Pension Benefit Guaranty Corporation 93-1 Februa ry 16, 1993 RE FE RE NC E: [*1] 400 7(a) P ayment of P remiums. D ue Da tes. 29 C FR 2 610 Declara tion and P ayment of P remiums. OP INI ON : I write in res ponse t o your let ter date d April 27, 1992, requ est in g an opin ion conc ern in g t he pa ymen t of prem iu ms by the Reti rement Plan f or * * * ("Pen sion Plan") f or the pl an year commenci ng on March 1, 1992, under Sect ion 4007 of the Employe e Reti rement Income Secur it y Act of 1974, as ame nded, 29 U.S.C. A. § 1307 ( West 1985 & Supp. 1992 ). Spe cifically, yo u s ee k t he Pen si on Ben ef it Gua ra nt y C or por at io n' s ( "PBG C") opin ion as to wh ether the Pensi on Plan owes premiums t o the PBGC even though a st andard ter minati on fil ing was made in February 1991, and all assets were distribu ted in 1 991 pursu ant to the first six catego ries of S ection 404 4(a) , 29 U .S.C.A . § 13 44( a). As we underst and the f acts, between Febru ary and Ju ne 1991, all Pension Plan particip ants rec eived their be nefit under the Pension Plan in eit her a lump sum d istribution or an irrevo cab le com mitme nt in the for m of a grou p ann uity contract fr om an i nsur ance c ompany. In addi ti on, y ou expl ain that sur pl us asse ts remained aft er all benefi ts of t he Pensi on Plan w ere [ *2] a ll ocate d and di str ibut ed under the fi rst si x cat egori es of Section 4044(a ), 29 U .S.C.A . § 1344(a), and th at at least a por tion of the surplu s was attrib utable to em ploye e con tributio ns. You i ndicat e that the Retire ment Board of * * * ha s not distri buted any of the surplus att ributable to employee contributi ons because of the unce rtainty arising fro m a p end ing lawsu it betwe en the p ensio n pla n spons or and pension plan participants over t he entitleme nt to the su rplus. PB GC explic itly addr essed your situa tion in the prea mble to PB GC 's July 10, 1 989 , amen dme nt to 29 C.F.R . § 261 0, stating: A number of plan professionals have asked the PBGC whe ther it is necessary for a p lan to d istribute e xcess a ssets in order for the premi um obligat ion to ce ase accru ing. Under secti on 4007(a) of ERISA an d § 2 610.25(e) of the proposed rule, the obli gati on to pay pre miums cont inues through the pl an year in which all plan a ssets are dis tri buted pursuant to a plan 's termi nati on or in wh ich a t rus tee is appoi nt ed un der s ect ion 4042 of ERISA, whiche ver o ccurs first. For purposes of thi s rul e, a pl an' s as set s ar e cons ide red distributed pursuant to a terminati on procedure upo n the dist ribu ti on of all asse ts [*3] that m ust be a llocate d to P riority C ate gories 1 through 6 of ERISA section 4044 (a), irresp ective o f whethe r there a re any a ssets to b e alloc ated a nd d istributed unde r ER ISA section 404 4(d ). Paym ent of P remiu ms; Fin al Rule , 54 F ed. R eg. 28 ,951 (19 89) (cod ified at 2 9 C .F.R. § 261 0.25 (e). Since PB GC has clearly st ated th at premium s cease accru ing once assets are distributed in Priority Ca tegories 1 through 6 of ERISA secti on 4044(a), PBGC would not requir e the Ret irement Board or the Pensi on Plan to make a prem ium filing fo r plan ye ar 19 92 w ith the P BG C sinc e Pe nsion P lan asse ts were d istributed in 199 1. I hope that thi s let ter is of ass istance t o you. If you have f urther questi ons, please feel free to contact Henry Talavera of my sta ff at (202 ) 77 8-88 22. Car ol Co nnor Flow e, Ge neral C ouns el