Like many of our clients, we have been anxiously awaiting guidance from regulators on pooled employer plans, which may enter the retirement plan marketplace as soon as January 1, 2021. The most anticipated guidance is likely that addressing the SECURE Act’s requirement that pooled plan providers register with the US Department of Labor and Internal Revenue Service before beginning operations as pooled plan providers. The DOL recently issued proposed regulations addressing this issue.
The SECURE Act’s pooled employer plan (PEP) provisions require that each pooled plan provider (PPP) register with the US Department of Labor (DOL) and Internal Revenue Service (IRS) before beginning operations as a PPP.[1] On September 1, 2020, the DOL published proposed regulations in the Federal Register interpreting this language and describing the PPP registration process.
The proposed regulations introduce a new Form PR, which would be submitted by the PPP to (1) register initially, (2) register certain reportable events, (3) amend previously submitted Forms PR, and (4) submit a final registration after the PPP has ceased providing services to the PEP. Forms PR must be submitted electronically. The regulations clarify that complying with the proposed regulations and timely submitting Forms PR as required will constitute sufficient registration with both the DOL and IRS.
Comments on the proposed regulations are due on or before October 1, 2020.
The proposed regulations state that a PPP must provide certain information as part of its initial registration, which must occur 30–90 days before the PPP begins operations as a PPP. For this purpose, “beginning operations as a PPP” is defined to mean publicly marketing PPP services or publicly offering a PEP.
The preamble to the proposed regulations notes that “beginning operations as a PPP” is not intended to include preliminary business activities, such as establishing the business organization, creating a business plan, or actions and communications designed to evaluate market demand in advance of publicly marketing PPP services.
Thus, for aspiring PPPs actively developing their PEP product(s), it is important to distinguish between (1) communications designed to evaluate market demand in advance of publicly marketing PPP services and (2) communications that constitute publicly marketing PPP services. In practice, it may be difficult to distinguish between these two types of communications, so aspiring PPPs may wish to submit comments highlighting this difficulty for the DOL.
The initial registration must include the following information:
The proposed regulations further provide that a PPP must file supplemental information within 30 days of the occurrence of certain reportable events, including the following:
The proposed regulations indicate that the DOL will allow PPPs to file corrected or amended versions of their initial registration and supplemental filings for reportable events and that the process for correcting or amending Forms PR will be similar to the process of correcting or amending Forms 5500.
If a PPP has ceased operating any and all PEPs, it must submit a supplemental reportable event filing indicating that the PPP’s final PEP has ceased operating. It must further submit a final filing, which is due within 30 days of the PPP filing the final Form 5500 for its last PEP.
The proposal solicits comments about the registration process generally, and specifically regarding whether
Comments on the proposed regulations are due on or before October 1, 2020.
If you are considering submitting comments in response to these proposed regulations or have questions about PEPs or registering as a PPP, please feel free to contact the authors of this LawFlash, any of the lawyers below, or your usual Morgan Lewis contact.
Boston
Lisa Barton
Chicago
Marla Kreindler
Dan Salemi
Julie Stapel
New York
Craig Bitman
Philadelphia
Bob Abramowitz
Amy Kelly
Mark Simons
Pittsburgh
John Ferreira
Matt Hawes
Elizabeth Goldberg
Randall C. McGeorge
R. Randall Tracht
Washington, DC
Rosina Barker
Althea Day
Michael Gorman
Lindsay Jackson
Daniel Kleinman
Greg Needles
Michael Richman
Jonathan Zimmerman
[1] For a refresher on PEPs and the role that PPPs play with respect to PEPs, read our December 2019 LawFlash. For a discussion of the DOL’s recent request for information addressing prohibited transaction and conflict of interest issues confronting PEPs, read our June 2020 ML BeneBits blog post.