What is PBGC?
Pension Benefit Guaranty Corporation (PBGC) is a United States federally chartered corporation created by the Employee Retirement Income Security Act of 1974 (ERISA). Congress set up PBGC to insure the defined benefit pensions of working Americans. PBGC insures two types of defined benefit pension plan in two separate insurance program: Single Employer program and Multi-Employer Program. You can find more details on the PBGC website below:
https://www.pbgc.gov/wr/find-an-insured-pension-plan/pbgc-protects-pensions
Is my retirement plan covered by PBGC?
Not all qualified retirement plans are covered by PBGC.
— PBGC only covers the defined benefit plan. So the IRA, the 401(k) plan, the profit sharing plan, the ESOP plan, the unqualified retirement plans are not covered by PBGC.
Not all defined benefit plans are covered by PBGC.
— A private-sector qualified defined benefit plan is exempt from PBGC coverage if:
- It has not covered more than 25 active participants at any time since ERISA was enacted (September 2, 1974), and
- It is established and maintained by a “professional service employer.”
Can PBGC audit my defined benefit pension plan?
Yes, if your defined benefit pension plan is covered by PBGC, your plan might be elected for the random audit. If your plan is audited by PBGC, you would like to have your enrolled actuary involved.