On November 26, 2010, the IRS released Notice 2010-83, which provides guidance on the special funding relief rules available to multiemployer pension plans under the Pension Relief Act of 2010.  This guidance had been anticipated since the Pension Relief Act was signed into law on June 25, 2010.

Notice 2010-83 is posted on the IRS website, along with a summary of its key provisions.  The guidance is presented in a question and answer format.  Notice 2010-83 follows Notice 2010-56, which was released on July 30, 2010 and contained preliminary guidance on the Pension Relief Act of 2010.

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Available for download is a HORIZON BULLETIN (updated December 13, 2010) summarizing the provisions of the Pension Relief Act of 2010 affecting multiemployer plans, reflecting the guidance provided by the IRS in Notice 2010-83.

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The following are key pieces of guidance provided by Notice 2010-83:
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• The 2008 and 2009 investment losses eligible for relief are determined on a market valuebasis, rather than the less favorable actuarial value basis, as some had feared.
• For plans electing relief, it appears the restriction on benefit improvements will range from three to twelve years, depending on how much of the available relief is utilized.  (The language of PRA 2010 hinted that the restriction might apply for as long as 32 years.)  Restrictions do not apply if the benefit improvements are funded through increased contributions or are required by law.  Further clarification on this issue may be needed.
• Plans can shorten the benefit increase restriction period at any time by opting out of relief prospectively, without losing the effect of the relief applied prior to opting out.
• The PPA certification status for the current plan year may be revised to reflect funding relief, but re-certification is not required.  (Any re-certification must be done before the end of the plan year to which the re-certification applies.)  Similarly, a plan may (but is not required to) update a previously-adopted funding improvement plan or rehabilitation plan to reflect the funding relief.
• Details are provided regarding the manner and timing of the relief election and the required notices to plan participants and the PBGC.  Generally, Trustees must make a formal decision to use the special rules by the earlier of the date of the 2011 actuarial certification or June 30, 2011.

On November 10, 2010, FASB announced that it will defer the effective date for its proposed disclosure rules for employers participating in multiemployer plans.

The FASB first released its proposed disclosure rules in an Exposure Draft on September 1, 2010.  Among other things, the new disclosure rules would have required a company to disclose an estimate of its total withdrawal liability exposure in the multiemployer pension plans in which it participates.   The new disclosure rules were originally scheduled to take effect for years ending after December 15, 2010 for publicly-traded companies and the following year for privately-held companies.

Over the past two months, the FASB has received numerous comments regarding its Exposure Draft, many of which expressed strong (and legitimate) concerns over its proposed withdrawal liability disclosure rules.  The FASB will deliberate over the next several months on how to improve disclosures with respect to multiemployer plan participation, while also considering the valid issues raised by the responses to its Exposure Draft.

From the summary of the Board’s decisions at its November 10, 2010 meeting, at FASB.org:

Disclosures about an employer’s participation in a multiemployer plan. The September 2010 Exposure Draft, Compensation—Retirement Benefits—Multiemployer Plans (Subtopic 715-80): Disclosure about an Employer’s Participation in a Multiemployer Plan, had proposed that public entities would begin providing enhanced disclosures in financial statements for fiscal years ending after December 15, 2010, with a one-year deferral for nonpublic entities. The Board decided that a final standard will not be effective for the 2010 calendar year-end reporting period. It will decide on an effective date at a future meeting, after it has substantially concluded its redeliberations.

* * * UPDATE * * *

On May 31, 2011, FASB reached a tentative decision regarding disclosure rules for multiemployer plans.  See the update here.