DOL Proposes Pooled Plan Provider Registration Rules and Form

The DOL has announced proposed regulations that would implement registration requirements for pooled plan providers under the Code and ERISA. Both statutes were amended by the Setting Every Community Up for Retirement Enhancement (SECURE) Act (see our Checkpoint article), to allow pooled plan providers to offer and operate a new type of multiple employer plan (MEP) known as a “pooled employer plan” (PEP) effective January 1, 2021. 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—i.e., a type of “open MEP.” Pooled plan providers offering PEPs must be designated as named fiduciaries who are responsible for all administrative duties (including nondiscrimination testing) that are reasonably necessary to ensure that their PEPs meet the applicable requirements of the Code and ERISA. Pooled plan providers must register before they begin operations. Registration with the DOL would also satisfy the registration obligation under the Code. Here are highlights:

• Multiple Filings. The proposed regulations would require three types of filings. An initial registration would supply basic information about the provider, its structure, affiliates, activities, and regulatory proceedings. Supplemental filings would be needed to report information about a provider’s PEPs (to the extent that information was not included in the initial filing), and to disclose reportable events such as changes to information in previous filings and significant financial and operational events. A final filing would be required when the provider’s last PEP terminates and the provider ceases operations.
• Filing Deadlines. The initial filing will be required at least 30 and no more than 90 days before a pooled plan provider begins operations, which would be deemed to occur when the provider begins to publicly market its services as a pooled plan provider or publicly offer a PEP. Thus, registration would not be required for beginning preliminary business activities such as establishing a business organization, obtaining licenses, entering into contracts with partners and subcontractors, and taking actions to evaluate market demand. Supplemental filings would be required before a new PEP begins operations, and within 30 days of any reportable event.
• Content of Initial Form. A provider’s initial filing would include basic identifying and contact information, an approximate date when the provider’s first PEP will begin operations, a description of the services or investment products the provider will offer, and information about criminal convictions and other legal proceedings. Providers would also have to identify a primary compliance officer and an agent for service of legal process.
• Final Filing. A provider’s final filing would be due after termination of its last PEP and within 30 days of the final Form 5500 for that PEP.
• Form PR. An appendix to the proposed regulations provides a draft of proposed new Form PR (Registration for Pooled Plan Provider), which would be used for all the new filings (initial, supplemental, and final). All Form PR filings would be made electronically through the electronic filing system currently used to file Form 5500 (EFAST2). Filings would be signed by the pooled plan provider under penalties of perjury. Multiple simultaneous changes could be disclosed on the same Form PR supplemental filing.
• Comment Request. In its preamble, the DOL asks for comments on various questions relating to new Form PR and its use, such as whether additional information or reportable events should be included, whether there may be better ways to coordinate with other (preexisting) disclosure requirements, whether the list of legal proceedings requiring disclosure should be expanded, and whether transition provisions are needed.

EBIA Comment: The SECURE Act requires pooled provider registrations but does not prescribe their content, so the DOL has had to develop them with an eye to the statutory requirements and the primary purposes of registration. The DOL sees those purposes as twofold: to provide the DOL with sufficient information, coupled with annual reports on Form 5500, to engage in “timely oversight,” and to allow the DOL to help employers and others gather information they will need about a pooled plan provider before signing up for a PEP. Whether the registration and ongoing reporting requirements are adequate or onerous may be a matter of perspective. Pooled plan providers, employers, and other stakeholders will have until 30 days after the proposed regulations are published in the Federal Register to offer comments and suggest changes. For more information, see EBIA’s 401(k) Plans manual at Section II.F.2 (“Multiple Employer Plan”).

Contributing Editors: EBIA Staff.