The Labor Department announced Thursday a final rule establishing registration requirements for pooled plan providers under the Setting Every Community Up for Retirement Enhancement (Secure) Act of 2019.
The Secure Act amended the Employee Retirement Income Security Act and the Internal Revenue Code to establish a new type of multiple employer plan (MEP) called a pooled employer plan, or PEP.
Pooled employer plans must be administered by a pooled plan provider, which can be an investment advisor or a broker-dealer.
The final rule establishes a “straightforward electronic registration process” for businesses that want to offer pooled employer plans, Labor said.
With the exception of Nov. 25, 2020, to Jan. 31, 2021, the process requires pooled plan providers to register at least 30 days before beginning operations.
“Plans must also submit supplemental filings regarding specific reportable events and a final filing after the provider’s last pooled employer plan has been terminated and ceased operations,” Labor states, “or the period of Nov. 25, 2020 to Jan. 31, 2021, the requirement to register at least 30 days prior to operating a pooled employer plan is waived, provided registration occurs no later than the start of the plan.”
Fred Reish, partner at Faegre Drinker in Los Angeles who specializes in ERISA, told ThinkAdvisor in a Thursday email that the rules are needed “so that pooled plan providers, so-called PPPs, can register their PEPs, pooled employer plans, in time to start up on the Jan. 1 effective date.”
These PEPs, Reish added, “will allow unrelated employers to join a single plan and transfer much of their fiduciary responsibility, and potential liability, to the PPP. Also, it should reduce costs, especially investment costs, and reduce administrative burdens on employers.”