An April 3 Department of Labor (DOL) Field Assistance Bulletin (FAB 2025-02) provides guidance on the annual funding notice requirements applicable to defined benefit (DB) plans. The Bulletin also provides updated model notices for single-employer and multiemployer DB pension plans.
FAB 2025-02 modifies the annual funding notice (AFN) rules by allowing plan administrators to disclose a plan’s funding level by using a new metric, “percentage of plan liabilities funded.” This is a change from the previous metric, “funding target attainment percentage.” The Bulletin also allows the AFN to disclose the new metric using a “reasonable estimate” of the plan’s year-end plan liabilities, but not for the previous two years. The Bulletin advises that the fair market value of the plan’s assets on the last day of those preceding two years should match the values reported on the plan’s Form 5500 filings for those years.
Other modifications included in the Bulletin include the permissibility of using, for the current plan year, a “reasonable, good faith” estimate of the number of plan participants and beneficiaries for the plan year if the AFN notes that the counts used are estimates. The Bulletin also provides two methods that can be used to calculate a plan’s average return on investments for the notice year, but also acknowledges that other methods may fulfill the requirement that the AFN disclose the plan’s average return on investments.
Prospects: While DOL acknowledges that many plans face an April 30 deadline for furnishing AFNs to their participants, and that therefore many 2025 AFNs have already been prepared, the agency says plan sponsors must “consider” the guidance provided in FAB 2025-02. Thus, many plans will have to revise their AFNs to accommodate the rules modifications contained in FAB 2025-02.
NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.