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Proposed PEP Regs Land at OMB

Government Affairs
About a month after the Department of Labor published a Request for Information (RFI) on prohibited transactions involving Pooled Employer Plans (PEPs), the DOL has now delivered a proposed rule on PEPs to the White House Office of Management and Budget for review. 
 
The OMB’s Office of Information and Regulatory Affairs website shows that the proposed regulation (RIN: 1210-AB94) was received July 15. The proposal will now undergo a review at OMB before being released for a public comment period. 
 
There are no other details about what’s contained in the proposed regulation, but at the rate the DOL has been issuing guidance over the past few weeks, release of the proposal could come soon. The OMB generally has up to 90 days to vet the request and either approve it for release or send it back for modifications, but there is no minimum period for review. 
 
The Setting Every Community Up for Retirement Enhancement (SECURE) Act, enacted in December 2019, eased the previous rules that had restricted Multiple Employer Plans (MEPs) to employers that have a common interest or relationship. As such, the legislation authorized the establishment of PEPs, which are plans sponsored by Pooled Plan Providers (PPPs) that may be joined by multiple, unrelated adopting employers. 
 
The legislation requires, among other things, that the PPP be a named fiduciary of the PEP, must be responsible as the plan administrator and must register with the DOL/IRS. The SECURE Act also provides that each adopting employer retains fiduciary responsibility for the selection and monitoring of the PPP or any other person designated as a named fiduciary of the PEP. 
 
Since this provision is effective for plan years beginning after Dec. 31, 2020, there is added urgency of getting guidance out on the operation of these plans. In addition to the regulations, that guidance could also include prohibited transaction exemptions (PTE). 
 
On June 17, the DOL announced its RFI on prohibited transactions involving PEPs under the SECURE Act to evaluate whether the department should propose a new prohibited transaction class exemption. The RFI requests 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. Comments on the RFI should be submitted by July 20, 2020. 

In anticipation of the many questions and considerations, the American Retirement Association in early June provided the Department of Labor with some comments on dealing with potential issues regarding PEPs and PPPs. The ARA also plans to submit additional comments.