By Pension and Benefits Editorial Staff
The Employee Benefits Security Administration (EBSA) has issued proposed regulations that would specify the registration requirements applicable to pooled plan providers of the pooled employer plans authorized by the SECURE Act. The proposed rules would establish a new Form PR (Pooled Plan Provider Registration) as the means for complying with the registration requirements and additional supplemental and final filings. By filing Form PR with the Department of Labor, a pooled plan provider would also satisfy the requirement to register with the Treasury Department.
Pooled plan providers. The SECURE Act, effective for plan years beginning after December 31, 2020, authorizes a new type of ERISA-covered defined contribution plan, an open MEP, called a “pooled employer plan.” A pooled employer plan will allow for participation by multiple unrelated employers without the need for any commonality of interests among the participating employers or other genuine organizational relationship unrelated to participation in the plan.
Most of the administrative and fiduciary responsibilities of sponsoring the plan would be transferred to a pooled plan provider. The pooled plan provider would be designated by the terms of the plan as a named fiduciary, as the plan administrator, and as the person responsible for performing all administrative duties (including conducting proper testing with respect to the plan and the employees of each employer in the plan). In addition, the pooled provider would need to register with the Department of Labor and the Treasury Department, acknowledging its status as a named fiduciary, in writing.
Registration requirements. The proposed rules would stipulate an initial registration filing and required supplemental filings for reporting changes in the information provided in the initial filing, information about each specific pooled employer plan before initiation of operations, and information on specified “reportable events.” In addition, the proposed rules would require a final filing once the last pooled employer plan has been terminated and ceased operations. All filings would be made electronically on new Form PR.
Initial registration. A pooled plan provider would be required to make an initial filing of Form PR no more than 90 days and no later than 30 days before beginning operations as a pooled plan provider. A provider would begin operations by publicly marketing pooled plan provider services or publicly offering a pooled employer plan.
Note: EBSA cautions that it does not intend to require registration as a result of preliminary business activities, such as establishing the business organization, creating a business plan, obtaining necessary licenses or entering into contracts with subcontractors or partners, obtaining a federal employer identification number, or actions and communications designed to evaluate market demand in advance of publicly marketing pooled plan provider services or publicly offering one or more pooled employer plans.
Information to be disclosed. In addition to identifying information (e.g., entity’s business mailing address and phone number and employer identification number) a pooled plan provider would need to disclose:
- The approximate date when pooled plan operations are expected to commence.
- A description of the administrative, investment, and fiduciary services that will be offered or provided in connection with the pooled employer plans, including a description of the role of any affiliates in such services, including members of the provider’s controlled group.
- A statement disclosing any federal or state criminal conviction related to the provision of services to, operation of, or investments of, any employee benefit plan, against the pooled plan provider, or any officer, director, or employee of the pooled plan provider if the conviction, or related term of imprisonment served, provider is within ten years of the date of registration.
Supplemental filings of reportable events. The proposed rules also identify reportable events which would require a supplemental filing of Form PR within 30 days of the occurrence of the event. Specifically, a supplemental filing would need to be made within 30 days of:
- any change in the information reported in the initial registration or an initial supplemental report;
- any significant change in corporate or business structure of the pooled plan provider (e.g., merger or acquisition);
- initiation of bankruptcy, receivership, or other insolvency proceeding for the pooled plan provider or an affiliate, or ceasing all operations as a pooled plan provider;
- receipt of written notice of the initiation of any administrative or enforcement action related to the provision of services to, operation of, or investments of any pooled employer plan or other employee benefit plan, in any court or administrative tribunal by any federal or state governmental agency or other regulatory authority against the pooled plan provider or any officers, director, or employee of the pooled plan provider;
- receipt of written notice of a finding of fraud or dishonesty by a federal or state court or federal or state governmental agency related to the provision of services to, operation of, or investments of any pooled employer plan or other employee benefit plan against the pooled plan provider or any officer, director, or employee of the pooled plan provider; and
- receipt of written notice of the filing of any federal or state criminal charges related to the provision of services to, operation of, or investments of any pooled employer plan or other employee benefit plan against the pooled plan provider or any officer, director, or employee of the pooled plan provider.
Only one registration requirement required. A pooled plan provider would need to make only one registration filing, regardless of the number of pooled employer plans it operates. However, supplemental filings would need to be made to reflect new pooled plans.
Final filing for terminated plans. In the event a pooled plan provider has terminated and ceased operating all pooled employer plans, the pooled plan provider must file a final supplemental filing on Form PR. A pooled employer plan would be treated as terminated and to have ceased operating when a resolution has been adopted terminating the plan, all assets under the plan (including insurance/annuity contracts) have been distributed to the participants and beneficiaries or legally transferred to the control of another plan, and a final Form 5500 has been filed for the plan.
Note: The final Form PR would need to be filed within 30 days of the filing of the last final Form 5500 for the last pooled employer plan that the provider operates.
Request for comments. EBSA requests comments from interested persons on all facets of the proposed rules. Among the questions on which comment has been requested are:
- Is the definition of “beginning operations as a pooled plan provider,” which determines whether initial registration is required, appropriate in scope? Should the definition exclude marketing and solicitation efforts so that the initial registration is tied solely to beginning operation of a pooled employer plan? Should the deadlines for filing an initial registration be nearer to the date of actual public marketing activities if the pooled plan provider intends only to engage in marketing and solicitation efforts, and will not enroll any employer or employee in a pooled employer plan until at least 30 days after the initial registrations.
- Should the disclosure of “ongoing criminal, civil, or administrative proceedings related to the provisions of services to, operation of, or investments of any employee benefit plan by the pooled plan provider” be expanded? For example, would disclosing settlements of fiduciary liability claims against pooled plan providers with the Department or PBGC, including settlements under ERISA Sec. 206(d)(4)(A)(iii), assist employers performing due diligence in selecting and monitoring pooled employer plans?
Comments should be submitted within 30 days of the publication date of the proposed regulations in the Federal Register (September 1, 2020).
Source: 85 FR 54288.
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