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DOL Proposes Rules on Pooled Plan Provider Registration Process

September 04, 2020

Like many of our clients, we have been anxiously awaiting guidance from regulators on pooled employer plans, which may enter the retirement plan marketplace as soon as January 1, 2021. The most anticipated guidance is likely that addressing the SECURE Act’s requirement that pooled plan providers register with the US Department of Labor and Internal Revenue Service before beginning operations as pooled plan providers. The DOL recently issued proposed regulations addressing this issue.

The SECURE Act’s pooled employer plan (PEP) provisions require that each pooled plan provider (PPP) register with the US Department of Labor (DOL) and Internal Revenue Service (IRS) before beginning operations as a PPP.[1] On September 1, 2020, the DOL published proposed regulations in the Federal Register interpreting this language and describing the PPP registration process.

The proposed regulations introduce a new Form PR, which would be submitted by the PPP to (1) register initially, (2) register certain reportable events, (3) amend previously submitted Forms PR, and (4) submit a final registration after the PPP has ceased providing services to the PEP. Forms PR must be submitted electronically. The regulations clarify that complying with the proposed regulations and timely submitting Forms PR as required will constitute sufficient registration with both the DOL and IRS.

Comments on the proposed regulations are due on or before October 1, 2020.

Initial Registration

The proposed regulations state that a PPP must provide certain information as part of its initial registration, which must occur 30–90 days before the PPP begins operations as a PPP. For this purpose, “beginning operations as a PPP” is defined to mean publicly marketing PPP services or publicly offering a PEP.

The preamble to the proposed regulations notes that “beginning operations as a PPP” is not intended to include preliminary business activities, such as establishing the business organization, creating a business plan, or actions and communications designed to evaluate market demand in advance of publicly marketing PPP services.

Thus, for aspiring PPPs actively developing their PEP product(s), it is important to distinguish between (1) communications designed to evaluate market demand in advance of publicly marketing PPP services and (2) communications that constitute publicly marketing PPP services. In practice, it may be difficult to distinguish between these two types of communications, so aspiring PPPs may wish to submit comments highlighting this difficulty for the DOL.

The initial registration must include the following information:

  • PPP’s legal business name, any trade name (d/b/a), and its EIN
  • PPP’s business telephone number, business mailing address, and the web address of any website where the PPP or its affiliate markets the PPP to the public or provides the public information on the PPP’s PEP
  • Name, mailing address, telephone number, and email address for the PPP’s primary compliance officer, as well as the name of the PPP’s agent for service of process, such agent’s address, and a statement that service of legal process may be made upon the PPP
  • Approximate date when PEP operations are expected to commence, and a description of the administrative and investment services that will be provided by the PPP (including certain information regarding the PPP’s affiliates that service the PEP)
  • Statements disclosing (1) certain federal or state criminal convictions against the PPP, or any officer, director, or employee of the PPP, if the conviction or related term of imprisonment served is within 10 years of the date of registration, and (2) certain ongoing criminal, civil, or administrative proceedings in any court or administrative tribunal by a regulatory authority against the PPP or any officer, director, or employee of the PPP

Supplemental Filings for Reportable Events

The proposed regulations further provide that a PPP must file supplemental information within 30 days of the occurrence of certain reportable events, including the following:

  • Change(s) in the information previously reported by the PPP on a Form PR
  • A significant change in the PPP’s business structure
  • Initiation of bankruptcy or similar proceedings for the PPP or its affiliate
  • Receipt of written notice of the initiation of an administrative or enforcement action against the PPP or an officer, director, or employee of the PPP and related to the provision of services to, operation of, or investments of the PEP or another employee benefit plan
  • Receipt of written notice of a finding of fraud or dishonesty by a court or agency against the PPP or an officer, director, or employee of the PPP and related to the provision of services to, operation of, or investments of the PEP or another employee benefit plan
  • Receipt of written notice of the filing of criminal charges against the PPP or an officer, director, or employee of the PPP and related to the provision of services to, operation of, or investments of the PEP or another employee benefit plan

Amended or Corrected Filings

The proposed regulations indicate that the DOL will allow PPPs to file corrected or amended versions of their initial registration and supplemental filings for reportable events and that the process for correcting or amending Forms PR will be similar to the process of correcting or amending Forms 5500.

Final Filing

If a PPP has ceased operating any and all PEPs, it must submit a supplemental reportable event filing indicating that the PPP’s final PEP has ceased operating. It must further submit a final filing, which is due within 30 days of the PPP filing the final Form 5500 for its last PEP.

Comments Requested

The proposal solicits comments about the registration process generally, and specifically regarding whether

  • the DOL’s definition of “beginning operations as a PPP” to mean publicly marketing PPP services or publicly offering a PEP is appropriate in scope, and whether “beginning operations as a PPP” should be construed to mean solely the PPP’s public offering of a PEP;
  • there are any additional classes of information or types of reportable events that should be included in the registration requirement;
  • there is a more efficient way to collect reportable event information;
  • the burden of the registration requirement could be reduced by aligning it with other disclosures required of the PPP;
  • there are alternative filings on which the DOL could rely in lieu of Form PR;
  • there are particular forms or numbers that could efficiently be included in the registration that would help employers find more information about the PPP; and
  • the DOL should expand the situations in which a PPP must submit a supplemental report (e.g., to include settlements of fiduciary liability claims with the DOL or Pension Benefit Guaranty Corporation).

Comments on the proposed regulations are due on or before October 1, 2020.

CONTACTS

If you are considering submitting comments in response to these proposed regulations or have questions about PEPs or registering as a PPP, please feel free to contact the authors of this LawFlash, any of the lawyers below, or your usual Morgan Lewis contact.

Boston
Lisa Barton 

Chicago
Marla Kreindler
Dan Salemi
Julie Stapel

Los Angeles
Michelle McCarthy

New York
Craig Bitman

Philadelphia
Bob Abramowitz
Amy Kelly
Mark Simons

Pittsburgh
John Ferreira
Matt Hawes
Elizabeth Goldberg
Randall C. McGeorge
R. Randall Tracht

Washington, DC
Rosina Barker
Althea Day
Michael Gorman
Lindsay Jackson
Daniel Kleinman
Greg Needles
Michael Richman
Jonathan Zimmerman



[1] For a refresher on PEPs and the role that PPPs play with respect to PEPs, read our December 2019 LawFlash. For a discussion of the DOL’s recent request for information addressing prohibited transaction and conflict of interest issues confronting PEPs, read our June 2020 ML BeneBits blog post.