISA. (2) Plans terminated during reorganization proceedings. (i) A bankruptcy proceeding has been filed by or against any person that was a contributing sponsor of the plan on the day before the plan's termination date or that was on that day a member of any controlled group of which any such contributing sponsor was a member, (ii) The proceeding is pending as a reorganization proceeding under chapter 11 of title 11, United States Code (or under any similar law of a State or political subdivision of a State), (iii) The person has not been discharged from the proceeding, and (iv) The proceeding was filed before October 18, 2005. (3) Special rule for certain airline-related plans. (4) Termination premium. (b) Filing requirements; method of filing. (c) Late payment penalty charges. (d) Due dates. (1) First applicable 12-month period. (2) Subsequent applicable 12-month periods. (e) Certain reorganization cases. (2) The condition of this paragraph (e)(2) is that either— (i) The plan terminates under section 4042 of ERISA, or (ii) The plan terminates under section 4041(c) of ERISA and at least one contributing sponsor or member of a contributing sponsor's controlled group meets the requirements of section 4041(c)(2)(B)(ii) of ERISA. (3) The condition of this paragraph (e)(3) is that as of the plan's termination date— (i) A bankruptcy proceeding has been filed by or against any person that was a contributing sponsor of the plan on the day before the plan's termination date or that was on that day a member of any controlled group of which any such contributing sponsor was a member, (ii) The proceeding is pending as a reorganization proceeding under chapter 11 of title 11, United States Code (or under any similar law of a State or political subdivision of a State), and (iii) The person has not been discharged from the proceeding. (4) If this paragraph (e) applies with respect to a DRA 2005 termination of a plan, then except as provided in paragraph (f) of this section, the first applicable 12-month period with respect to the plan is the period of 12 calendar months beginning with the first calendar month following the calendar month in which occurs the earliest date when, for every person that was a contributing sponsor of the plan on the day before the plan's termination date, or that was on that day a member of any controlled group of which any such contributing sponsor was a member, either— (i) There is not pending any bankruptcy proceeding that was filed by or against such person and that was, as of the plan's termination date, a reorganization proceeding under chapter 11 of title 11, United States Code (or under any similar law of a State or political subdivision of a State), or (ii) The person has been discharged in any such proceeding, or (iii) The person no longer exists. (f) Plan termination date in past when set. (1) The first calendar month following the calendar month in which the termination date is established by agreement or court action as described in section 4048 of ERISA, or (2) The first calendar month specified in paragraph (d)(1) of this section or (if paragraph (e) of this section applies) paragraph (e)(4) of this section. (g) Liability for termination premiums. [72 FR 71230, Dec. 17, 2007, as amended at 79 FR 13562, Mar. 11, 2014] Appendix to Part 4007—Policy Guidelines on Premium Penalties Sec. General Provisions 1 What is the purpose of this Appendix? 2 What defined terms are used in this Appendix? 3 What is the purpose of a premium penalty? 4 What information is in this Appendix and how is it organized? Premium Penalty Assessment [Reserved] Waiver Standards 21 What are the standards for waiving a premium penalty? 22 What is “reasonable cause”? 23 What kinds of facts does PBGC consider in determining whether there is reasonable cause for a failure to pay a premium? 24 What are some situations that might justify a “reasonable cause” waiver? 25 What are some situations that might justify a partial “reasonable cause” waiver? Procedures [Reserved] General Provisions 1 What is the purpose of this Appendix? This appendix sets forth principles and guidelines that we intend to follow in assessing, reviewing, and waiving premium penalties. However, this is only general policy guidance. Our action in each case is guided by the facts and circumstances of the case. 2 What defined terms are used in this Appendix? The following terms are defined in part 4001 of this chapter: contributing sponsor, ERISA, PBGC, person, plan, and plan administrator. In addition, in this appendix: (a) Premium penalty (b) Waiver (c) We (d) You (1) A plan administrator, contributing sponsor, or other person, if— (i) The person's action or inaction may be the basis for a premium penalty assessment, (ii) The person may be required to pay the premium penalty, or (iii) The person is requesting review of the premium penalty; or (2) An employee or agent of, or advisor to, any of these persons. 3 What is the purpose of a premium penalty? The basic purpose of a premium penalty is to encourage you to pay premiums in full and on time and to voluntarily self-correct any failure to do so. 4 What information is in this Appendix and how is it organized? This Appendix has four divisions: (a) General provisions. (b) Premium penalty assessment. (c) Waiver standards. (1) Reasonable cause. (2) Other waivers. (d) Procedures. Premium Penalty Assessment [Reserved] Waiver Standards 21 What are the standards for waiving a premium penalty? (a) Facts and circumstances. (b) Waivers Provisions of law. (2) Reasonable cause. (3) Legal errors. (i) Erroneous legal interpretation—disclosed. (ii) Erroneous legal interpretation—undisclosed. (iii) Recent change in the law. (4) Pendency of PBGC procedures. (i) If you request review of a premium penalty, and you make a non-frivolous argument in your request for review that you were not required to pay the premium or that you were, and still are, unable to obtain the information needed to determine the premium, we may waive the portion of the premium penalty that accrues during the review process. If you make such a non-frivolous argument with respect to a portion of the premium, we may apply this principle to that portion. (ii) We may waive all or a part of a premium penalty if we believe that the pendency of PBGC procedures for identifying a premium delinquency and notifying you of the delinquency contributed to your failure to correct the delinquency more promptly. (5) Other circumstances. (c) Action or inaction of outside parties. 22 What is “reasonable cause”? (a) General rule. (1) The failure arises from circumstances beyond your control, and (2) You could not avoid the failure by the exercise of ordinary business care and prudence. (b) Overlooking legal requirements. (c) Action or inaction of outside parties. (d) Size of organization. (e) Size of premium underpayment. (f) Collection and enforcement. (i) The likelihood or cost of collecting the premium penalty, or (ii) The costs and risks of enforcing the premium penalty by litigation. 23 What kinds of facts does PBGC consider in determining whether there is reasonable cause for a failure to pay a premium? In determining the extent to which a failure to pay a premium in full and on time arose from circumstances beyond your control and the extent to which you could have avoided the failure by the exercise of ordinary business care and prudence—and thus the extent to which waiver of a premium penalty for reasonable cause is appropriate—we consider facts such as the following: (a) What event or circumstance caused the underpayment and when the event happened or the circumstance arose. The dates you give should clearly correspond with the underpayment upon which the premium penalty is based. (b) How that event or circumstance kept you from paying the premium in full and on time. The explanation you give should relate directly to the failure to pay a premium that is the subject of the premium penalty. (c) Whether you could have anticipated the event or circumstance. (d) How you responded to the event or circumstance, including what steps you took, and how quickly you took them, to pay the premium and how you conducted other business affairs. Knowing how you responded to the event or circumstance may help us determine what degree of business care and prudence you were capable of exercising during that period and thus whether the failure to pay the premium could or could not have been avoided by the exercise of ordinary business care and prudence. 24 What are some situations that might justify a “reasonable cause” waiver? The following examples illustrate some of the reasons often given for failures to pay premiums for which we may assess penalties. The situation described in each example may constitute reasonable cause, and each example lists factors we consider in determining whether to grant a premium penalty waiver for reasonable cause in a case of that kind. (a) An individual with responsibility for taking action was suddenly and unexpectedly absent or unable to act. (b) A fire or other casualty or natural disaster destroyed relevant records or prevented compliance in some other way. (c) You reasonably relied on erroneous oral or written advice given by a PBGC employee. (d) You were unable to obtain information, including records and calculations, needed to comply. 25 What are some situations that might justify a partial “reasonable cause” waiver? (a) Assume that a fire destroyed the records needed to compute a premium payment. If in the exercise of ordinary business care and prudence it should take you one month to reconstruct the records and pay the premium, but the payment was made two months late, it might be appropriate to waive that part of the premium penalty attributable to the first month the payment was late, but not the part attributable to the second month. (b) Assume that a plan administrator underpaid the plan's flat-rate premium because of reasonable reliance on erroneous advice from a PBGC employee, and also underpaid the plan's variable-rate premium because the plan actuary used the wrong interest rate. A PBGC audit revealed both errors. PBGC billed the plan for a premium penalty of $5,000—$1,000 for underpayment of the flat-rate premium and $4,000 for underpayment of the variable-rate premium. The plan administrator requested a waiver of the premium penalty. While the erroneous PBGC advice constituted reasonable cause for underpaying the flat-rate premium, there was no showing of reasonable cause for the error in the variable-rate premium. Therefore, we would waive only the part of the premium penalty based on underpayment of the flat-rate portion of the premium ($1,000). Procedures [Reserved] [71 FR 66869, Nov. 17, 2006, as amended at 79 FR 13562, Mar. 11, 2014]