DOL Proposes Registration Requirements for Pooled Plan Providers

The Department of Labor (DOL) on Aug. 20 issued proposed regulations that would establish requirements for pooled plan providers (PPPs) to register with the DOL.

The DOL says that it recognizes that there may be challenges associated with these new types of multiple employer plans (MEPs) that it, the Treasury Department or IRS may need to address. The SECURE Act expressly provides that participating employers will retain certain residual fiduciary responsibilities, including the selection and oversight of the PPP and the plan’s other named fiduciaries. This, the DOL says, raises concerns that the potential for inadequate employer oversight of the activities of a pooled employer plan (PEP) and its plan fiduciaries and other service providers may be greater than for other plans sponsored by an employer, because the nature of the plan involves participating employers passing along more responsibility to the PPP than they do in other plan arrangements.

 

The statutory purpose of the registration requirement, to the DOL, is to provide it with sufficient information regarding persons acting as PPPs to engage in effective monitoring and oversight of this new type of ERISA retirement plan. Although the DOL does not have specific details regarding how PEPs authorized under the SECURE Act will be structured or operated, the DOL says that it has assumed that they may be similar to other currently operating MEPs. 

 

The proposed rule would establish the requirements for registering with the DOL as a PPP for PEPs under Sections 3(43) and 3(44) of ERISA. The SECURE Act provides that newly permitted PPPs can begin offering PEPs on Jan. 1, 2021, but requires such persons to register with the Secretary of Labor before beginning operations.

 

The proposed rule also would establish a new form—EBSA Form PR (Pooled Plan Provider Registration)—as the required filing format for PPP registrations. Filing the proposed Form PR with the DOL would also satisfy the SECURE Act requirement to register with the Treasury Department.

 

This, the DOL suggests, would better ensure that information is available—and available earlier—than it would be if relying only on Forms 5500 for information. While PPPs will be required to file Forms 5500 for the PEPs they operate, the DOL notes, Forms 5500 generally are not filed until seven to nine-and-a-half months after the end of the plan year. In the absence of appropriate detail in the registration statement, a PPP could begin operating multiple plans with hundreds or thousands of participants and millions of dollars without the agencies having any information about the PEPs for nearly two years.

 

 

The proposal would require an initial registration filing and supplemental filings to report:

 

The DOL’s view of the initial registration requirement is that it will provide it, the Treasury Department, the IRS, prospective employer customers and the public with notice and relevant information about the PPP. Accordingly, it says, the initiation of public marketing services as a PPP or publicly offering one or more PEPs are “important registration triggers.” However, the DOL says that it does not intend to require registration due to preliminary business activities such as:

 

The DOL is proposing that a prospective PPP would need to file the following information 30 to 90 days before beginning operations as a pooled plan provider:

 

 

The proposal also requires additional filings for:

 

The DOL wants these supplemental filings in order to gather information it considers important for its purposes, as well as those of the Treasury Department and the IRS.

Without that information, the DOL says, the agencies typically would not learn of risks to a PEP until the plan files a Form 5500. And, the DOL indicates, that could spell trouble for participants, since it means they may not learn of risks to a PEP until many months after the event and after opportunities for protecting plan participants from financial injury have passed.

 

The DOL adds that reporting changes in the previously filed registration information also will help it to ensure that the information regarding PPPs posted on its website and available to the public is up to date. More specifically, it says that PPPs would need to disclose the following changes in a supplemental filing within 30 days after the change took place:

 

1. Any change in the registration information previously reported by the PPP.

 

2. Any one of the following changes in circumstances of the PPP:

 

 

The DOL says that it intends that the filing system for registrations to allow PPPs the ability to file corrections and amendments of their registration and reportable event filings. Under the proposed rules, inadvertent or good faith errors and omissions in a filing’s content generally would not be treated as a failure to register, as long as a corrected or amended filing is submitted within a reasonable period after the error or omission is discovered. And if a correction only concerns information previously reported, a person would indicate on the form that the filing is an amended filing, not a supplemental filing.

 

 

The proposal would require a final filing once the last PEP has been terminated and ceased operations. The DOL believes that the initial registration, supplemental filing and final filing requirements, when combined with the Form 5500 annual reporting requirements, will give it the timely access to PPP information it needs in order to fulfill the monitoring and oversight tasks the SECURE Act placed on the agencies. The DOL also believes that it would be less burdensome and less costly for PPPs and PEPs than some alternatives that were considered.

 

Under the proposed rules, if a PPP has ceased operating all PEPs and has filed a supplemental reportable event filing to indicate that the last PEP for which it served as the PPP has been terminated and ceased operating, the provider would be required to file a final registration filing. 

 

For this purpose, a plan would be treated as terminated and having ceased operations when:

 

The final filing is intended to:

 

The final Form PR filing would be due within 30 days of the filing of the last final Form 5500 for the last PEP the provider operates. A single combined filing could be used to:

 

 

The proposed rules include a provision that requires electronic filing of all PPP registrations. The DOL argues that this would be easier and more cost-effective for persons interested in being PPPs and that it would help PPPs by ensuring that all required information would be included in the registration before the electronic filing could be completed through the website. In addition, they say, electronic filing should facilitate disclosure of information to participating employers, covered participants and beneficiaries, as well as the public. 

 

The DOL is proposing a new EBSA form—Form PR. This form and its instructions would be the required filing format for PPP registrations and would facilitate the regulatory registration requirements the  proposed regulations stipulate.

 

 

The DOL will accept comments on the proposed regulations for 30 days after they are published in the Federal Register. They can be submitted electronically through the federal eRulemaking portal: http://www.regulations.gov. Comments also can be submitted in written form by mail; they are to be sent to: Office of Regulations and Interpretations, Employee Benefits Security Administration, Room N–5655, U.S. Department of Labor, 200 Constitution Ave. NW, Washington, DC 20210, Attention: Proposed Registration Requirements for Pooled Plan Providers RIN 1210–AB94. 

 

All submissions must include the agency name and Regulatory Identifier Number (RIN) for this rulemaking: RIN 1210–AB94.

 

The says it DOL will share any comments submitted with the IRS.