Pension Benefit Guaranty Corporation 94-2 July 26, 1994 RE FE RE NC E: [*1] 400 7 Pa yment of Pre miums 400 7(a) P ayment of P remiums. D ue Da tes 400 7(b ) Pa ymen t of Pre mium s. Pen alties and Interes t OP INI ON : You have requested an opinion from the Pens ion B enefit G uaranty Corporation ("PBG C") whether interest and penalt ies asses sed by PBGC for the la te payment of premiu ms due under s ec tion 4007 of the Employee Retirement Inco me S ecurity A ct of 19 74 ( "E RIS A" ) can b e paid from th e assets o f a multiem ploye r pen sion p lan or m ust be p aid by the p lan trustee s perso nally or b y the pla n's spon soring orga nizatio ns or e mplo yer(s). You stat e t ha t yo ur cl ie nt , th e b oa rd of tru ste es of a m ul tie mp lo ye r p en sio n p la n, di sc ov er ed th at th e p la n's prio r trus tees and/or admin ist rator h ad fai led to coun t th e number of pl an parti cipant s accurat ely a nd, th erefore , fa iled t o pay the cor re ct amo un t o f pr emi ums to PBGC w it hi n t he ti me r equ ir ed b y l aw . As a r es ul t, PBGC assesse d interest and pen alties of ap pro ximate ly $ 1,0 00. ER ISA section 400 7(a) and ( b) p rovid e that -- (a) The designated payor of each plan shall pay the premiums i mposed b y the [PB GC ] und er [T itle IV of ERISA] with resp ect to tha t plan w hen the y are d ue. . . . (b) If an y basic b enefit pr emium is not pa id when it is due[,] [*2] the [PBGC ] is authori zed to assess a [penalty ]. . . . If any prem ium is no t paid by the las t date p rescrib ed fo r a pa ymen t, interest . . . shall b e paid . . . . ERISA section 400 7(e) (1) p rovid es that, in the case of a multiemployer plan, t he term "designated payor" is the plan administrator. Thus, t he plan administrat or ha s the duty t o ensure that PBGC premiums are paid in a timely fashion. Bec ause the o bligati on to pay penal ties and int erest is t rigger ed by a fai lure t o make premium payment s, t he plan admini str ator has t he dut y t o ensu re t he pay ment of pen alt ies and i nter est as we ll . n1 n1 Sectio n 40 07( b) an d (c) su ppo rt this conc lusion b y autho rizing the design ated p ayor to app ly for pe nalty waivers and authori zing t he PBGC to bri ng a civ il a ction for "th e am ount of the premium[,] penalty, and interest" i f the desig nated payo r fails to pa y a pre mium when due. Although the plan administ rator h as the dut y of ensuri ng these payments are made, the payments -- i ncluding penal ti es an d int eres t - - may be paid f rom pla n ass ets . Thi s poi nt i s made cle ar i n th e conf erenc e commit tee report on ER ISA . The plan is to be liable for both t he premiums for coverage of benefits and for [*3] any penalty asses sed for fail ure to pay prem iums. Besi des th e pen alt y, th e [PBGC] ma y al so c har ge i nt ere st . . . f or u npai d pre miu ms that are past due. H.R. Co nf. Rep . No . 128 0, 93 d C ong., 2 d Se ss. 365 (19 74) , reprin ted in 1974 U.S.C.C.A.N. 5038, 5145. Of cour se, the paymen ts may al so be pai d fr om othe r sou rces , s uch as the indi vidu al a sset s of the plan admin ist rat or or t rust ee or funds o f a con tributing e mplo yer. This letter doe s not add ress issues tha t may b e raised unde r Title I o f E R IS A by a t ru ste e's or pl an ad mi ni str at or 's failur e to pa y PB GC prem iums in a timely ma nner. Y ou m ay wish to cons ult with the Department of Labor, whi ch has respon sibi li ty for the int erpre tat ion and e nforc eme nt of the p rovisio ns of T itle I, if you have any questions concerning such issu es. If you ha ve any fu rther q uestion s regar ding this m atter, ple ase ca ll Den ise Y egge of my staff at (2 02) 326 -412 4. Carol Connor Flowe

Ge neral C ouns el