On November 12th, 2020, the U.S. Department of Labor (DOL) announced a final rule establishing registration requirements for pooled benefit plan providers. The rule implements registration requirements pursuant to the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).
Background of the SECURE Act
The SECURE Act amended both the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. It established a new type of multiple employer plan (MEP) called a “pooled employer plan.” Pooled employer plans are only administered by a “pooled plan provider.”
According to the Employee Benefits Security Administration (EBSA), pooled employer plans offer employers greater flexibility in their benefit offerings. Specifically, small unrelated employers now can offer workplace retirement savings option with reduced burdens and costs to the business.
The SECURE Act allows pooled plan providers to start operating pooled employer plans beginning on January 1st, 2021. Pooled plan providers, however, must register with the Secretaries of Labor and Treasury before they begin operations as a provider.
Explanation of the Final Rule
The final rule establishes a straightforward electronic registration process for businesses that want to offer pooled employer plans. The process requires pooled plan providers to register at least 30 days before beginning operations. The registration, however, carries an exception period of November 25th, 2020, to January 31st, 2021 (see below). Plans must also submit the following:
- supplemental filings regarding specific reportable events; and
- a final filing after the termination of the provider’s last pooled employer plan and it ceased operations.
For the period of November 25th, 2020, to January 31st, 2021, the EBSA will waive the 30-day requirement to register. The waiver is only granted, however, provided registration occurs no later than the start of the plan.
There are rules that employers considered as “pooled plan providers” must comply with. Failure to comply could lead to fines and penalties levied by the DOL. Pooled plan providers must register by electronically submitting the new EBSA Form PR. The new electronic filing system will be available on November 25th, 2020, with the new Form PR released before launch.