DOL issues RFI re. pooled employer plans

Per the DOL:

The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) amended the Employee Retirement Income Security Act of 1974 (ERISA) to allow for pooled employer plans (PEPs). PEPs are required to designate a pooled plan provider who is a named fiduciary of the PEP. As a fiduciary, the pooled plan provider is subject to standards and restrictions in ERISA and the Internal Revenue Code, including the prohibited transaction provisions restricting fiduciaries of plans from engaging in conflict of interest transactions. This document 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. This document also requests information on similar issues involving multiple employer plans sponsored by employer groups or associations or professional employer organizations (referred to herein as “MEPs”). The Department of Labor (the Department) is considering whether to propose a class exemption on its own motion to cover prohibited transactions involving PEPs and MEPs.

The RFI can be found here.

Comment period closes on July 20, 2020

A key implication for financial services firms under the SECURE Act

The passage of the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) includes provisions on pooled individual account plans whose participating employers lack a common nexus (PEPs). PEPs should be particularly appealing to small employers who were previously daunted by the cost and complexity of sponsoring, and the fiduciary duty risk from managing, their own retirement plan. A pooled plan provider (PPP) would serve as plan administrator and “named fiduciary” under ERISA of the PEP. In this capacity, a financial services firm operating as a PPP would have various fiduciary responsibilities, including all administrative functions and the selection of investment options in the plan lineup. A PPP must also ensure that all persons/firms handling plan assets are properly bonded under ERISA. The DOL will issue regulations over the coming months on the exact contours of a PPP’s duties. Financial services firms looking to gain market share of the plan market may wish to watch these developments closely, particularly as we gauge interest in these types of plans by small employers.