Pension & Benefits News DOL releases RFI on PT issues involving pooled employer plans under SECURE Act and other multiple employer plans
Thursday, July 16, 2020

DOL releases RFI on PT issues involving pooled employer plans under SECURE Act and other multiple employer plans

By Pension and Benefits Editorial Staff

The U.S. Department of Labor (DOL) has issued a Request for Information (RFI) on prohibited transactions involving pooled employer plans (PEPs) under the Setting Every Community Up for Retirement Enhancement (SECURE) Act and other multiple employer plans. The DOL is considering whether to propose a class exemption on its own motion to cover prohibited transactions (PTs) involving PEPs and MEPs. The RFI is an opportunity for the public to provide data and information that may be used to evaluate whether the Department’s Employee Benefits Security Administration (EBSA) should propose a new prohibited transaction class exemption.

PEPs. The SECURE Act amended ERISA to allow for pooled employer plans (PEPs). A PEP is an individual account plan established or maintained for the purpose of providing benefits to the employees of two or more employers, that is treated as a single employee pension benefit plan or single pension plan for purposes of ERISA. PEPs are required to designate a pooled plan provider who is designated as a named fiduciary, plan administrator, and the person responsible for specified administrative duties. As a fiduciary, the pooled plan provider is subject to standards and restrictions in ERISA and the Code, including the prohibited transaction provisions restricting fiduciaries of plans from engaging in conflict of interest transactions.

Note, however, that each employer in the plan retains fiduciary responsibility for: (1) the selection and monitoring of the pooled plan provider and any other named fiduciaries of the plan, and (2) to the extent not otherwise delegated to another fiduciary by the pooled plan provider and subject to the provisions of ERISA Sec. 404(c), the investment and management of the portion of the plan’s assets attributable to their own employees and the employees’ beneficiaries.

Requested information. The RFI seeks information on the possible parties, business models, and conflicts of interest that respondents anticipate will be involved in the formation and ongoing operation of PEPs. As a result of the SECURE Act amendments to ERISA and the Code, a variety of service providers may decide to become pooled plan providers, such as banks, insurance companies, broker-dealers, and similar financial services firms (including pension recordkeepers and third-party administrators). The RFI seeks information regarding the possible parties, business models, conflicts of interest, plan investments, number and type of employers likely to join a PEP or MEP, and prohibited transactions that might exist in connection with PEPs, for the purpose of assessing the need for new prohibited transaction exemptions or amendments to existing exemptions. The DOL is also requesting information on similar issues involving multiple employer plans (MEPs) sponsored by employer groups or associations or professional employer organizations.

The RFI contains a number of questions. Respondents do not need to answer every question, but should identify, by number, each question addressed. Respondents also are encouraged to address any other matters they believe are relevant to the general topic of the RFI.

Comments should be submitted to the Department on or before July 20, 2020. Written comments may be submitted to the Office of Exemption Determinations by any of the following methods, identified by Z-RIN 1210- ZA28: Federal eRulemaking Portal: at Docket ID number: EBSA-2020-0001 (follow the instructions for submitting comments), or email to [email protected]. The DOL encourages commenters to submit all comments electronically and not to follow with paper copies. All comments and hearing requests will be made available to the public. The DOL instructs commenters to not include any personally identifiable information (such as Social Security number, name, address, or other contact information) or confidential business information that they do not want publicly disclosed.

Source: 85 FR 36880.

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