United States: Diving Into The Pooled Plan Provider Deep End? It's Time To Register!

Pooled plan providers hoping to start operating pooled employer plans in 2021 will finally have the ability to register to do so, under regulations finalized by the Department of Labor ("DOL") on November 16, 2020.

As described in detail in our prior alert, the SECURE Act created a new type of retirement vehicle called a “Pooled Employer Plan,” or PEP, in which multiple unrelated employers may participate and which may be sponsored by entities including financial services companies, such as banks, insurance companies and third-party administrators. The sponsors, referred to as “Pooled Plan Providers” or PPPs, are responsible for most fiduciary and administrative duties related to the PEPs they sponsor. The SECURE Act permits a PPP to begin sponsoring PEPs as soon as January 1, 2021, provided the PPP meets the SECURE Act's requirements, including registration with the DOL and IRS before commencing operations. The DOL issued proposed regulations on August 20, and in its November 16 final regulations, softened some of the requirements it had originally proposed.

Initial Registration. A PPP's initial registration, to be made on a new "Form PR," generally must be made 30 days prior to a PPP's "beginning operations as a" PPP. The DOL had initially stated in its proposed regulations that a PPP would be considered to have begun its operations if it publicly marketed its services as a PPP. However, the DOL removed references to marketing based on public comments noting the ambiguity and potential chilling effect of such a requirement. Under the final regulations, a PPP will generally be treated as having begun operations as a PPP on the earlier of when its first participating employer executes or adopts a participation or similar agreement for the PEP or the date the trustee for the PEP holds any asset in trust.

The DOL also provided a special transition rule to address concerns that PPPs may be forced to delay initiating operations because of the DOL's delay in publishing the final PPP registration rule. Under this transition rule, a PPP may file its initial Form PR registration any time before February 1, 2021 (waiving the 30 day advance requirement), so long as it is filed before the PPP begins operating as a PPP.

The Form PR requirements are fairly straightforward, and will also satisfy the SECURE Act's requirement that a PPP register with the Treasury Department and the Internal Revenue Service. Contents include the PPP's name, EIN, contact information, websites used for marketing, compliance officer contact information, agent for service of legal process, date PEP operations are expected to commence, a description of the administrative, investment services that will be offered or provided in connection with the PEP (including a description of the role of affiliates), disclosures relating to criminal proceedings and convictions, and a statement disclosing certain ongoing civil and administrative proceedings.

Supplemental Filings. The final rules also set forth requirements for two types of supplemental filings. First, a PPP is generally required to file a supplemental filing with respect to each PEP that it operates that includes certain information on the PEP, such as the PEP's name and plan number, unless that information was included in its initial Form PR filing. This supplemental filing is due no later than the time at which the PPP begins operating the applicable PEP. The second type of supplemental filing is to report to the DOL changes in previously reported registration information and certain other "reportable events." This type of supplemental filing is due on the later of (a) 30 days after the end of the calendar quarter in which the change or reportable event occurred, or (b) 45 days after the change or reportable event occurred.

Final Filing. A PPP must file a final Form PR when it has terminated and ceased all operations.

In its press release accompanying the final regulations, the DOL states that the Form PR will be available at https://www.efast.dol.gov/ beginning November 25, 2020.

Originally Published by Mayer Brown, November 2020

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