2013 Maximum Yearly PBGC Guaranteed Pension Benefit Amount To Increase Slightly In 2013

November 28, 2012

The yearly maximum guaranteed benefit for a 65-year-old retiree under the Pension Benefit Guaranty Corporation (PBGC) insurance program will increase to almost $57,500 in 2013, up from $56,000 in 2012.  Beginning in 2013, the PBGC announced November 27, 2012 that the maximum yearly guarantee for a 65-year-old retiree is $57,477.24. The increase is not retroactive.

The slight increase in the  guaranteed benefit is likely to be meaningful for the many pensioners receiving benefits under pension plans covered by the PBGC insurance program. This program insures guaranteed benefits amounts for pensioners of defined benefit plans covered by the PBGC insurance programs that are underfunded under the PBGC rules when terminated and otherwise meet program requirements.  Most retirees who get their pension from PBGC — almost 85 percent — receive the full amount of their promised benefit. In some cases, retirees can receive more than the PBGC maximum guarantee.

The PBGC maximum guarantee is based on a formula prescribed by federal law. Yearly amounts are higher for people older than age 65, and lower for those who retire earlier or choose survivor benefits (see chart).  If a pension plan ends in 2013, but a retiree does not begin collecting benefits until a future year, the 2013 rates still apply. For plans that terminate as a result of bankruptcy, the maximum yearly rates are guided by the limits in effect on the day the bankruptcy started, not the day the plan ended.

The following chart shows the 2013 annual and monthly maximum benefit guarantees for retirees from ages 45 to 75. The maximum amount is lower for retirees who begin getting benefits at ages below 65, reflecting the fact that younger retirees receive more monthly pension checks over a longer lifetime. The maximum amount is higher for benefits starting at ages above 65, because older retirees receive fewer monthly pension checks over their expected lifetimes.

PBGC Maximum Monthly Guarantees for 2013
Age Annual Maximum Monthly Maximum Monthly Joint and 50% Survivor Maximum*
75 174,730.80 14,560.90 13,104.81
74 158,867.04 13,238.92 11,915.03
73 143,003.40 11,916.95 10,725.26
72 127,139.64 10,594.97 9,535.47
71 111,275.88 9,272.99 8,345.69
70 95,412.24 7,951.02 7,155.92
69 85,641.12 7,136.76 6,423.08
68 77,019.48 6,418.29 5,776.46
67 69,547.44 5,795.62 5,216.06
66 63,225.00 5,268.75 4,741.88
65 57,477.24 4,789.77 4,310.79
64 53,453.88 4,454.49 4,009.04
63 49,430.40 4,119.20 3,707.28
62 45,407.04 3,783.92 3,405.53
61 41,383.56 3,448.63 3,103.77
60 37,360.20 3,113.35 2,802.02
59 35,061.12 2,921.76 2,629.58
58 32,762.04 2,730.17 2,457.15
57 30,462.96 2,538.58 2,284.72
56 28,163.88 2,346.99 2,112.29
55 25,864.80 2,155.40 1,939.86
54 24,715.20 2,059.60 1,853.64
53 23,565.72 1,963.81 1,767.43
52 22,416.12 1,868.01 1,681.21
51 21,266.52 1,772.21 1,594.99
50 20,117.04 1,676.42 1,508.78
49 18,967.44 1,580.62 1,422.56
48 17,817.96 1,484.83 1,336.35
47 16,668.36 1,389.03 1,250.13
46 15,518.88 1,293.24 1,163.92
45 14,369.28 1,197.44 1,077.70
* Both spouses the same age

The PBGC insurance program is funded through insurance premiums paid by covered plans.  In recent years, the number of underfunded plans has increased due to a lagging economy, declines in market performance and other factors.  The demands on the PBGC insurance program prompted Congress to increase premiums, modify pension funding rules and enact various other reforms in an effort to shore up the PBGC insurance program.  The PBGC also has undertaken a number of regulatory and operational reforms.  Companies sponsoring plans covered by the PBGC insurance program should review their existing funding and insurance requirements to ensure that they are in compliance with existing rules and taking advantage of  the most favorable opportunities under these rules.  In addition, companies sponsoring defined benefit plans govered by the PBGC insurance program and/or the Internal Revenue Code and Employee Retirement Income Security Act’s minimum funding rules or entities that are  part of commonly controlled or affiliated groups of companies, purchasing stock or assets from such company groups or lending to or investing in such entities should evaluate the funding status of these programs and the responsibilities and liability exposures that might impact their interests.

For additional information, see PBGC’s fact sheet “Pension Gurantees” and for information about the benefits guaranteed by the PBGC, see “Making Sense of the Maximum Insurance Benefit.”

For Help or More Information

If you need help reviewing and updating, administering or defending your employee benefit, human resources, insurance, health care matters or related documents or practices to respond to emerging health plan regulations, monitoring or commenting on these rules, defending your health plan or its administration, or other health or employee benefit, human resources or risk management concerns, please contact the author of this update, Cynthia Marcotte Stamer.

About Ms. Stamer

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters. 

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals.  A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns. 

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations.   She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications.   You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and registerto receive future updates about developments on these and other concerns  see here or contact Ms. Stamer via telephone at 469.767.8872 or via e-mail to  cstamer@solutionslawyer.net.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources at www.solutionslawpress.com including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile at here or e-mailing this information here.   

©2012 Cynthia Marcotte Stamer.  Non-exclusive right to republish granted to Solutions Law Press.  All other rights reserved.


IRS OKs Retirement Plans Allowing Plan Loans & Hardship Withdrawals To Hurricane Sandy Victims

November 23, 2012

Retirement plan fiduciaries of plans covering participants impacted by Hurricane Sandy seeking loans or hardship withdrawals received some welcome guidance from the Internal Revenue Service (IRS). 

The IRS announced November 16 that 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Sandy and members of their families. Read News Release IR-2012-93. For more information, read Announcement 2012-44.

Plan fiduciaries dealing with requests or  wishing to offer this option to participants affected by Hurricane Sandy should check this guidance along with existing plan terms and associated loan and hardship withdrawal rules to confirm that  their plan terms contain  all necessary provisions to use this guidance and their plan’s loan or  hardship withdrawal provisions before moving forward.  Assuming that the plan contains appropriate provisions and the necessary requirements are met,the guidance says plan fiduciaries can  authorize these requests.

For Help or More Information

If you need help reviewing and updating, administering or defending your employee benefit, human resources, insurance, health care matters or related documents or practices to respond to emerging health plan regulations, monitoring or commenting on these rules, defending your health plan or its administration, or other health or employee benefit, human resources or risk management concerns, please contact the author of this update, Cynthia Marcotte Stamer.

About Ms. Stamer

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters. 

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals.  A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials concerning regulatory, investigatory or enforcement concerns. 

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations.   She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications.   You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and registerto receive future updates about developments on these and other concerns  see here or contact Ms. Stamer via telephone at 469.767.8872 or via e-mail to  cstamer@solutionslawyer.net.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources at www.solutionslawpress.com including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile at here or e-mailing this information here.   

©2012 Cynthia Marcotte Stamer.  Non-exclusive right to republish granted to Solutions Law Press.  All other rights reserved.


New Labor Department Rule Allows Employers 7 Days To Deliver Employee Contributions To Employee Benefit Plans

January 14, 2010

By Cynthia Marcotte Stamer

Regulations published by the Department of Labor today (January 14, 2010) offer employers the opportunity to know their deposit of employee contributions and other amounts withheld from wages or otherwise received from employees with a pension, profit-sharing, health, or other welfare benefit plan is timely for purposes of the fiduciary responsibility requirements of the Employee Retirement Income Security Act (“ERISA”) and the prohibited transaction rules of the Internal Revenue Code (the “Code”) by depositing those amounts with the plan within the seven day period specified in a new safe harbor included in the Regulations.

Certainty about the timeliness of these deposits is important, as mishandling of these employee contributions, participant loan repayments or other employee benefit plan assets frequently triggers judgments, fines and penalties against companies that sponsor employee benefit plans as well as owners, board members, or other members of management. See Mishandling Employee Benefit Obligations Creates Big Liabilities For Distressed Businesses & Their Leaders.  Consequently, businesses sponsoring employee benefit programs and owners, officers, directors or other members of management with authority over or responsibility for the handling or application of amounts withheld or collected from employees as employee contributions or plan loans should make arrangements for these amounts to be properly handled and timely deposited with the appropriate employee benefit plan in accordance with these new plan asset regulations.

Title I of ERISA generally requires that employee benefit “plan assets” be held in trust, prudently handled and invested, used for the exclusive benefit of the plan and its participants, and otherwise used and administered in accordance with ERISA’s fiduciary responsibility rules.  Meanwhile, the use of “plan assets” of certain employee benefit plans in a manner prohibited by the Code’s prohibited transaction rules also may trigger excise taxes and other penalties.

For purposes of both ERISA and the Code, Labor Department Regulation § 2510.3-102, specifies that amounts (other than union dues) that an employer withholds from wages or otherwise collects from employees as employee contributions or loan repayments to an employee benefit plan generally become plan assets subject to these fiduciary responsibility rules “as of the earliest date on which such contributions or repayments can reasonably be segregated from the employer’s general assets.”  Since employers, business owners, members of management can risk exposure to damages, administrative penalties and/or excise taxes, knowing when amounts collected from employees are considered plan assets is a critical first step to managing these risks.

Unfortunately, the subjectivity of this standard leaves room for much uncertainty and debate about the precise deadline by which employee contributions, plan loans and other amounts from employees must be received by the plan. The subjectivity inherent in this standard leaves many employers uncertain about the adequacy of their compliance efforts and frequently fuels debate among plans, debtors, creditors, regulators or others about the when amounts earmarked to be withheld from employee wages cease to be assets of the debtor employer and become plan assets.

To mitigate debate and uncertainty about the timing of these events, Labor Department Regulation § 2510.3-102 as published in final form today includes a new “safe harbor” rule for plans with fewer than 100 participants at the beginning of the plan year. Under the safe harbor, employee contributions, plan loans and other amounts withheld from wages or received from employees for payment to an employee benefit plan are treated as treated timely paid to the plan if deposited with the plan not later than the 7th business day following the day on which such amount is received by the employer (in the case of amounts that a participant or beneficiary pays to an employer), or the 7th business day following the day on which such amount would otherwise have been payable to the participant in cash (in the case of amounts withheld by an employer from a participant’s wages).  While this safe harbor assures employers and others that withhold from wages or receive employee contributions or participant loan payments owing to less than 100 participant plans that their deposit will be considered timely if received by the plan within seven days, the plan asset regulations leave open that deposit with the plan more than 7 after receipt might still be considered timely deposit with the plan under certain circumstance. 

Where deposit with the plan is not made within the seven-day period established by the safe harbor, the plan asset rules continue to leave room for great subjectivity in the determination of the deadline for deposit.  In addition to the seven-day safe harbor, the plan asset regulations clearly establish bright-line deadlines after which the deposit of employee contribution or plan loan amounts always will be considered untimely. Thus, the plan asset rules provide that the deadline for depositing employee contributions and plan loans with the plan in no event ever extends beyond the applicable of the following dates (the “Latest Date”)

  • For pension plans, the 15th business day of the month following the month in which the employee contribution or participant loan repayment amounts are withheld or received by the employer;
  • With respect to a SIMPLE plan that involves SIMPLE IRAs the 30th calendar day following the month in which the participant contribution amounts would otherwise have been payable to the participant in cash; and
  • For health and other welfare benefit plans, 90 days from the date on which the employee contribution is withheld or received by the employer.

In all other instances, the plan asset regulations leave open to uncertainty and debate when and if an employer’s deposit of employee contributions and plan loans more than seven-days after payroll deduction or receipt but before the Latest Date will qualify as timely for purposes of ERISA Title I or the Code’s prohibited transaction provisions.

Companies and owners, officers and directors of businesses that harm plans by failing to ensure that these amounts are timely deposited into an employee benefit plan or otherwise are involved in the mishandling of these funds frequently become subject to prosecution, damage awards, civil penalties and excise taxes.  To mitigate potential exposure to these risks, businesses and leaders of businesses that withhold from wages or collect employee contributions or plan loan payments from employees should make arrangements to ensure that these amounts timely are deposited with the appropriate plans and otherwise handled appropriately in accordance with ERISA and the Code.

If your business or employee benefit plan needs assistance evaluating or responding to these or other employee benefit, or other employment, workplace health and safety, corporate ethics and compliance or other concerns or claims, please contact the author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer. 

Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group, a representative to the ABA Joint Committee on Employee Benefits Council, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer has advised and represented employers on these and other labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 22 years. She is experienced with assisting employers, insurers, administrators, and others to design and administer group health plans cost-effectively in accordance with these and other applicable federal regulations as well as well as advising and defending employers and others against tax, employee benefit, labor and employment, and other related audits, investigations and litigation, charges, audits, claims and investigations by the IRS, Department of Labor and other federal and state regulators.  Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.   For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.

Other Information & Resources

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©2010 Cynthia Marcotte Stamer. All rights reserved.