This Benefits Alert summarizes changes affecting the 2026 Pension Benefit Guaranty Corporation (PBGC) premium filing and the 2025 Form 5500 filing and includes key reminders and common filing errors to help plan sponsors avoid mistakes. Plan sponsors of ERISA-covered defined benefit (DB) and defined contribution (DC) plans are advised to review these updates in advance and work with their service providers to address any questions before the filings are due.

PBGC premiums for the 2026 plan year

Flat-rate premiums

All ERISA-covered DB plans pay a per-participant annual premium. The PBGC provides a significantly higher level of benefit guarantees for participants of single-employer plans compared to multiemployer plans, which is reflected in the premium rates these plans pay.

Variable-rate premiums

In addition to the flat-rate premium, underfunded single-employer DB plans pay an additional variable-rate premium (VRP) based on the plan’s level of underfunding.

The VRP can be determined using either the standard or alternative premium funding target, the only difference being the interest rates used to determine the liability. The interest rates under the standard method are based on a one-month average of daily rates, whereas the interest rates under the alternative method are based on rates averaged over 24 months (or the full yield curve). Plan sponsors can switch between these two methodologies, but when a switch is made, the method elected must remain in place for at least five years.

Plan sponsors should consult with their actuaries to carefully evaluate which methodology to use, considering items such as trends in interest rates, funding policy, expected returns, and future contributions.

Special rules apply when determining premiums for Cooperative and Small Employer Charity (CSEC) plans. These rules were not modified for the 2026 plan year.

New: Paper check option eliminated

PBGC is transitioning away from using paper checks for both premium payments and overpayment refunds, in accordance with Modernizing Payments To and From America’s Bank Account, an executive order signed by President Trump on March 25, 2025. Starting with plan years that begin in 2026, all premium payments must be made electronically, either through pay.gov or by electronic funds transfer (EFT) such as ACH or Fedwire. For more information, refer to the “Premium filing payment and instructions” section on PBGC’s website.

• Special events during 2025. As a reminder, additional information must be disclosed on the filing if the plan sponsor:
• Transferred some or all assets and liabilities to another plan since last year’s premium filing (e.g., merger, consolidation, spinoff)
• Froze the plan to new entrants
• Froze benefit accruals or service
• Purchased annuities or offered a lump-sum window during 2025
• Qualifies for an extended due date under a PBGC disaster relief announcement
• Common filing errors. Filers should also take care to avoid these common errors when submitting premium filings:
• Entering incorrect employer identification numbers (EINs) or plan numbers (PNs)
• Reporting an incorrect plan effective date
• Sending premium payments via ACH or Fedwire without including proper plan identifiers (e.g., EIN, PN, Premium Payment Year commencement date)
• Inconsistencies in VRP calculations related to the Lookback Rule (small plans)
• Failing to provide a sufficient or clear explanation for changes in premiums on amended filings
• Reporting incorrect plan year information, especially for short plan years
• Ignoring warning messages during the submission process, which may result in errors or incomplete filings

Instructions for the 2026 PBGC premiums can be found here.

Form 5500 for the 2025 plan year

Each year, the Form 5500 filing requirements are typically updated by the Internal Revenue Service (IRS), U.S. Department of Labor, and PBGC. Plan sponsors should note the following updates related to the 2025 Form 5500 filing:

Form 5558

This form is used to receive an automatic 2.5-month extension to file Form 5500 and Form 8955-SSA. Plans have the option to file Form 5558 electronically through EFAST2 or mail the form to the IRS.

If you choose to mail your form, please note that postmarks may not accurately reflect the date the U.S. Postal Service accepts your mail. To ensure your form is filed on time, the Form 5558 instructions state that you can use an IRS-designated private delivery service (PDS), which can provide written proof of the mailing date. For a list of approved PDS options and the correct IRS mailing addresses for these services, visit www.irs.gov/PDS and www.irs.gov/PDSstreetAddresses.

New plan characteristic codes

Plan characteristic codes are codes used to describe the specific features and characteristics of an employee benefit plan. They summarize the types of benefits the plan provides, the plan’s funding arrangements, and other important plan details. Four new codes were added for DB plans:

• Code 1G: Variable annuity benefit formula (all plans). A variable annuity benefit formula provides for a benefit that is “periodically adjusted by reference to the difference between a rate of return and a specified assumed interest rate.”
• Code 1J: Mass withdrawal termination (multiemployer). A multiemployer DB plan that terminated by mass withdrawal under ERISA section 4041A(a)(2) occurs when all employers withdraw from the plan or when all employers’ obligations to contribute to the plan end.
• Code 1K: Plan amendment termination (multiemployer). A multiemployer DB plan that terminated by plan amendment under ERISA section 4041A(a)(1) occurs when a plan amendment is adopted that stops participants from receiving credit for service with any employer after a specified date.
• Code 1L: Insolvent plan termination (multiemployer). An insolvent multiemployer plan as defined in ERISA section 4245(b) is a plan that lacks sufficient resources (e.g., assets, contributions, withdrawal liability payments, earnings) to pay benefits when due.

In addition, Code 1H was clarified to state that it only applies to a single-employer plan that has terminated and fully closed out for PBGC purposes.

Schedules SB and MB—funding method changes

• Schedule SB (single-employer plans): Although not flagged as a change, the 2025 instructions clarify that if a plan changes its funding method during the 2025 plan year, the Line 25 attachment must explain the rationale for the change and include the IRS approval date. If IRS approval was not required, the attachment must cite the basis for automatic approval under Revenue Procedure 2017-56. The instructions also stress that this attachment “must be complete and accurate.”
• Schedule MB (multiemployer plans): Line 5 already requires the plan to report on the schedule the rationale for any change in funding method and either the IRS approval date or the basis for automatic approval under Revenue Procedure 2000-40. This year’s instructions specifically emphasize that both the schedule and any attachments must be complete and accurate.

This heightened emphasis for both schedules suggests the IRS may scrutinize funding method changes more closely.

Delinquent participant contributions

A tip was added to Line 9a of Schedule DCG, Line 4a of Schedule H, and Line 4a of Schedule I to clarify that a participant-contribution delinquency must continue to be reported on the schedule and the related attachment for every Form 5500 filing year during which the delinquent contribution exists. Once the delinquency is fully corrected, it is reported one final time for the plan year in which the correction occurs.

The tip includes the following example. Say a plan first has a delinquent participant contribution during the 2022 plan year, and this delinquency is identified and fully corrected during the 2023 plan year. The delinquency must be reported on both the 2022 and 2023 Form 5500 filings. The 2022 filing reports the initial delinquency, while the 2023 filing reports the existence of the delinquency during the plan year. Since the delinquency was fully corrected during the 2023 plan year, it does not need to be reported on the 2024 Form 5500 or subsequent filings.

Penalties

Failure to comply with ERISA and IRS filing requirements can result in significant penalties for plan administrators and sponsors. Administrative penalties include:

• $2,739 per day (up from $2,670 per day) for failing to file a complete and accurate report.
• $250 per day (up to a maximum of $150,000) for failing to file returns for “certain deferred compensation, trusts and annuities and bond purchase plans” in a timely manner.
• $1,000 for failing to file the actuarial statement, Schedule MB (multiemployer DB plans), or Schedule SB (single-employer DB plans).
• Individuals who are convicted of willfully violating the reporting requirements may be penalized up to $100,000, up to 10 years in prison, or both. Those making false statements or representations may be penalized up to $10,000, five years in prison, or both.

Instructions for the 2025 Form 5500 can be found here.

Please contact your Milliman consultant regarding how these provisions may impact your plan(s).

¹ Due dates can be extended for plans affected by federally declared disasters. PBGC generally grants disaster relief when the IRS grants such relief for taxpayers. IRS announcements for tax relief can be found here: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations.