Update from ASC Actuaries


MAP-21 AFN Supplement details from DOL FAB 2013-01

Valerie Lopez
By: Valerie M. Lopez,
FSA, EA, MSPA


Executive Summary


On March 8, the Department of Labor (DOL) issued information for preparers of the Annual Funding Notice (AFN), which for the vast majority of plan sponsors must be issued to plan participants by the end of April. The AFN discloses plan funding, PBGC coverage and plan administrator contact information. The DOL issued Field Assistance Bulletin 2013-01 (FAB 2013-01) giving guidance on the additional disclosure requirements that were added with the passage of The Moving Ahead for Progress in the 21st Century Act (MAP-21). MAP-21 required the DOL to issue a model notice and practitioners now have a model supplement to work with for affected plan sponsors. Sponsors not affected by the additional AFN disclosure requirements of MAP-21 can continue to rely on the existing DOL Model Notice for their disclosures.


Background


MAP-21, which was passed in 2012, imposed additional disclosures on the AFN for the 2012-14 plan years in which:

 

  • A plan’s Funding Target using the MAP-21 segment rates is less than 95% of the Funding Target using the 24-month segment rates; and
  • A plan’s funding shortfall is greater than $500,000; and
  • A plan had 50 or more participants on any day during the preceding plan year.


For 2012 plan years, plan sponsors who elected out of MAP-21 for all purposes are exempt, but those who elected to apply MAP-21 for funding only are not.


While most small plan sponsors will not be affected by the additional disclosure requirement, those that are must provide historical plan funding information based on both MAP-21 and unadjusted PPA segment rates. The Model issued with FAB 2013-01 provides plan sponsors and practitioners with the information necessary to prepare AFNs.


Bulletin Highlights


FAB 2013-01 provides plans sponsors with a model Supplement (in the Appendix) which can be attached to the existing model AFN. The DOL has endorsed attaching the supplement to the existing model until further guidance is issued. While plan sponsors may use other notice forms to satisfy the MAP-21 content requirements, given the short time frame until the disclosures are due, this approach may be the most expedient.


The Bulletin includes a Q&A section covering 20 questions which span general, coverage, and content questions. The coverage Q&As highlight the affected plan years and how each of the 3 criteria are tested for purposes of determining whether the additional disclosures are required. The content Q&A section covers the varied and complex rules for preparing the items in the historical data required to be attached in the AFN Supplement.


The full text of the Bulletin is available here.


ASC Programming


ASC has reviewed the reporting requirements and guidance of FAB 2013-01 and we have made available a Word document form that users can download and use to fill in the required information. At this time, we are not planning to automate the filling in of the content required in the Supplement, largely because this is not a permanent reporting requirement. If the law is changed to make the additional reporting under MAP-21 permanent, we will review programming plans at that time.


For users who are interested in generating a list of DB plans that have over 50 participants (one of the 3 criteria for preparing the additional Supplement to the AFN), we have prepared a grid which may be requested by submitting a Client Support Center request to General Support (select Defined Benefit as the Product in your request).


The Supplement is available in DGEM by navigating to the Download Files tab. Expand the “Form 5500” and “Misc” folders to select the file “AFN_MAP-21notice_2013.docx” for download.