DOL Final Regulations Establish Pooled Plan Provider Registration Requirements

The DOL has issued final regulations establishing the registration requirements for pooled plan providers (PPPs) who offer and operate pooled employer plans (PEPs). PEPs are individual account plans (including 401(k) plans) established or maintained for the purpose of providing benefits to the employees of two or more employers that do not have a common interest other than having adopted the plan. Under the SECURE Act, PEPs must be operated by PPPs who are responsible for all administrative duties (including nondiscrimination testing) reasonably necessary to ensure that the PEPs meet the applicable requirements of the Code and ERISA (see our Checkpoint article). Before beginning operations, PPPs must register with the IRS and DOL, and in September 2020, the DOL proposed regulations setting the procedures and deadlines for registration (see our Checkpoint article). The final regulations retain the three-part structure of the proposed regulations, requiring an initial filing when the PPP begins operations, supplemental filings when previously reported information changes or the PPP operates a new plan, and a final supplemental filing when the PPP terminates and ceases operating all PEPs. (Filings with the DOL also satisfy the filing requirement under the Code.) But various changes have been made to clarify the registration requirements and reduce their compliance burden. Noteworthy changes include—

• Deadline for Initial Registration. As under the proposed regulations, a PPP’s initial registration generally must be filed at least 30 days before “beginning operations.” But the final regulations drop the requirement that registration must occur no earlier than 90 days before beginning operations. And filings submitted prior to February 1, 2021, need not be submitted 30 days in advance (i.e., registrations before that date may be filed at any time before beginning operations). Instead of using public marketing or public offering of a PEP to define when operations have begun, the final regulations use the initiation of operations of the PPP’s first PEP, which is deemed to occur when the first employer executes or adopts an agreement specifying that the plan is a PEP, or, if earlier, when the PEP’s trustee first holds any asset in trust. Thus, preliminary business activities, including marketing, do not trigger the need to file.
• Content of Initial Registration. Instead of requiring that PPPs identify a “primary compliance officer,” the final regulations require identification of the PPP’s “responsible compliance official”—a change meant to indicate that PPPs do not have to create a new position, but simply specify who should receive status and compliance-oriented questions under the authorizing provisions of the Code and ERISA. Initial registrations will not have to include an explanation of each affiliate’s role in providing services. Disclosures regarding criminal convictions and civil proceedings involving PPP employees also apply to employees of the PEP, but only if they handle plan assets or are responsible for plan operations or investments. And the required information regarding ongoing civil or administrative proceedings has been clarified to exclude certain routine oversight activities and limit the reportable events to matters involving claims of fraud or dishonesty with respect to any employee benefit plan, or the mismanagement of plan assets.
• Supplemental Registration. The final regulations extend the deadline for most supplemental filings to the later of 30 days after the calendar quarter in which the reportable event occurred or 45 days after the event, but reports on the creation of a new PEP are still required before the PEP begins operation. Supplemental reports will not have to include EINs for new PEPs; new PEPs will instead be identified by their names and the plan numbers used for annual reporting purposes. The required information regarding significant corporate or business structure changes of affiliates of the PPP has been simplified to apply only to affiliates expected to provide services to the PEP. Changes to the supplemental reporting of criminal and civil matters resemble those made to initial registrations.
• Content of Final Filing. The final regulations direct PPPs to the instructions for Form PR for the content and procedural requirements for final supplemental filings. The preamble indicates that the deadline for final filings will be the later of 30 days after the calendar quarter in which the final Form 5500 is filed for the last PEP operated by the PPP, or 45 days after that filing.

EBIA Comment: Recordkeepers, investment adviser firms, and others planning to enter this market can now get to work on assembling the information necessary to make their initial filings. According to the DOL, the new electronic filing system will become available on November 25, 2020; it will be part of the EFAST2 system used for filing Form 5500. Before then, an information copy of Form PR will be made available to help filers prepare. For more information, see EBIA’s 401(k) Plans manual at Section II.F.2 (“Multiple Employer Plans (MEPs)”).

Contributing Editors: EBIA Staff.