Registration Requirements for Pooled Plan Providers

Cited as:85 FR 72934
Court:Employee Benefits Security Administration, Labor Department
Publication Date:16 Nov 2020
Record Number:2020-25170
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Federal Register / Vol. 85, No. 221 / Monday, November 16, 2020 / Rules and Regulations
costs associated with an ID/IQ contract,
or portion of a contract. In such cases,
FHWA’s construction contracting
requirements will apply to all ID/IQ
contract work orders if any ID/IQ
contract work orders are funded with
Title 23, U.S.C. funds. Any expenses
incurred before FHWA authorization
shall not be eligible for reimbursement
except as may be determined in
accordance with § 1.9 of this chapter.
(2) The applicable Federal share for
each work order shall be specified in the
relevant project agreement.
§ 635.606 ID/IQ procedures.
(a) FHWA approval. The State DOT
shall submit its proposed ID/IQ
procurement procedures to the Division
Administrator for review and approval.
Following approval by the Division
Administrator, any subsequent changes
in procedures and requirements shall
also be subject to approval by the
Division Administrator before they are
implemented. Other contracting
agencies may follow approved State
DOT procedures in their State or their
own procedures if approved by both the
State DOT and FHWA. The Division
Administrator’s approval of ID/IQ
procurement procedures may not be
delegated or assigned to the State DOT.
(b) Competition. ID/IQ procurement
procedures shall effectively secure
competition in the judgment of the
Division Administrator.
(c) Procurement requirements. ID/IQ
procurement procedures shall include
the following procedures and
responsibilities:
(1) Review and approval of ID/IQ
solicitations;
(2) Review and approval of work item
descriptions and specifications;
(3) Approval to advertise solicitations;
(4) Concurrence with ID/IQ contract
awards to single or multiple contractors;
(5) Approval of and amendments to
formal project agreements and
authorizations to proceed pursuant to
§ 630.106 of this chapter;
(6) Issuance of work orders;
(7) Approval of and amendments to
agreement estimates pursuant to
§ 635.115;
(8) Changed conditions clauses;
(9) Approval of contract changes and
extra work pursuant to § 635.120; and
(10) Other procedures as needed to
ensure compliance with other
requirements in this subpart and under
Title 23, U.S.C. and its implementing
regulations and 49 CFR part 26.
(d) Design-build and ID/IQ. Subject to
the approval of the Division
Administrator, as described in
§ 635.606(a), contracting agencies may
incorporate the design-build contracting
method with ID/IQ contracts. In
addition to the requirements of this
section, the contracting agency shall
include procedures as needed to ensure
compliance with part 636 of this chapter
and related requirements.
[FR Doc. 2020–23675 Filed 11–13–20; 8:45 am]
BILLING CODE 4910–22–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9909]
RIN 1545–BP35
Limitation on Deduction for Dividends
Received From Certain Foreign
Corporations and Amounts Eligible for
Section 954 Look-Through Exception;
Correction
AGENCY
: Internal Revenue Service (IRS),
Treasury.
ACTION
: Final regulations; correction.
SUMMARY
: This document contains
corrections to the final regulations
(Treasury Decision 9909) that were
published in the Federal Register on
Thursday, August 27, 2020. Treasury
Decision 9909 contained final
regulations under sections 245A and
954 of the Internal Revenue Code (the
‘‘Code’’) that limit the deduction for
certain dividends received by United
States persons from foreign corporations
under section 245A and the exception to
subpart F income under section
954(c)(6) for certain dividends received
by controlled foreign corporations.
DATES
: These corrections are effective
on November 16, 2020.
FOR FURTHER INFORMATION CONTACT
:
Arielle M. Borsos or Logan M.
Kincheloe at (202) 317–6937 (not a toll-
free number).
SUPPLEMENTARY INFORMATION
:
Background
The final regulations (TD 9909) that
are the subject of this correction are
issued under sections 245A, 954(c)(6),
and 6038 of the Internal Revenue Code.
Need for Correction
As published on August 27, 2020 (85
FR 53068) the final regulations (TD
9909) contain errors that need to be
corrected.
Correction of Publication
Accordingly, the final regulations (TD
9909) that are the subject of FR Doc.
2020–18543, appearing on page 53068
in the Federal Register of August 27,
2020, are corrected as follows:
1. On page 53075, third column,
removing the second and third sentence
of the last full paragraph.
2. On page 53076, first column, the
seventh line from the bottom of the first
full paragraph, after the sentence ending
‘‘See proposed § 1.245A–5(e)(3)(i)(C).’’,
adding the language ‘‘Because the
determination as to whether there
would be an extraordinary reduction
amount or tiered extraordinary
reduction amount greater than zero is
made without regard to an election to
close the taxable year, this
determination is made without taking
into account any elections that may be
available, or other events that may
occur, solely by reason of an election to
close the taxable year, such as the
application of section 954(b)(4) to a
short taxable year created as a result of
the election.’’
3. On page 53076, first column, the
sixth and seventh lines from the bottom
of the first full paragraph, the language
‘‘Because the election can only’’ is
corrected to read ‘‘Furthermore, because
the election to close the taxable year can
only’’.
4. On page 53077, the second column,
the sixth line from the bottom of the
first full paragraph, the language ‘‘under
sections 7805(b)(2)’’ is corrected to read
‘‘under section 7805(b)(2)’’.
5. On page 53078, the first column,
the seventh line of the second full
paragraph, the language ‘‘Earning
subject’’ is corrected to read ‘‘Earnings
subject’’.
6. On page 53082, the third column,
the last line of the bottom partial
paragraph, ‘‘gap period’’ is corrected to
read ‘‘disqualified period’’.
Crystal Pemberton,
Senior Federal Register Liaison, Publications
and Regulations Branch, Legal Processing
Division, Associate Chief Counsel, (Procedure
and Administration).
[FR Doc. 2020–24092 Filed 11–13–20; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
29 CFR Part 2510
RIN 1210–AB94
Registration Requirements for Pooled
Plan Providers
AGENCY
: Employee Benefits Security
Administration, Labor.
ACTION
: Final rule.
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1
The SECURE Act did not change the conditions
for plans that were already permitted under section
3(2) of ERISA to act as a single MEP. See, e.g.,
Advisory Opinions 2008–07A, 2003–17A, and
2001–04A. Those classes of multiple employer
plans (e.g., employer association retirement plans
and plans sponsored by professional employer
organizations) are outside of the scope of this
rulemaking, as are multiple employer plans
established and maintained pursuant to bona fide
collective bargaining.
2
See the preamble discussion in the Final Rule
on the Definition of ‘‘Employer’’ Under Section 3(5)
of ERISA—Association Retirement Plans and Other
Multiple-Employer Plans, 84 FR 37508 (July 31,
2019). The Department did, however, seek
comments through a Request for Information
published with that proposed rule seeking
comments on whether, and if so under what
conditions, open MEP structures should be treated
as a multiple employer plan for purposes of Title
I of ERISA.
3
The SECURE Act was enacted as Division O of
the Further Consolidated Appropriations Act, 2020
(Pub. L. 116–94) (December 20, 2019).
4
29 U.S.C. 1002(43)(B). The term ‘‘pooled
employer plan’’ does not include a multiemployer
plan or plan maintained by employers that have a
common interest other than having adopted the
plan. The term also does not include a plan
established before the date the SECURE Act was
enacted unless the plan administrator elects to have
the plan treated as a pooled employer plan and the
plan meets the ERISA requirements applicable to a
pooled employer plan established on or after such
date.
SUMMARY
: This final regulation
establishes the requirements for
registering with the Department of Labor
as a ‘‘pooled plan provider’’ for ‘‘pooled
employer plans’’ under the Employee
Retirement Income Security Act of 1974,
as amended (ERISA). The Setting Every
Community Up for Retirement
Enhancement Act of 2019 (SECURE Act)
provides that newly permitted pooled
plan providers can begin offering pooled
employer plans on January 1, 2021, but
requires such persons to register with
the Secretary of Labor before beginning
operations. This final regulation also
establishes a new form—EBSA Form PR
(Pooled Plan Provider Registration)—as
the required filing format for pooled
plan provider registrations. The Form
PR must be filed electronically with the
Department of Labor. Filing the Form
PR with the Department of Labor also
satisfies the SECURE Act requirement to
register with the Department of the
Treasury. This final regulation affects
persons wishing to serve as pooled plan
providers, defined contribution pension
benefit plans that are operated as pooled
employer plans, employers participating
in such plans, and participants and
beneficiaries covered by such plans.
DATES
: This final regulation is effective
on November 16, 2020.
ADDRESSES
: Form PR and the
accompanying instructions are the
required filing format for pooled plan
provider registrations and the Form PR
must be filed electronically with the
Department of Labor at https://
www.efast.dol.gov/.
FOR FURTHER INFORMATION CONTACT
:
Colleen Brisport Sequeda, Office of
Regulations and Interpretations,
Employee Benefits Security
Administration, U.S. Department of
Labor, (202) 693–8500 (this is not a toll-
free number), for questions related to
pooled plan provider reporting
requirements under Title I of ERISA.
Customer service information:
Individuals interested in obtaining
general information from the
Department of Labor concerning Title I
of ERISA may call the EBSA Toll-Free
Hotline at 1–866–444–EBSA (3272) or
visit the Department’s website
(www.dol.gov/agencies/ebsa).
SUPPLEMENTARY INFORMATION
:
I. Legal Framework
Under ERISA, an employee benefit
plan (whether a pension plan or a
welfare plan) must be sponsored by an
employer, by an employee organization,
or by both. Section 3(5) of ERISA
defines the term ‘‘employer’’ for this
purpose as ‘‘any person acting directly
as an employer, or indirectly in the
interest of an employer, in relation to an
employee benefit plan, and includes a
group or association of employers acting
for an employer in such capacity.’’
These definitional provisions of ERISA
have been interpreted as permitting a
multiple employer plan (MEP) to be
established or maintained by a bona fide
group or association of employers that is
controlled by the employer members
and that acts in the interests of its
employer members to provide benefits
to their employees.
1
This approach is
based on the premise that the person or
group that maintains the plan is tied to
the employers and employees that
participate in the plan by some common
economic or representational interest or
genuine organizational relationship
unrelated to the provision of benefits.
The Department of Labor (Department)
has taken steps, through a final rule on
‘‘association retirement plans’’ at 29
CFR 2510.3–55, to clarify and expand
the types of arrangements that can be
treated as multiple employer plans
under Title I of ERISA. That final rule
did not, however, extend to so-called
‘‘open MEPs.’’
2
The Setting Every Community Up for
Retirement Enhancement Act of 2019
(SECURE Act)
3
removed possible legal
barriers to the broader use of multiple
employer plans by authorizing a new
type of ERISA-covered defined
contribution plan—a ‘‘pooled employer
plan’’ operated by a ‘‘pooled plan
provider.’’ The SECURE Act amended
section 3(2) of ERISA to authorize these
pooled employer plans, which offer
benefits to the employees of multiple
unrelated employers without the need
for any commonality among the
participating employers or other
genuine organizational relationship
unrelated to participation in the plan,
thus enabling a type of open MEP. A
pooled employer plan arrangement
allows most of the administrative and
fiduciary responsibilities of sponsoring
a retirement plan to be transferred to a
pooled plan provider. Therefore, a
pooled employer plan can offer
employers, especially small employers,
a workplace retirement savings option
with reduced burdens and costs
compared to sponsoring their own
separate retirement plan. New section
3(44) of ERISA establishes requirements
for pooled plan providers, including a
requirement to register with the
Department and the Department of the
Treasury (Treasury Department) before
beginning operations as a pooled plan
provider. The effective date for these
provisions allows ‘‘pooled employer
plans’’ to begin operating on January 1,
2021.
Under section 3(2) of ERISA, a pooled
employer plan is treated for purposes of
ERISA as a single plan that is a multiple
employer plan. A pooled employer plan
is generally defined in section 3(43) as
a qualified retirement plan that is an
individual account plan or a plan that
consists of individual retirement
accounts described in Internal Revenue
Code (Code) section 408 that is
established or maintained for the
purpose of providing benefits to the
employees of two or more employers,
the terms of which meet certain
requirements set forth in the statute.
4
Specifically, the terms of the plan must:
Designate a pooled plan provider
and provide that the pooled plan
provider is a named fiduciary of the
plan;
designate one or more trustees
(other than an employer in the plan) to
be responsible for collecting
contributions to, and holding the assets
of, the plan, and require the trustees to
implement written contribution
collection procedures that are
reasonable, diligent, and systematic;
provide that each employer in the
plan retains fiduciary responsibility for
the selection and monitoring, in
accordance with ERISA fiduciary
requirements, of the person designated
as the pooled plan provider and any
other person who is designated as a
named fiduciary of the plan, and the
investment and management of the
portion of the plan’s assets attributable
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5
The SECURE Act requires that pooled plan
providers must ensure that all plan fiduciaries and
other persons who handle plan assets are bonded
in accordance with section 412 of ERISA. In the
Department’s view, the SECURE Act confirms the
application of ERISA section 412 requirements to
pooled employer plans, except that the Act
establishes $1,000,000 as the maximum bond
amount as compared to $500,000 for plans that do
not hold employer securities. Thus, the normal
section 412 rules for ERISA plans govern the
bonding requirements for pooled employer plans
and the pooled plan provider is subject to the
provisions of ERISA section 412(b), which provides
that ‘‘it shall be unlawful for any plan official of
such plan or any other person having authority to
direct the performance of such functions, to permit
such functions, or any of them, to be performed by
any plan official, with respect to whom the
requirements of subsection (a) [of ERISA section
412] have not been met.’’ See 29 CFR 2550.412–1,
29 CFR part 2580; see also Field Assistance Bulletin
2008–04 (providing a general description of
statutory and regulatory requirements for bonding).
The Department does not read the SECURE Act as
broadening the section 412 bonding rules to apply
to persons who handle plan assets regardless of
whether they handled plan funds or other property
within the meaning of section 412. Similarly, the
existing statutory and regulatory exemptions for
certain banks, insurance companies, and registered
broker-dealers continue to apply.
6
ERISA section 3(44)(a)(ii).
to the employees of that employer (or
beneficiaries of such employees) in the
plan to the extent not delegated to
another fiduciary by the pooled plan
provider and subject to the ERISA rules
relating to self-directed investments;
provide that employers in the plan,
and participants and beneficiaries, are
not subject to unreasonable restrictions,
fees, or penalties with regard to ceasing
participation, receipt of distributions, or
otherwise transferring assets of the plan
in accordance with applicable rules for
plan mergers and transfers;
require the pooled plan provider to
provide to employers in the plan any
disclosures or other information that the
Secretary of Labor may require,
including any disclosures or other
information to facilitate the selection or
monitoring of the pooled plan provider
by employers in the plan;
require each employer in the plan
to take any actions that the Secretary of
Labor or pooled plan provider
determines are necessary to administer
the plan or to allow for the plan to meet
the ERISA and Code requirements
applicable to the plan, including
providing any disclosures or other
information that the Secretary of Labor
may require or which the pooled plan
provider otherwise determines are
necessary to administer the plan or to
allow the plan to meet such ERISA and
Code requirements; and
provide that any disclosure or other
information required to be provided to
participating employers may be
provided in electronic form and will be
designed to ensure only reasonable costs
are imposed on pooled plan providers
and employers in the plan.
The fidelity bonding requirements in
ERISA section 412 apply to fiduciaries
and other persons handling the assets of
a pooled employer plan, but the
maximum bond amount for each such
plan official is $1,000,000, as compared
to the $500,000 maximum that applies
in the case of other ERISA-covered
plans that do not hold employer
securities.
5
A pooled plan provider with respect
to a pooled employer plan is defined in
ERISA section 3(44) to mean a person
that—
is designated by the terms of the
plan as a named fiduciary under ERISA,
as the plan administrator, and as the
person responsible to perform all
administrative duties (including
conducting proper testing with respect
to the plan and the employees of each
employer in the plan) that are
reasonably necessary to ensure that the
plan meets the Code requirements for
tax-favored treatment and the
requirements of ERISA and to ensure
that each employer in the plan takes
such actions as the Secretary or the
pooled plan provider determines
necessary for the plan to meet Code and
ERISA requirements, including
providing to the pooled plan provider
any disclosures or other information
that the Secretary may require or that
the pooled plan provider otherwise
determines are necessary to administer
the plan or to allow the plan to meet
Code and ERISA requirements;
acknowledges in writing its status
as a named fiduciary under ERISA and
as the plan administrator;
is responsible for ensuring that all
persons who handle plan assets or are
plan fiduciaries are bonded in
accordance with ERISA requirements;
and
registers as a pooled plan provider.
The SECURE Act specifies that the
Secretary may perform audits,
examinations, and investigations of
pooled plan providers as may be
necessary to enforce and carry out the
purposes of the provision. The SECURE
Act also directs the Department to issue
such guidance as it determines
appropriate to carry out the pooled
employer plan and pooled plan provider
provisions, including guidance (1) to
identify the administrative duties and
other actions required to be performed
by a pooled plan provider; and (2) that
provides, in appropriate cases involving
a noncompliant employer, for transfer of
plan assets attributable to employees of
the noncompliant employer (or
beneficiaries of such employees) to (a) a
plan maintained only by that employer
(or its successor), (b) a tax-favored
retirement plan for each individual
whose account is transferred, or (c) any
other arrangement that the Department
determines is appropriate. The SECURE
Act further provides such guidance
must provide for the noncompliant
employer (and not the plan with respect
to which the failure occurred or any
other employer in the plan) to be liable
for any plan liabilities attributable to
employees of the noncompliant
employer (or beneficiaries of such
employees), except to the extent
provided in the guidance. An employer
or pooled plan provider is not treated as
failing to meet a requirement of
guidance issued by the Secretary if,
before the issuance of such guidance,
the employer or pooled plan provider
complies in good faith with a reasonable
interpretation of the provisions to which
the guidance relates.
The SECURE Act also provides that
the Form 5500 annual return/report of
employee benefit plan (Form 5500)
filing for a multiple employer plan
subject to section 210 of ERISA,
including a pooled employer plan, must
include a list of the employers in the
plan, a good faith estimate of the
percentage of total contributions made
by such employers during the plan year,
the aggregate account balances
attributable to each employer in the
plan (determined as the sum of the
account balances of the employees of
each employer and the beneficiaries of
such employees) and, with respect to a
pooled employer plan in particular, the
identifying information for the person
designated under the terms of the plan
as the pooled plan provider. In addition,
the provision authorizes the Department
to prescribe simplified reporting for
pooled employer plans that cover fewer
than 1,000 participants, but only if no
single employer in the plan has 100 or
more participants covered by the plan.
The SECURE Act does not limit the
class of persons who can act as pooled
plan providers, but it is expected that
many financial services companies
(such as insurance companies, banks,
trust companies, consulting firms,
record keepers, and third-party
administrators) will be pooled plan
providers. As noted above, however,
section 3(44) does require as a condition
of being a pooled plan provider that the
person ‘‘registers as a pooled plan
provider with the Secretary, and
provides to the Secretary such other
information the Department may
require, before beginning operations as
a pooled plan provider.’’
6
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7
Title I and Title IV of ERISA and the Code
establish annual reporting requirements for
employee benefit plans. DOL, the Treasury
Department (specifically the IRS), and the Pension
Benefit Guaranty Corporation jointly developed the
Form 5500 so employee benefit plans could use one
form to satisfy annual reporting requirements under
ERISA and the Code. The Form 5500 is part of
ERISA’s overall reporting and disclosure
framework, helping to assure that employee benefit
plans are operated and managed in accordance with
certain prescribed standards and that participants
and beneficiaries, as well as regulators, are
provided or have access to sufficient information to
protect the rights and benefits of plan participants
and beneficiaries.
8
Section 505 of ERISA provides generally that the
Secretary may prescribe such regulations the
Secretary ‘‘finds necessary or appropriate to carry
out the provisions of this subchapter. Among other
things, such regulations may define accounting,
technical and trade terms used in such provisions;
may prescribe forms; and may provide for the
keeping of books and records, and for the
inspection of such books and records (subject to
section 1134(a) and (b) of this title).’’ 29 U.S.C.
1135.
In the Department’s view, the primary
statutory purpose of the registration
requirement is to provide the
Department with sufficient information
about persons acting as pooled plan
providers to engage in effective
monitoring and oversight of this new
type of ERISA-covered retirement plan.
Although the Department does not have
specific details as to how pooled
employer plans authorized under the
SECURE Act will be structured or
operated, the Department has assumed
that they may be similar to other
currently operating multiple employer
plans, and the Department did not
receive any comments suggesting a
contrary view. Additionally, there may
be challenges associated with these new
types of multiple employer plans that
the Department, the Treasury
Department, or the Internal Revenue
Service (IRS), as the Federal agencies
charged with oversight of private-sector
pension plans, may need to address.
The SECURE Act expressly provides
that participating employers will retain
certain residual fiduciary
responsibilities, including
responsibilities with respect to the
selection and oversight of the pooled
plan provider and the plan’s other
named fiduciaries. This raises concerns
that there may be greater potential for
inadequate employer oversight of the
activities of a pooled employer plan, its
fiduciaries, and service providers than
is true of more traditional employer-
sponsored plans because participating
employers pass along more
responsibility to the pooled plan
provider than they do in other plan
arrangements.
The registration process and
requirements must enable the
Department to identify pooled plan
providers when they begin operating
and to effectively oversee the providers
and plans. While pooled plan providers
will be required to file Forms 5500 for
the pooled employer plans they operate,
Forms 5500 generally are not filed until
seven to nine-and-a-half months after
the end of the plan year.
7
In the absence
of appropriate detail in the registration
statement, a pooled plan provider could
begin operating multiple plans with
hundreds or thousands of participants
and millions of dollars without the
agencies having any information about
the pooled employer plans for almost
two years.
In determining how best to implement
the statutory registration requirement,
the Department considered a number of
alternatives including whether the
statement must be filed when the
provider begins operations in
anticipation of offering one or more
pooled employer plans, when it begins
operating each individual pooled
employer plan, or both. The Department
also does not believe that the SECURE
Act provisions preclude the Department
from imposing reasonable ongoing
reporting requirements to enable the
Department to effectively oversee
pooled plan providers and the pooled
employer plans they operate. Therefore,
as discussed in more detail below,
relying on the language in the SECURE
Act requiring a registration statement, as
well as on its broad authority under
section 505 of ERISA to prescribe
regulations,
8
including forms, to enable
the Department to carry out its statutory
oversight mission, the Department has
chosen the structure set out in the final
rule, which adopts the structure
essentially as proposed.
The final rule requires an initial
registration filing and supplemental
filings. The supplemental filings are to
report changes in the information in the
initial filing, information about each
specific pooled employer plan before
initiation of operations, and information
on specified reportable events. These
filings (initial and supplemental)
capture information that is important for
the Department, the Treasury
Department, and the IRS to carry out
oversight and for participating
employers to exercise their fiduciary
duties of selection and monitoring. The
final rule also requires a final filing once
the last pooled employer plan offered by
a pooled plan provider has been
terminated and has ceased operations.
The Department believes that the
initial registration, supplemental filing,
and final filing requirements, when
combined with the Form 5500 annual
reporting requirements, will give the
Department the timely access to pooled
plan provider information needed to
fulfill the monitoring and oversight
tasks the SECURE Act placed on the
agencies and will be less burdensome
and less costly for pooled plan
providers and pooled employer plans
than some of the alternatives
considered. The final rule establishes a
new EBSA form—EBSA Form PR
(Pooled Plan Provider Registration)
(Form PR)—as the required filing format
for pooled plan provider registrations.
Filing the Form PR satisfies the
requirements under Title I of ERISA and
the Code to register with the Department
and the Treasury Department,
respectively.
This final rule is a deregulatory action
under Executive Order (E.O.) 13771.
Details on the estimated costs of this
final rule can be found in the regulatory
impact analysis, set forth later in this
preamble. Pursuant to the Congressional
Review Act (5 U.S.C. 801 et seq.), the
Office of Information and Regulatory
Affairs designated this rule as not a
‘‘major rule,’’ as defined by 5 U.S.C.
804(2).
On September 1, 2020, the
Department published in the Federal
Register a proposed rule and proposed
EBSA Form PR. The Department invited
interested persons to submit comments
on these items and, in response to this
invitation, the Department received 20
written comments from a variety of
parties, including plan sponsors and
fiduciaries, plan service and investment
providers, and employee benefit plan
and participant representatives. These
comments are available for review on
the ‘‘Public Comments’’ page of the
Department’s Employee Benefits
Security Administration website under
the ‘‘Laws and Regulations’’ tab. Below
is a detailed discussion of the
provisions of the final rule, the public
comments the Department received, and
how these comments affected the
Department’s decision-making when
adopting the final rule.
II. Registration Requirements for
Pooled Plan Providers
The SECURE Act expressly requires,
as a condition of being a pooled plan
provider, that the provider register with
the Department and provide other
information that the Secretary may
require. The SECURE Act, however, did
not include specific content
requirements for pooled plan provider
registration. Under the final rule, the
requirement to register and provide
information to the Department is
triggered by specific events. The rule’s
requirements can be divided into three
sets of filing obligations corresponding
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to the timing of specific events. First,
there is an initial registration filing of
basic identifying information about the
pooled plan provider and additional
information about pending legal or
administrative proceedings. Second,
there is a supplemental filing or filings
requirement. A supplemental filing is
required if there is a change in the
information that was reported in the
initial registration or if there is a
significant new financial and/or
operational event related to the pooled
plan provider. A supplemental filing
also is required when a pooled
employer plan starts operations. The
requirement for supplemental
information is intended to provide the
agencies, participating employers and
employees, and the public information
about noteworthy events occurring after
the initial registration. Third, there is a
final filing that is required once the last
pooled employer plan has been
terminated and ceased operations.
A. Initial Registration
Beginning Operations as a Pooled Plan
Provider
Paragraph (a) of the final regulations
states that section 3(44) of ERISA sets
forth the criteria that a person must
meet in order to be a pooled plan
provider for pooled employer plans
under section 3(43) of ERISA. This
introductory paragraph provides the
context and scope for the registration
requirement established in the
remainder of the final rule. Commenters
did not raise questions or concerns with
paragraph (a) in the proposed rule.
Therefore, the final rule adopts this
provision as proposed.
Section 3(44)(A)(ii) of ERISA contains
the registration requirement. That
section, in relevant part, defines a
pooled plan provider as a person who
‘‘registers as a pooled plan provider
with the Secretary, and provides to the
Secretary such other information as the
Secretary may require, before beginning
operations as a pooled plan provider.’’
The statute does not define what is
meant by ‘‘beginning operations as a
pooled plan provider.’’
Paragraph (b) of the proposed rule
defined the central phrase ‘‘beginning
operations as a pooled plan provider’’ to
mean ‘‘publicly marketing services as a
pooled plan provider or publicly
offering a pooled employer plan.’’ The
preamble to the proposal clarified that
this definition was not intended to
require registration as a result of
preliminary business activities, such as
establishing the business organization,
creating a business plan, obtaining
necessary licenses or entering into
contracts with subcontractors or
partners, obtaining a Federal employer
identification number from the IRS, or
actions and communications designed
to evaluate market demand in advance
of publicly marketing pooled plan
provider services or publicly offering
one or more pooled employer plans.
The proposed rule specifically
solicited comments on this crucial
definition in paragraph (b) by asking the
following questions: Is the definition of
‘‘beginning operations as a pooled plan
provider,’’ which determines whether
initial registration is required,
appropriate in scope? Should the
definition exclude marketing and
solicitation efforts so that the initial
registration is tied solely to beginning
operation of a pooled employer plan?
Should the deadlines for filing an initial
registration be nearer to the date of
actual public marketing activities if the
pooled plan provider intends only to
engage in marketing and solicitation
efforts, and will not enroll any employer
or employee in a pooled employer plan
until at least 30 days after initial
registration?
A number of commenters raised
significant concerns with this proposed
definition, particularly with its reliance
on ‘‘publicly marketing services as a
pooled plan provider’’ or ‘‘publicly
offering a pooled employer plan’’ as the
alternative acts that would decisively
establish precisely when a person is
considered to have begun ‘‘operations’’
as a pooled plan provider. A more
global objection was that registration
should not turn on such early-stage and
inchoate activities of firms with
potential interest in eventually serving
as a pooled plan provider. A more
specific concern was based on the
assertions that the two selected
activities—marketing and offering—
were too vague.
The consensus of these commenters
was that more precision and clarity is
needed when dealing with the
establishment of a regulatory trigger for
a governmental filing requirement,
especially the ‘‘public marketing’’
trigger. These commenters uniformly
agreed that firms need to evaluate
market demand before deciding whether
to offer a pooled employer plan, and
that there is no clear distinction
between commonly accepted methods
for evaluating demand and the act of
‘‘publicly marketing services’’ within
the plain meaning of these words in the
proposal.
A number of commenters stated that
the line between ‘‘communications
designed to evaluate market demand,’’
which the Department explained in the
preamble of the proposal would not be
actions that would trigger the proposal’s
filing requirement, and ‘‘publicly
marketing services as a pooled plan
provider’’ is not clear. Neither of these
terms, according to these commenters, is
clearly defined in the proposed rule or
its preamble, and there is no safe harbor
communication design or disclaimer
described that could be used to ensure
that a communication provided by a
pooled plan provider to evaluate market
demand does not also constitute public
marketing material.
To illustrate this ambiguity,
commenters offered the following
examples. An announcement at an
industry conference of a firm’s intent to
enter the marketplace as a pooled plan
provider, for example, could be
construed as public marketing by some
but not by others. In addition, a
commenter suggested that a firm making
references to developing pooled plan
provider services or to establishing a
pooled employer plan in personal
biographies, company websites, or
company handouts could be construed
as public marketing by some but not by
others. Similarly, communications to
current clients about future intentions to
offer a pooled employer plan could be
construed as public marketing. Call
center responses by employees, with or
without marketing responsibilities in
their job descriptions, could be
construed as public marketing by some
but not by others. In citing these
examples, commenters stated that
public marketing and communication is
a necessary predicate for firms to gauge
demand and decide whether it makes
financial sense to offer or bring to
market a particular product or service,
and pooled employer plans are no
different. Firms need to solicit interest
publicly before determining whether to
enter the marketplace, according to
these commenters, and the proposal
does not recognize that reality.
Several commenters predicted certain
potential negative effects of this
proposed definition. One possible effect
of the ambiguity of the proposal,
according to comments, is that potential
pooled plan providers would register
before they have fully considered and
designed a product or approach to bring
to market. Another possible effect,
according to comments, is that potential
providers would avoid entering the
marketplace altogether. A third possible
effect of this ambiguity relates to firms
that have already begun research and
marketing efforts in anticipation of
pooled employer plan business
operations to commence on January 1,
2021. These firms, according to one
commenter, will be in immediate
violation of the registration requirement
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upon the effective date of the final rule
because research and marketing activity
will have preceded registration, even if
these firms register on the first possible
date following publication.
For these reasons, the commenters
overwhelmingly favor a final rule that
defines ‘‘beginning operations as a
pooled plan provider’’ in a manner that
ties the initial registration to some core
operational facet of the pooled employer
plan, rather than to the type of early-
stage marketing and soliciting activities
in the proposal. Some commenters
suggested that registration could be
required in advance (e.g., 30 days) of a
specific and objectively determinable
act customarily associated with the start
of a retirement plan. Commenters
offered the following examples: The
date of plan establishment; the date of
enrollment of the first participating
employer and its employees; the first
date of actual plan operation; the date
of the first participating employer’s
formal adoption of a participation or
similar agreement; the date of the
pooled plan provider’s first
appointment as such by an adopting
employer under a pooled employer
plan; and the date when the first dollar
is obligated to be held in trust.
Alternatively, other commenters
suggested a less objective approach. In
particular, they suggested tying the
registration to whenever the pooled
employer plan is considered covered
under ERISA, e.g., 30 days in advance
of that point. This suggestion is based
on a different provision in the proposal,
at paragraphs (b)(2) and (b)(6) (relating
to a supplemental report containing the
name and EIN for the pooled employer
plan, and the name, address, and EIN
for the trustee of the plan), which relies
on the same longstanding facts-and-
circumstances coverage principles that
have governed plans under ERISA for
decades. In an attempt to bring some
certainty to this highly facts-and-
circumstances-dependent approach, one
commenter suggested that the final rule
could clarify, perhaps by example, that
this standard would be considered
satisfied if registration occurred at some
designated period (e.g., 30 days) before
‘‘the date the first pooled employer plan
offered by the pooled plan provider is
positioned to enter into participation
arrangements with employers.’’
Regardless of the approach taken to
define this concept, these commenters
uniformly agreed that there is no need
to prevent providers from marketing to
potential employer members during the
period between registration and plan
operations. Any such prohibition would
be counterproductive or even harmful to
potential participating employers,
according to these commenters.
Providers must be able to market their
pooled employer plan and pooled plan
provider services as early as practicable
so that prospective participating
employers can assess their options,
according to these commenters.
In response to these commenters,
paragraph (b) of the final rule adopts
operation of a pooled employer plan as
the event requiring prior registration
rather than ‘‘marketing’’ or ‘‘offering
services’’ as a pooled plan provider.
Specifically, paragraph (b) of the final
rule provides that, for purposes of
implementing the statutory phrase
‘‘beginning operations as a pooled plan
provider,’’ the final rule defines that
phrase to mean when the pooled plan
provider begins ‘‘initiation of operations
of the first plan that the person operates
as a pooled employer plan.’’ This term
must be read in conjunction with
paragraph (b)(6) of the final rule, which
states, in response to the many
commenters looking for a brighter-line
test, that a pooled employer plan is
treated as initiating operations as a
pooled employer plan when the first
participating employer executes or
adopts a participation, subscription, or
similar agreement for the plan
specifying that it is a pooled employer
plan or, if earlier, when the trustee of
the plan first holds any asset in trust. A
benefit of this approach is that it
encompasses the traditional activities of
pension plan formation and is intended
to provide would-be pooled plan
providers with maximum flexibility.
The Department agrees with the
commenters that this approach will
simplify the registration process.
Preliminary business activities of a
would-be pooled plan provider, such as
establishing the business organization,
creating a business plan, obtaining
necessary licenses, entering into
contracts with subcontractors or
partners, obtaining a Federal employer
identification number from the IRS, or
actions and communications designed
to evaluate market demand, including
marketing activity, do not trigger the
registration requirement. This approach
also continues to advance and support
the Department’s oversight functions, as
the proposal sought to do. From the
outset, an important purpose of the
registration requirement is to provide
the Department, the Treasury
Department, the IRS, and importantly,
prospective employer customers and the
public, with notice and relevant
information about the pooled plan
provider. The Department has
determined that this purpose is served
equally as well by the final rule’s focus
on plan operations, as compared to the
proposal’s focus on marketing and
offering of services.
Timing of Initial Registration—Changes
to the Proposal’s 90/30 Rule
Paragraph (b)(1) of the proposal
established a registration window by
providing, in relevant part, that a person
intending to act as a pooled plan
provider must file the Form PR with the
Department ‘‘[n]o earlier than 90 days
and no later than 30 days before
beginning operations as a pooled plan
provider[.]’’ Many commenters
questioned the necessity of the complex
aspects of the proposal, including this
provision. One commenter, in
particular, stated that it is not clear what
value this narrow time period (60 days)
would provide to the Department in its
oversight role. This commenter instead
suggested expanding the 90-day period
to 180 days before beginning operations.
A longer window, according to this
commenter, would give providers more
leeway in getting a plan up and running
after registration, as there could be
unforeseen circumstances that delay the
official establishment date of a plan.
The Department agrees with the
commenters that this aspect of the
proposal could be streamlined without
compromising important safeguards.
The principal purpose of the 90-day
restriction in the proposal was to ensure
the information filed with the
Department is relatively accurate and
current so that Federal oversight
agencies and employers are able to
effectively discharge their oversight and
monitoring obligations. Consistent with
the arguments of these commenters, the
Department has concluded this purpose
is adequately supported by the final
rule’s requirement, in paragraph (b)(3)(i)
of the final rule, that a pooled plan
provider submit a timely supplemental
filing when there is a change in the
information that was reported in an
initial filing. Accordingly, paragraph
(b)(1) of final rule is changed from the
proposal and does not include the ‘‘no
earlier than 90 days’’ clause, but instead
requires the filing of an initial
registration ‘‘at least 30 days before the
initiation of operations of a plan as a
pooled employer plan.’’
Special Transition Provision—Delayed
Application of the 30-Day Rule
Paragraph (b)(1) of the final rule
requires an initial registration at least 30
days before the initiation of operations
of a plan as a pooled employer plan.
Some commenters on the proposal
stated that a significant number of firms
already have committed substantial
resources toward, and intend to initiate,
operations of pooled employer plans on
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January 1, 2021, or as soon as possible
thereafter. These commenters are
concerned that they will be compelled
to delay the initiation of operations of
pooled employer plans solely because of
the Department’s timeline for
publishing a final rule. To address these
concerns, paragraph (c) of the final rule
contains a special provision that allows
an initial registration to be filed anytime
before February 1, 2021, provided that
it is filed ‘‘on or before’’ the initiation
of operations of a plan as a pooled
employer plan. The effect of this
provision is to waive the otherwise
applicable 30-day waiting period
between registration and the start of
plan operations. The provision applies
with respect to pooled plan providers
that would initiate operations of a plan
as a pooled employer plan on or after
January 1, 2021 and before February 1,
2021. Paragraph (c) of the final rule has
no effect after that date. Some
commenters requested a much longer
period, e.g., a period of 180 days
following publication of a final rule.
Requests of this magnitude, however,
appear to have been predicated, at least
in part, on the proposal’s reliance on
‘‘publicly marketing services’’ as the
trigger for the registration requirement,
which has been eliminated.
Content Requirements
The SECURE Act left it to the
agencies’ discretion to establish specific
content requirements for the pooled
plan provider registration. In developing
this proposal, the Department focused
on information needed by the agencies
to identify, contact, and engage in
timely oversight of pooled plan
providers, as well as on the information
that the Department could post on its
website that would provide employers
considering participating in a pooled
employer plan, participating employees,
covered employees, and other interested
stakeholders the ability to identify,
contact, and perform some due
diligence on pooled plan providers. The
Department also considered the content
requirements of other registration
requirements under Federal and State
securities laws for investment advisers
and broker-dealers. For example, among
other information, registrations require
disclosures of identifying and contact
information, background information
about the registrant’s business,
information about relevant management
policies, names of executives and
general partners, relevant legal
proceedings and previous violations,
and relevant negative information, such
as legal problems or other business
events or trouble that would be of
consequence to users of the registration
information. The Department also
focused on minimizing the
administrative burden and expense
involved for pooled plan providers and
the pooled employer plans they operate.
Based on those considerations, and as
a result of applicable comments more
fully described below, paragraph (b)(1)
sets out the specific information a
prospective pooled plan provider would
need to file on Form PR at least 30 days
before beginning operations as a pooled
plan provider:
1. Legal Business Name and any
Trade Name (Doing Business As).
Commenters did not raise questions or
concerns with this requirement;
therefore, the final rule adopts this
provision as proposed.
2. Federal Employer Identification
Number (EIN). An EIN is a nine-digit
employer identification number (for
example, 00–1234567) that has been
assigned by the IRS. Entities that do not
have an EIN may apply for one on Form
SS–4, Application for Employer
Identification Number. The Form SS–4
is available by calling 1–800–829–4933
or on the IRS website at https://
www.irs.gov/pub/irs-pdf/fss4.pdf. EIN
data is important for accurately
identifying registrants and cross-
referencing information reported about
the registrant on other filings, such as
the Form 5500 filed by the pooled
employer plans operated by the
registrant. Commenters did not raise
questions or concerns with this
requirement. Therefore, the final rule
adopts this provision as proposed.
3. Business Telephone. Paragraph
(b)(1)(ii) of the final rule requires a
business telephone number as a way for
interested/participating employers and
covered employees to contact the
pooled plan provider for information.
Some commenters, responding to
questions in the preamble of the
proposal, requested confirmation that
this final regulation does not preclude a
pooled plan provider from permitting a
call center number to be reported as the
business phone. The view of these
commenters is that registrants should be
able to determine the most appropriate
contact information to provide on the
registration. Other commenters
suggested a better business practice for
pooled employer plans may be to have
one telephone number for potential
participating employers and a different
telephone for participating employers
and participants, as the nature of the
callers’ questions and needs could be
quite different. This paragraph of the
final rule requires the phone number of
the pooled plan provider; it does not
prescribe or proscribe anything beyond
that. Registrants decide what business
phone number to include in the
registration for this purpose.
Accordingly, the final rule adopts the
provision as proposed.
4. Business Mailing Address.
Commenters did not request any
revisions to this requirement, which is
adopted as proposed.
5. Address of any public website or
websites of the pooled plan provider or
any affiliates to be used to market any
such person(s) as a pooled plan
provider to the public or to provide
public information on the pooled
employer plan operated by the pooled
plan provider. The preamble to the
proposed rule explained that the
Department considers this information
useful for its oversight of pooled plan
providers and will also assist employers
performing due diligence in selecting
and monitoring pooled employer plans.
The preamble also stated that the
Department expects that most pooled
plan providers will have such websites
and believes that having information on
such websites provides an alternative to
requiring more information to be
submitted as part of the registration
process. Commenters did not raise
questions or concerns with or request
any revisions to this requirement in the
proposal. Therefore, the final rule
adopts this provision as proposed.
6. The name, mailing address,
telephone number, and email address
for the responsible compliance official
of the pooled plan provider. Paragraph
(b)(1)(v) of the proposal required the
reporting of basic contact information
about the pooled plan provider’s
‘‘primary compliance officer.’’ The
Department is aware that many
companies of the type likely to be
pooled plan providers have individuals
or teams of compliance officers with
varying responsibilities, and this
provision of the proposal relied on that
relatively uncontroversial fact. The
intent behind this provision of the
proposal was to capture and make
available basic contact information of
the person responsible for these
individuals or compliance officers
because, in the Department’s view, it is
important that the Department, as well
as participating employers and covered
employees, have an effective means of
communicating with a responsible
person at the pooled plan provider
regarding compliance questions or
concerns.
Some commenters questioned the
necessity of providing contact
information for a ‘‘primary compliance
officer.’’ To the extent the purpose of
the requirement is to provide a contact
for the Department’s own use, they
argued that the Department as a Federal
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regulatory authority independently has
the capacity to identify and contact a
compliance officer without regard to
this regulation. To the extent the
requirement is designed to provide
employers and employees with contact
information for a person that is able to
answer questions about their pooled
employer plan, the commenters
believed that the primary compliance
officer would not be helpful. They
suggested that the type of information
employers and employees were likely to
seek, or that they should seek, is more
appropriately provided by the plan
administrator, and noted that contact
information for the plan administrator
could be found in the summary plan
description, or answered by the general
business number required by paragraph
(b)(1)(ii) of the proposal. These
commenters accordingly suggested
eliminating this aspect of the proposal.
The Department declines to adopt this
global suggestion. The Department
continues to believe that employers,
participants, and oversight agencies will
have legitimate questions specifically
regarding the pooled employer plans’
compliance with applicable provisions
under ERISA and the Code that cannot
be answered by contacting, for example,
the general number of the pooled plan
provider, a salesperson, or an entry-
level clerk. Pooled plan providers and
pooled employer plans are new types of
entities under the law, and it is
reasonable to expect that affected
individuals will have genuine
compliance-oriented questions that may
not have ready answers. Moreover, even
in its own experience, the Department
sometimes encounters friction when
attempting to communicate with
responsible compliance officials,
especially at large companies with
numerous touchpoints. The Department,
therefore, retains a version of this
requirement in the final rule, but is
modifying it to address public
comments.
Some commenters stated that the term
‘‘primary compliance officer’’ is
imprecise and possibly confusing.
According to commenters, some
companies that might be pooled plan
providers do not have compliance
officers at all, while other firms have
many compliance officers none of
whom are necessarily ‘‘primary.’’ For
the former group, commenters stated
that presumably the Department is not
requiring that a pooled plan provider
hire a primary compliance officer solely
for this registration regulation, and, as
regards the latter group, the commenters
stated that the proposal was unclear as
to what laws or regulations the
identified person had to be responsible
for as primary compliance officer.
Finally, some commenters objected to
having to identify a specific individual
by name, as a contact, asserting that this
could raise privacy or similar concerns
and necessitate supplemental filings, as
required by paragraph (b)(3)(i) of the
regulation, with every change in
compliance officer. In response to these
comments, the Department has made
adjustments to the proposal.
Paragraph (b)(1)(v) of this final rule
requires the ‘‘[n]ame, address, contact
telephone number and email address for
the responsible compliance official of
the pooled plan provider.’’ For this
purpose, the term responsible
compliance official means ‘‘the person
or persons, identified by name, title, or
office, responsible for addressing
questions regarding the pooled plan
provider’s status under, or compliance
with, applicable provisions of the
Employee Retirement Income Security
Act and the Internal Revenue Code as
pertaining to a pooled employer plan.’’
As revised, this does not require a
pooled plan provider to hire or promote
an individual with any particular degree
or certification. Rather, this standard
simply requires an identification of, and
basic contact information for, the
person, unit, or element designated by
the pooled plan provider as the point-
person responsible for fielding and
addressing questions about the pooled
plan provider’s status under ERISA and
the Code. Put differently, this provision
requires nothing more than that the
company identify with modest
specificity whom it wishes to receive
and address status and compliance-
oriented questions under the two laws
(ERISA and the Code) that sanction the
existence of this novel type of plan, and
how to contact this person, office, or
other element of the pooled plan
provider.
7. The agent for service of legal
process for the pooled plan provider
and the address at which process may
be served on such agent. The proposal
rule explained that this provision would
allow either a person or a process
service company to be identified as the
agent for service of legal process.
Commenters did not raise any material
questions or concerns with this
requirement, therefore, the final rule
adopts this provision substantially as
proposed. However, in response to
observations that the rule implements a
registration requirement and does not
otherwise implement substantive
mandates, the final rule removes from
the proposal the phrase ‘‘and in
addition a statement that service of legal
process may be made upon the pooled
plan provider.’’ This removal clarifies
that paragraph (b)(1)(vi) of the final rule
does not confer or affect rights or
obligations of parties.
8. The approximate date when pooled
plan operations are expected to
commence. Because the SECURE Act
requires that the registration must be
filed ‘‘before the pooled plan provider
begins operations,’’ this data element
will enable the Department to ensure
compliance with the SECURE Act
requirement. Paragraph (b)(1) of the
final regulation requires that the
registration be filed at least 30 days
before beginning operations as a pooled
plan provider, except where a provider
falls within the initial 30-day transition
period. Commenters did not raise
questions or concerns about this
provision or request any revisions to its
text. Therefore, the final rule adopts this
provision as proposed.
9. A description of the administrative,
investment, and fiduciary services that
will be offered or provided in
connection with the pooled employer
plans, including a description of the
role of any affiliates in such services.
Paragraph (b)(1)(viii) of the proposal
requires the registrant to include in the
initial filing a ‘‘description of the
administrative, investment, and
fiduciary services that will be offered or
provided in connection with the pooled
employer plans, including a description
of the role of any affiliates in such
services.’’ The preamble to the proposal
explained that information about
various plan services to be provided by
the pooled plan provider or any affiliate
will assist the Department and
prospective participating employers in
evaluating the pooled plan provider and
identifying potential conflicts of interest
with respect to the operations or
investments of any pooled employer
plans to be operated by the provider.
Commenters raised multiple concerns
with this provision. A few commenters
argued that this provision (in
conjunction with other provisions) is
inconsistent with a simple registration
requirement and should be eliminated
from the final rule. These commenters
argue broadly that the success of this
new retirement vehicle (i.e., the pooled
employer plan) will be jeopardized by
excessive and unnecessary regulations.
These commenters generally advocated
for fewer regulatory obstacles to starting
up pooled employer plans, but with
careful monitoring and possible
adjustments over time.
Other commenters asserted that the
Department’s expectations for paragraph
(b)(1)(viii) of the proposal are unclear
because of tensions between the text of
the regulation, on the one hand, and the
proposed Form PR and related
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9
85 FR 36880 (June 18, 2020) (titled Prohibited
Transactions Involving Pooled Employer Plans
Under the SECURE Act and Other Multiple
Employer Plans).
10
Section 411 of ERISA provides ‘‘[n]o person
who has been convicted of, or has been imprisoned
as a result of his conviction of, robbery, bribery,
extortion, embezzlement, fraud, grand larceny,
burglary, arson, a felony violation of Federal or
State law involving substances defined in section
802(6) of title 21, murder, rape, kidnaping, perjury,
assault with intent to kill, . . . any felony involving
abuse or misuse of such person’s position or
employment in a labor organization or employee
benefit plan to seek or obtain an illegal gain at the
expense of the members of the labor organization
or the beneficiaries of the employee benefit plan
. . . shall serve or be permitted to serve . . . (1) as
instructions, on the other. The
commenters noted that the proposed
regulatory text requires a ‘‘description’’
of the services that will be offered or
provided by a pooled plan provider or
affiliate, as well as a ‘‘description of the
role’’ of any affiliates in such services.
By contrast, the proposed Form PR and
related instructions require only that
certain boxes be checked to indicate
whether certain services will be offered
or provided by the pooled plan provider
or an affiliate (no description at all),
according to these commenters.
Assuming that the Department intends
that the narrower requirements in the
proposed Form PR (i.e., whether
services will be provided, instead of a
description of and the role of affiliates)
would satisfy the operative text, the
commenters additionally questioned
whether such reporting offers the
Department or employers any value or
information not otherwise available
already, such as through existing
reporting obligations (Form 5500,
Schedule C) and disclosure regulations.
Other commenters argued that the
information required by paragraph
(b)(1)(viii) of the proposal is
unnecessary. This is because, according
to these commenters, the SECURE Act,
among other things, requires the pooled
plan provider to serve as the ERISA
3(16) administrator and as a named
fiduciary. As such, the pooled plan
provider is ‘‘the person responsible for
the performance of all administrative
duties (including conducting proper
testing with respect to the plan and the
employees of each employer in the
plan).’’ Accordingly, it should be
evident, these commenters assert, that
the pooled plan provider will provide
administrative and fiduciary services.
These commenters see no benefit to this
proposed provision that would require
the pooled plan provider to report such
obvious information back to the
government on the Form PR.
Other commenters questioned
whether this provision would result in
the disclosure of information helpful to
carry out the stated objectives of the
Department (to assist in the evaluation
of potential for conflicts of interest).
These commenters stated their belief
that many pooled plan providers will
offer or sponsor multiple pooled
employer plans. Further, these
commenters stated that many pooled
plan providers will offer multiple
services, directly or through affiliates, to
these plans. These commenters stated
their belief that some pooled employer
plans will use some services offered by
the pooled plan provider (or affiliates),
and other pooled employer plans will
use a different combination of services
offered by the pooled plan provider (or
affiliates). In recognition that each
pooled employer plan ultimately will
select its own combination of services
from the pooled plan provider (or
affiliates), these commenters question
whether the generic list of information
required by paragraph (b)(1)(iii) of the
proposal (as implemented through the
proposed Form PR), which is not
specific to any particular pooled
employer plan, would meaningfully
advance the stated objectives of the
Department. These commenters
suggested that potential participating
employers need different information–
information specific to their particular
pooled employer plan–to evaluate
potential conflicts, such as information
more closely approximating the
information covered service providers
furnish to responsible plan fiduciaries
under 29 CFR 2550.408b–2.
The Department declines to eliminate
this provision. The SECURE Act clearly
imposes an oversight duty on the
Department with respect to pooled
employer plans. A chief concern of the
Department is potential conflicts of
interest. Pooled plan providers are in a
unique statutory position in that they
are granted full discretion and authority
to establish the plan and all of its
features, administer the plan, and to act
as a fiduciary, hire service providers,
and select investments and investment
managers. Further, at this point in time,
business models for these plans are still
being developed.
9
In light of all of this,
the Department does not agree that a
question that requires a pooled plan
provider to identify whether it or any of
its affiliates will provide services to a
pooled employer plan is unreasonable
or excessive in scope. In response to
specific commenters’ concerns about the
vagueness of the proposal’s requirement
to explain the role of affiliates in
connection with providing services, the
final rule has been simplified to require
merely an identification, by name and
EIN, of any affiliate that is expected to
provide services to the pooled employer
plan. This will allow the Department to
follow up as necessary.
10. A statement disclosing any
ongoing Federal or State criminal
proceeding, or any Federal or State
criminal convictions, related to the
provisions of services to, operation of, or
investments of, any employee benefit
plan against the pooled plan provider,
or any officer, director, or employee of
a pooled plan provider, provided that
disclosure of any criminal conviction
may be omitted if the conviction, or
related term of imprisonment served, is
outside ten years of the date of the
registration. This provision in paragraph
(b)(1)(ix) of the final rule was adopted
from the proposed regulation with only
one non-substantive change. A few
commenters argued that this provision
need not focus on individual employees
of the pooled plan provider for reasons
of privacy, as well as for reasons of
scope and burden. In terms of privacy,
this provision encompasses only
information (e.g., caption, docket
number, State) that is already in the
public record. For instance, if the entire
case is under seal and there is no docket
or caption, the filer would not need to
disclose the existence of any such
sealed case. In terms of scope, a
commenter objected to the notion that a
pooled plan provider would have to
report criminal conviction information
about ‘‘any employee’’—including rank-
and-file employees, such as janitors or
maintenance staff, whose positions
make it unlikely that they could
threaten the safety of a pooled employer
plan. These commenters also noted that
the firms likely to be pooled plan
providers have thousands of employees.
Like the proposal, however, the final
rule does not reach as broadly as some
commenters suggest. This provision
reaches only those rank-and-file
employees of the pooled plan provider
whose conviction relates to providing
services to, the operation of, or
investments of, an employee benefit
plan, and whose conviction or
imprisonment is within the last ten
years. The final rule retains this
provision because it focuses on relevant
negative information that will be useful
in the Department’s oversight of pooled
plan providers. Other statutory
provisions in ERISA already evidence
the relevance of this type of activity and
inform the scope of paragraph (b)(1)(ix)
of the final rule. For example, under
ERISA section 411, the Department is
responsible for ensuring that
disqualified parties do not serve in
positions or capacities prohibited under
the statute.
10
Although paragraph
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an administrator, fiduciary, officer, trustee,
custodian, counsel, agent, employee, or
representative in any capacity of any employee
benefit plan, (2) as a consultant or adviser to an
employee benefit plan, including but not limited to
any entity whose activities are in whole or
substantial part devoted to providing goods or
services to any employee benefit plan, or (3) in any
capacity that involves decision-making authority or
custody or control of the moneys, funds, assets, or
property of any employee benefit plan . . . .’’
11
See also Beck v. Levering, 947 F.2d 639 (2d Cir.
1991) (in a civil action, permitting lifetime
injunction against an individual from providing
services to ERISA plans).
12
Other regulatory authority includes self-
regulatory organizations authorized by law, such as
the Financial Industry Regulatory Authority
(FINRA). However, as used in the final rule, other
regulatory authority does not include any foreign
regulatory authorities.
13
See, e.g., 29 CFR 2571.2 (Procedures for
Administrative Hearings on the Issuance of Cease
and Desist Orders Under ERISA Section 521—
Multiple Employer Welfare Arrangements).
(b)(1)(ix) of the final rule is intentionally
constructed without all the technical
nuance and specifications in section 411
of ERISA, that statutory provision
prohibits individuals convicted of
disqualifying crimes from serving in
plan-related capacities during or for a
period of 13 years after such conviction
or the end of imprisonment, whichever
is later, subject to provisions allowing
that period to be shortened.
11
Finally, the proposal specifically
solicited comments on whether civil
judgments in private litigation should
be added to this provision, and if so, the
types. In the Department’s view,
criminal judgments are more likely, as
a broad category, to be good indicators
of the need for additional review or
inquiry than are civil judgments in
private litigation. None of the
commenters unambiguously advocated
including civil judgments of this type in
this provision, accordingly, the
Department declines to expand this
provision in this manner. A non-
substantive change was made to this
provision. For organizational purposes,
the words ‘‘ongoing’’ and ‘‘proceedings’’
were moved to this provision from
paragraph (b)(1)(x) of the proposal to
accommodate changes made to that
provision.
11. A statement disclosing any
ongoing civil or administrative
proceedings in any court or
administrative tribunal by the Federal or
State government or other regulatory
authority against the pooled plan
provider, or any officer, or director, or
employee of the pooled plan provider,
involving a claim or fraud or dishonesty
with respect to any employee benefit
plan, or involving the mismanagement
of plan assets. Paragraph (b)(1)(x) of the
proposal required the initial filing to
include a statement disclosing any
ongoing criminal, civil, or
administrative proceedings related to
the provisions of services to, operation
of, or investments of any employee
benefit plan, in any court or
administrative tribunal by the Federal or
State government or other regulatory
authority against the pooled plan
provider or any officer, director, or
employee of the pooled plan provider.
12
Similar to the information on criminal
convictions, this data element focuses
on information that may be useful in the
Department’s oversight of pooled plan
providers and that may also assist
employers performing due diligence in
selecting and monitoring pooled
employer plans.
Regarding ongoing administrative
proceedings (as opposed to criminal and
civil proceedings), a number of
commenters were concerned that the
clause ‘‘any ongoing administrative
proceeding’’ could be read to include
routine audits, investigations, or
informal inquiries by Federal and State
regulators. These commenters stated
that most pooled plan providers likely
will be financial service organizations
that are routinely subject to
investigations, audits, and other
administrative actions by any number of
Federal and State agencies and that
requiring these providers to report such
actions would be burdensome and
potentially misleading as to the ‘‘risks’’
of working with a specific provider.
These commenters suggested limiting
the scope of the types of administrative
proceedings falling into this category in
a manner that does not include routine
administrative activities carried out by
executive agencies as part of their
routine oversight functions and
responsibilities.
In response to these commenters, the
Department agrees that the public
would benefit from a more precise
definition of ‘‘administrative
proceeding’’ that does not include
routine regulatory oversight activities of
the type suggested by some commenters
and that the scope of this provision
could be narrowed without
compromising the Department’s
objectives. Paragraph (b)(1)(x) of the
final rule, therefore, is limited to formal
administrative hearings. This limitation
was accomplished by adding a
definition of ‘‘administrative
proceeding’’ in paragraph (b)(8) of the
final rule. This definition is grounded in
established procedures for
administrative hearings by the
Department.
13
Paragraph (b)(8) defines
this term to mean ‘‘a judicial-type
proceeding of public record before an
administrative law judge or similar
decision-maker.’’ The key elements of
this definition ensure a level of
formality and process that operate to
exclude the types of routine
administrative proceedings mentioned
by the commenters, such as routine
audits, examinations, and benefits
reviews by executive-branch agencies.
In sum, the definition elevates the level
of administrative proceeding above the
numerous array of preliminary
administrative and oversight activities
mentioned by the commenters, to
proceedings that involve disputes that
are ripe for adjudication and matters
that are of public record.
Additionally, regarding all three types
of proceedings covered by paragraph
(b)(1)(x) of the proposal (criminal, civil,
and administrative), many commenters
raised concerns regarding the general
breadth of activities covered by this
provision of the proposal. They
requested a more substantial limitation
on the type of activities covered by the
subject proceedings than merely any act
‘‘related to’’ the ‘‘operation of’’ or
‘‘investments of’’ any employee benefit
plan to which the pooled plan provider
has a commercial (service or
investments) relationship. Additionally,
the commenters were concerned with
the proposal’s extension of this
provision to ‘‘any . . . employee’’ of the
pooled plan provider. Many pooled plan
providers will likely be large firms and
may have thousands–even tens of
thousands–of employees, according to
the commenters. The commenters
maintained that the cumulative effect of
these open-ended or undefined concepts
will result in an expensive,
impracticable, or unworkable
registration.
In response to these commenters, the
final rule makes another narrowing
change to the proposal. The Department
has determined that, without this
additional change, this aspect of the
final rule may be impractical for large
providers and could result in so much
reporting that the registration
requirement would become less useful.
Accordingly, paragraph (b)(1)(x) of the
final rule limits the type of reportable
event to matters involving claims of
fraud or dishonesty with respect to any
employee benefit plan, or involving the
mismanagement of plan assets. These
matters go to the core of the
Department’s oversight responsibilities
and, similarly, should be of utmost
relevance to potential or participating
employers. These changes will reduce
the reporting burden on pooled plan
providers, while improving the quality
of the information on file by
encompassing only the most egregious
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14
The preamble to the proposal provided that, for
purposes of registration, employees of the pooled
plan provider would include employees of the
pooled employer plan, but only those who handle
assets of the plan within the meaning of section 412
of ERISA or who are responsible for the operations
or investments of the plan. 85 FR 54288. The intent
of this provision is to avoid potential oversight gaps
by treating certain employees of the pooled
employer plan, if any, as if they are employees of
the pooled plan provider in order to subject them
to the disclosure requirements of the regulation.
The provision identifies a subset of employees of
the pooled employer plan who are in important
positions of plan operations or handle plan assets.
Commenters did not raise questions or concerns
about this provision. Therefore, the final rule
adopts this provision as proposed. In response to
one comment, however, this provision was
relocated from the preamble to paragraph (b)(10) of
the final rule for complete transparency.
15
Subsequent filings on Form 5500 are publicly
available through the Department’s EFAST website,
available at efast.dol.gov. Using the EFAST search
function, an interested person may review any
Form 5500 filings by a specific pooled employer
plan by entering the plan’s name and PN.
claims. Commenters’ concerns regarding
the coverage of rank-and-file employees
are not without merit. Limiting the
scope of actions as described in this
paragraph addresses this concern.
14
Finally, the proposal specifically
requested comments on the feasibility
and advisability of expanding this
provision in the final rule to include
settlements of fiduciary liability claims
against pooled plan providers with the
Department or the Pension Benefit
Guaranty Corporation, including
settlements under ERISA
§ 206(d)(4)(A)(iii). Commenters were
asked whether such information would
be helpful to employers performing due
diligence in selecting and monitoring
pooled employer plans. The
commenters who responded to this
specific request uniformly rejected such
an expansion. They reasoned that most
lawsuits are settled without admission
of fault and disclosure of such
information, therefore, would not
necessarily prove itself to be helpful or
reliable to prospective or participating
employers and may even have adverse
or otherwise chilling effects on the
establishment of pooled plan providers
and pooled employer plans. Based on
the public record, the Department
declines to expand this provision in this
manner.
B. Reportable Event Supplemental
Filings
The final rule provides for two types
of supplemental filings. The first type
focuses on the commencement of
operations by a pooled plan provider of
a pooled employer plan. The second
type of supplemental filing deals more
generally with changes in circumstances
of the pooled plan provider that have
occurred since the provider’s initial
filing. Both types of supplemental
filings will provide important
information to the Department, the
Treasury Department, and the IRS, to
help them protect plan participants and
beneficiaries and conduct more effective
monitoring and oversight of pooled
employer plans and pooled plan
providers. Without this kind of timely
information, the agencies would
typically not learn of risks to a pooled
employer plan until the plan files a
Form 5500, possibly many months after
the event (assuming the information was
even required to be reported on the
Form 5500), and when opportunities for
protecting plan participants from
financial injury have been missed.
Reporting changes in the previously
filed registration information also will
help the Department ensure that the
information regarding pooled plan
providers posted on its website and
available to the public is up to date.
Otherwise the Department, employers,
and the public would have to rely on
outdated information until a Form 5500
was filed for the plan and then would
need to compare the registration
information with the subsequently filed
information about pooled plan
providers in Forms 5500 submitted by
the pooled plan provider on behalf of
the pooled employer plans the providers
operate. The need to rely upon,
compare, and resolve differences
between registration statements and
Forms 5500 would dramatically reduce
the value of registration filings as a
ready and reliable data source for the
Department, employers, and the public.
Commencement of a Pooled Employer
Plan—Paragraph (b)(2)
Paragraph (b)(2) of the final rule
requires a pooled plan provider to file
a supplemental report before beginning
to operate a pooled employer plan. The
supplemental filing must contain the
name and plan number (PN) that the
pooled employer plan will use for
annual reporting, and the name,
address, and EIN for the trustee for the
plan.
15
Under paragraph (b)(2), this
supplemental information must be filed
‘‘[n]o later than the initiation of
operations of a plan as a pooled
employer plan.’’ Sometimes, however, a
pooled plan provider will know this
information at the time it submits its
initial filing. If so, paragraph (b)(2) is
satisfied if the pooled plan provider
includes this information with the
initial filing. This supplemental
information must be reported earlier
than the other supplemental
information required pursuant to
paragraph (b)(3) of the final rule, which
must be reported within the later of 30
days after the calendar quarter in which
the reportable event occurred or 45 days
after a reportable event. The earlier
timing requirement in paragraph (b)(2)
arises from Code section 413(e)(3),
which provides that the requirements to
be a pooled plan provider (including the
requirement to register with the
Secretary of the Treasury before
beginning operations as a pooled plan
provider) must be satisfied ‘‘with
respect to any plan.’’
One change was made to this
provision from the proposed regulation.
Whereas the proposal required the EIN
for the pooled employer plan, paragraph
(b)(2) of the final rule requires the PN
that the pooled employer plan will use
for annual reporting purposes.
Paragraph (b)(1)(iii) of the final rule
already requires disclosure of the EIN of
the pooled plan provider. Thus, the
combination EIN/PN for each pooled
employer plan would be the pooled
plan provider’s nine-digit EIN and the
three-digit PN that the pooled plan
provider assigns to each pooled
employer plan it operates. This change
eliminates the burden on a pooled plan
provider to obtain a separate EIN for
each pooled employer plan it operates.
Instead, the pooled plan provider
simply uses its own EIN and self-assigns
a PN for the particular pooled employer
plan. This change also establishes a
much stronger link between the Form
PR and the pooled employer plan’s
Forms 5500 Annual Return/Report. One
commenter requested the Department,
among other things, to take active efforts
to ensure that the pooled plan
provider’s Form PR and the pooled
employer plan’s annual reports will be
appropriately cross-linked. This change
responds to this commenter’s request.
Other Reportable Events—Paragraph
(b)(3)(i) through (v)
Paragraph (b)(3) of the final rule
requires a supplemental filing for any
changes in the previously reported
registration information and for certain
specified events within the later of 30
days after the calendar quarter in which
the change or reportable event occurred
or 45 days after a reportable event. This
is a longer period than was permitted
under the proposed regulation, which
required a supplemental filing within 30
days of each such reportable event. This
extension was based on commenters’
concerns with the brevity of the
timeframe in the proposal.
In evaluating the 30-day deadline in
the proposal, the commenters were
concerned that they would need to
establish a complex and costly tracking
system to monitor for supplemental
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16
In response to a comment seeking
confirmation, the Department confirms that the
supplemental reporting with respect to merger or
acquisition relates only to ‘‘M&A’’ activity of the
pooled plan provider, not any of its affiliates.
reporting events, reducing the profit
margins and incentives to offer pooled
employer plans. The commenters
argued that the number and scope of
potential reportable events would
effectively require daily tracking and
reporting because every day necessarily
is the end of a prior 30-day period. The
commenters suggested an annual
updating requirement as an alternative.
In response to these concerns, the
final rule requires a supplemental filing
for any changes in the previously
reported registration information and for
certain specified events within the later
of 30 days after the calendar quarter in
which the change or reportable event
occurred or 45 days after a reportable
event. The Department agrees with the
commenters that the proposal’s 30-day
deadline could have potentially created
unnecessary burden for some pooled
plan providers. The Department,
however, is unable to conclude that a
single annual update for all reportable
events that occurred in that year reliably
provides the Department, other
agencies, and participating employers
with sufficiently timely information to
discharge the obligations that underpin
the establishment of this rule. Such an
approach would reduce the reliability of
registration information, which could be
quite stale. For instance, an annual
update of the sort recommended by the
commenters would be well in excess of
the 180 days creditors generally have to
file against a debtor in matters of
bankruptcy. Further, the final rule limits
the scope of the supplemental reporting
requirements in paragraph (b)(3)(iii) of
the final rule, potentially obviating at
least some of the concerns underpinning
the length of commenters’ request. On
balance, the Department believes the
‘‘quarterly’’ rule in the final regulation
strikes a fair balance between the
proposal and the commenters’ request.
The Department recognizes that an
occurrence triggering a supplemental
filing could happen within days of the
end of a quarter; the final rule thus
provides that pooled plan providers at
a minimum will have 45 days to submit
a supplemental filing.
Changes that trigger a supplemental
filing under paragraph (b)(3) are as
follows:
1. Changes in information previously
reported. Paragraph (b)(3)(i) of the final
rule requires a supplemental filing in
the case of a change in the registration
information previously reported by the
pooled plan provider. This provision in
the final rule is the same as in the
proposed rule with one non-substantive
change. One commenter suggested that
we limit the changes that require a
supplemental filing under paragraph
(b)(3)(i) to those that are ‘‘material.’’ The
Department declines this suggestion
because, in its view, all of the
registration information required in an
initial filing is material. The purpose of
paragraph (b)(3)(i) of the final rule is to
ensure that the registration information
the Department has, and that it posts on
its website, is accurate and up to date
so that the Department and prospective
and participating employers are able to
perform their oversight and due
diligence activities, respectively, and
accurate and up-to-date information is
essential to these functions. Moreover,
in other parts of this final rule, we have
circumscribed the information that is to
be included in an initial filing and have
also extended the timeframe for
submitting the supplemental filing, both
of which should ameliorate concerns
that registrants potentially would be
filing copious non-material information.
The non-substantive change is to clarify
that updated disclosure relating to
criminal, civil, or administrative
proceedings need not be made pursuant
to paragraph (b)(3)(i) if such information
is otherwise being disclosed pursuant to
paragraphs (b)(3)(iii)–(v).
2. Changes in corporate or business
structure. Paragraph (b)(3)(ii) of the final
rule requires a supplemental filing in
the case of any significant change in
corporate or business structure of the
pooled plan provider, e.g., merger,
acquisition, or initiation of bankruptcy,
receivership, or other insolvency
proceeding for the pooled plan provider
or affiliate that provides services to any
pooled employer plan, or ceasing all
operations as a pooled plan provider. A
significant change in corporate or
business structure could have
consequences that affect the pooled
employer plans as well as participating
employers and covered employees and
could also give rise to possible conflicts
of interest that would not have existed
in the absence of the transaction.
One clarification was made to this
provision from the proposed regulation.
The proposal would have required a
supplemental filing in the case of an
insolvency proceeding of an affiliate of
a pooled plan provider regardless of
whether the affiliate provides services to
a pooled employer plan. Some
commenters broadly questioned the
need for any supplemental reporting of
any event involving affiliates of the
pooled plan provider, arguing that this
registration requirement should be
limited to pooled plan providers only.
Other commenters, however, suggested
that insolvency proceedings of affiliates
may be relevant for purposes of this rule
if the affiliate provides services to the
pooled employer plan. The Department
agrees with these commenters that
insolvency proceedings of an affiliate of
the pooled plan provider are more
relevant when the affiliate is a service
provider of the pooled employer plan,
and less so when the affiliate has no
service relationship to the plan.
Information about an insolvency
proceeding of an affiliate that does not
provide services to the pooled employer
plan, although not irrelevant, may be in
excess of what is necessary for the
Department to discharge its oversight
obligations under the statute. Such
information, moreover, may be of
limited or no value to participating
employers with respect to their
selection and monitoring obligations
identified in section 3(43) of ERISA.
Accordingly, information about an
insolvency proceeding of an affiliate
does not have to be reported in a
supplemental filing under the final rule,
unless the affiliate is a service provider
of a pooled employer plan. In these
circumstances, the Department believes
the cost of the disclosure is justified by
its value to oversight officials. The
Department added ‘‘that provides
services to any pooled employer plan’’
to paragraph (b)(3)(ii) to effect this
clarification.
16
One commenter suggested that the
Department consider narrowing this
proposed requirement even further to
limit reporting of mergers and
acquisitions of pooled plan providers.
These events, according to this
commenter, could be quite common for
financial corporations and in some
cases, may involve entities that will
have no relation to the pooled employer
plan. Instead of a blanket reporting
obligation, the commenter recommend
limiting this requirement to situations
that will directly impact the pooled plan
provider and its pooled employer plan
offerings. The Department declines to
adopt this suggestion because the
pooled plan provider serves a critical
role in sponsoring the pooled employer
plan and therefore significant changes
in its corporate or business structure
may raise important considerations with
respect to the plan. Unlike the
disclosure provisions related to
insolvency, this provision only applies
to the pooled plan provider and does
not apply to any affiliates. Therefore,
the Department believes that the burden
in providing this disclosure will be
infrequent and low.
3. Receipt of notice of new
administrative proceedings or
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enforcement actions. Paragraph
(b)(3)(iii) of the proposed regulation
required supplemental reporting by the
registrant on ‘‘receipt of written notice
of the initiation of any administrative or
enforcement action related to the
provision of services to, operation of, or
investments of any pooled employer
plan or other employee benefit plan, in
any court or administrative tribunal by
any Federal or State governmental
agency or other regulatory authority
against the pooled plan provider or any
officer, director, or employee of the
pooled plan provider.’’ Commenters
raised similar concerns with this
provision in the proposal as with
paragraph (b)(1)(x) of the proposal
(which dealt with disclosures of
ongoing criminal, civil, or
administrative proceedings). These
concerns were mostly based upon the
provision’s scope and breadth,
particularly regarding the types of
actions, the types of administrative
proceedings, and the class of actors
against whom actions would be
initiated. The Department narrowed the
scope of paragraph (b)(1)(x) of the final
rule in two ways, as discussed above in
this preamble. The Department,
therefore, narrowed the scope of
paragraph (b)(3)(iii) of the final rule to
match the scope of paragraph (b)(1)(x) of
the final rule. Accordingly, paragraph
(b)(3)(iii) of the final rule requires a
supplemental filing if a pooled plan
provider receives written notice of the
initiation of any administrative
proceeding or enforcement action in any
court or administrative tribunal by any
Federal or State governmental agency or
other regulatory authority against the
pooled plan provider, or any officer,
director, or employee of the pooled plan
provider involving a claim of fraud or
dishonesty with respect to any
employee benefit plan, or involving the
mismanagement of plan assets. Timely
knowledge of such actions will help the
agencies fulfill their oversight functions
and assist prospective and existing
participating employers in properly
carrying out their duties under the
SECURE Act provisions with respect to
selection and monitoring of pooled
employer plans.
4. Receipt of notice of finding of
fraud, dishonesty, or mismanagement.
Paragraph (b)(3)(iv) of the final
regulation requires a supplemental
filing if the registrant receives written
notice of a negative finding in any
matter described in paragraph (b)(1)(x)
or (b)(3)(iii) of this section. This
provision is essentially the same as its
predecessor in the proposed rule,
although changes were made to conform
to revisions to paragraphs (b)(1)(x) and
(b)(3)(iii) of the final rule. Those
revisions to paragraphs (b)(1)(x) and
(b)(3)(iii) of the final rule, which
dictated the revisions to paragraph
(b)(3)(iv), are discussed above in this
preamble. The purpose of paragraph
(b)(3)(iv) of the final regulation is to
capture the findings, if negative, of the
proceedings described in paragraphs
(b)(1)(x) and (b)(3)(iii) of the final
regulation. A decision is negative if
there is finding of fraud or dishonesty
related to providing services to any
employee benefit plan (including a
pooled employer plan), or if there is a
finding of mismanagement of plan
assets. This information is important for
agency oversight and for participating
employers with respect to their duties
under the SECURE Act provisions
regarding selection and monitoring of
the pooled employer plans.
5. Receipt of notice of filing of
criminal charges. Paragraph (b)(3)(v) of
the final rule requires a supplemental
filing if a pooled plan provider receives
written notice of the filing of any
Federal or State criminal charges related
to the provision of services to, operation
of, or investments of any pooled
employer plan or other employee
benefit plan against the pooled plan
provider or any officer, director, or
employee of the pooled plan provider.
Such actions, too, are relevant to the
selection and monitoring obligations of
participating employers, and while
ERISA section 411 bars serving as an
ERISA fiduciary following a wide range
of crimes, this information is limited to
those criminal charges related to the
provision of services to, operation of, or
investments of any pooled employer or
other employee benefit plan.
Commenters did not raise questions or
concerns with this requirement.
Therefore, the final rule adopts this
provision as proposed.
Although the final rule largely adopts
the proposed criminal disclosures
without change, the Department is
concerned with potential reputational
harm in the cases of persons acquitted
of the criminal charges for which a prior
reporting has been made under this
section. To address this concern, the
Department added paragraph (d) to the
final rule. Paragraph (d) provides that a
pooled plan provider may file an update
to remove any matter previously
reported under paragraph (b)(1)(ix) or
(b)(3)(v) of the final rule for which the
defendant has received an acquittal.’’
For this purpose, the term ‘‘acquittal’’
means a finding by a judge or jury that
a defendant is not guilty or any other
dismissal or judgment which the
government may not appeal and
includes situations where a prosecuting
authority voluntarily dismisses charges
with an ability to subsequently re-file.
Likewise, the Department reserves the
right to remove such information
independently or in response to a
request from a person acquitted of such
charges.
C. Amendment and Correction of
Registration Information
Pooled plan providers can file
corrections and amendments of their
initial registration and reportable event
filings though the electronic filing
system. Inadvertent or good faith errors
in registrations do not nullify a person’s
status as a pooled plan provider,
provided that a corrected or amended
filing is submitted within a reasonable
period of the discovery of the error or
omission. If correcting only information
previously reported, such as entry of an
incorrect name for the agent for service
of legal process, a person would
indicate on the form that the filing is an
amended filing, not a supplemental
filing.
Further, the Department expects to
propose, through a separate rulemaking,
new questions on the Form 5500 that
would ask whether a pooled plan
provider filed its registration statement
with the Secretary, including any
required updates, and to report the
electronic confirmation number
provided to the pooled plan provider at
the time that the registration was
received. These would be similar to the
questions currently on the Form 5500
that require reporting by multiple
employer group health plans about their
compliance with registration and
reporting requirements on the Form M–
1 (Report for Multiple Employer Welfare
Arrangements (MEWAs) and Certain
Entities Claiming Exception (ECEs)).
The questions would provide the
Department, the Treasury Department,
the IRS, participating employers, and
other stakeholders with information that
would allow them to connect the Form
PR registration with the Form 5500 for
all pooled employer plans operated by
the registrant.
D. Final Filing
If a pooled plan provider has ceased
operating all pooled employer plans and
has filed a supplemental reportable
event filing to indicate that the last
pooled employer plan for which it
served as the pooled plan provider has
been terminated and ceased operating,
the provider is required to file a final
registration filing. For this purpose, a
plan is treated as terminated and having
ceased operations when a resolution has
been adopted terminating the plan, all
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A final Form 5500 cannot be filed for a pooled
employer plan until all assets under the plan
(including insurance/annuity contracts) have been
distributed to the participants and beneficiaries or
legally transferred to the control of another plan.
The final Form 5500 must be filed, absent an
extension of time, no later than the last day of the
7th calendar month after the end of the plan year
in which the plan terminated, but it can be filed
earlier, including as a short plan year filing, if the
pooled employer plan were to cease having
participants and beneficiaries and distribute all the
assets in the middle of a plan year.
18
Public Law 107–347, sec. 2 (Dec. 17, 2002).
19
Regulatory Planning and Review, 58 FR 51735
(Oct. 4, 1993).
20
Improving Regulation and Regulatory Review,
76 FR 3821 (Jan. 18, 2011).
21
5 U.S.C. 804(2) (1996).
22
Reducing Regulation and Controlling
Regulatory Costs, 82 FR 9339 (Jan. 30, 2017).
23
44 U.S.C. 3506(c)(2)(A) (1995).
24
5 U.S.C. 601 et seq. (1980).
assets under the plan (including
insurance/annuity contracts) have been
properly distributed to the participants
and beneficiaries or legally transferred
to the control of another plan, and when
a final Form 5500 has been filed for the
plan. The final Form PR filing is due
within the later of (a) 30 days after the
calendar quarter in which the final
Form 5500 for the last pooled employer
plan operated by the pooled plan
provider was filed,
17
or (b) 45 days after
such filing. A single combined filing
may be used both to report the date that
the last pooled employer plan operated
by the provider has been terminated and
ceased operating, including filing the
final Form 5500 in accordance with its
instructions, and to serve as the final
Form PR filing by the pooled plan
provider. The final filing assists the
Department’s maintenance of an
accurate database of persons serving as
pooled plan providers and provides
accurate public information about
pooled plan providers to employers,
participants, beneficiaries, and other
interested persons.
E. Electronic Filing
This final regulation requires
electronic filing of all pooled plan
provider registrations with the
Department. The Department is using
the same electronic system for pooled
plan providers to file the Form PR that
plan administrators currently use to file
the Form 5500. Regular mail is not the
most efficient or cost-effective way to
file and process this information.
Because the internet is widely
accessible to persons who the
Department expects to be interested in
being pooled plan providers, they will
find electronic filing easier and more
cost-effective than paper filing. The
electronic submission process will also
assist pooled plan providers by ensuring
that all required information is included
in the registration before the electronic
filing can be completed through the
internet site. In addition, the process
provides an electronic registration
confirmation receipt. Electronic filing
also will facilitate the disclosure of the
information to participating employers,
covered participants and beneficiaries,
and other interested members of the
public. Once a registration is filed, the
data would be posted on the
Department’s website and be available
to the public. Therefore, filers and data
users all stand to benefit from electronic
filing in ways that are consistent with
the goals of the E-Government Act of
2002.
18
Under ERISA Section 505, in addition
to having the authority to prescribe such
regulations the Department determines
may be necessary or appropriate to carry
out the provisions of Title I of ERISA,
the Department has the authority to
prescribe forms. The Department used
this authority to create the Form PR.
Form PR and the accompanying
instructions are the required filing
format for pooled plan provider
registrations and the Form PR must be
filed electronically with the Department
of Labor at https://www.efast.dol.gov/.
F. Coordination With the Treasury
Department and the Internal Revenue
Service
The SECURE Act requires pooled plan
providers to register with the
Department as well as with the Treasury
Department and the IRS. The
Department coordinated with those
agencies to develop the final regulation.
Filing the registration statement with
the Department, including the
supplemental statement identifying a
pooled employer plan for which the
pooled plan provider is acting in that
capacity prior to the initiation of
operations of each such plan, satisfies
the Code requirement to register as a
pooled plan provider with respect to
that plan. The Department will continue
to consult with the Treasury Department
and the IRS in connection with their
development of the pooled plan
provider registration requirements and
filing process.
G. Good Cause Finding for Immediate
Registration
The Administrative Procedure Act (5
U.S.C. 553 (d)) (APA) permits a rule to
become effective immediately, rather
than after a 30-day delay, if there is
good cause to do so. The SECURE Act
allows pooled plan providers to begin
operations on January 1, 2021, but only
if they first register with the
Department. Commenters on the
proposed rule requested that the
Department make the registration
process available as soon as possible.
Some commenters even requested that
the Department accept registrations
before publication of a final rule. The
Department agrees that pooled plan
providers will benefit from having the
ability to register immediately, and not
wait for a 30-day effective date period.
For those providers that plan to begin
operating a pooled employer plan on
January 1, 2021, making them wait for
the expiration of the APA’s 30-day
effective-date period will unnecessarily
compress their overall start-up
obligations into a smaller window of
time and may, in fact, impede a
provider’s contractual obligation to
begin operation of a pooled employer
plan on January 1, 2021. Moreover, no
one is harmed by allowing registrants to
file early, as the statute itself does not
allow pooled employer plans to begin
operations until January 1, 2021. In fact,
an immediate effective date will allow
important information to be publicly
available that will enable employers,
and ERISA plan participants and
beneficiaries, more time to evaluate the
bona fides of a particular pooled
employer plan. Accordingly, the
Department finds there is good cause for
the final rule to become effective
immediately, rather than after a 30-day
delay.
Regulatory Impact Analysis
Summary—The SECURE Act was
enacted to expand retirement savings.
Section 101 of the SECURE Act amends
section 3(2) of ERISA to eliminate the
commonality of interest requirement for
establishing certain individual account
plans, or ‘‘pooled employer plans,’’ that
meet specific requirements. Among
these requirements, such plans must
designate a pooled plan provider to
serve as a named fiduciary and as the
plan administrator. Further, section 101
of the SECURE Act requires pooled plan
providers to register with the
Department and the Treasury
Department before beginning
operations. The statute expressly
provides a separate authorization for the
Department to require additional
information.
The Department has examined the
effects of this rule as required by
Executive Order 12866,
19
Executive
Order 13563,
20
the Congressional
Review Act,
21
Executive Order 13771,
22
the Paperwork Reduction Act of 1995,
23
the Regulatory Flexibility Act,
24
section
202 of the Unfunded Mandates Reform
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2 U.S.C. 1501 et seq. (1995).
26
Federalism, 64 FR 153 (Aug. 4, 1999).
27
Regulatory Planning and Review, supra note 2.
Act of 1995,
25
and Executive Order
13132.
26
1.1. Executive Orders
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, select regulatory approaches
that maximize net benefits (including
potential economic, environmental,
public health, and safety effects;
distributive impacts; and equity).
Executive Order 13563 emphasizes the
importance of quantifying costs and
benefits, reducing costs, harmonizing
rules, and promoting flexibility.
Under Executive Order 12866,
‘‘significant’’ regulatory actions are
subject to review by the Office of
Management and Budget (OMB).
27
Section 3(f) of the Executive Order
defines a ‘‘significant regulatory action’’
as an action that is likely to produce a
rule that does any of the following:
(1) Has an annual effect on the
economy of $100 million or more in any
one year, or adversely and materially
affects a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
State, local or tribal governments or
communities (such actions are also
referred to as ‘‘economically
significant’’);
(2) creates a serious inconsistency or
otherwise interferes with an action
taken or planned by another agency;
(3) materially alters the budgetary
impacts of entitlement grants, user fees,
or loan programs or the rights and
obligations of recipients thereof; or
(4) raises novel legal or policy issues
arising out of legal mandates, the
President’s priorities, or the principles
set forth in the Executive Order.
A full regulatory impact analysis must
be prepared for major rules with
economically significant effects (for
example, impacts of $100 million or
more in any one year), and OMB
reviews ‘‘significant’’ regulatory actions.
OMB determined that this rule is not
economically significant within the
meaning of section 3(f)(1) of the
Executive Order but is significant under
3(f)(4). Therefore, the Department has
provided an assessment of the potential
costs, benefits, and transfers associated
with this final rule. In accordance with
the provisions of Executive Order
12866, OMB has reviewed this final
rule.
1.2. Introduction and Need for
Regulation
As added by the SECURE Act, section
3(44) of ERISA requires a person to
register as a pooled plan provider with
the Secretary, and provide other
information the Secretary may require,
before operating a pooled employer
plan. This final rule responds to the
direction given to the Secretary in the
SECURE Act and specifies the
requirements for registering with the
Secretary.
The required information allows the
Department to identify pooled plan
providers so that it may monitor their
actions. While the Form 5500, which
pooled plan providers will also be
required to file, collects important
information, Form 5500 reporting is
generally unavailable for more than 18
months after a plan starts. The SECURE
Act’s registration requirement gives the
Department more immediate access to
pooled plan provider information,
allowing the Department (and other
agencies) to observe how this new
market develops and assess the need for
further guidance.
1.3. Affected Entities
The goal of the SECURE Act is to
increase retirement savings, particularly
by expanding the options for small
employers to participate in multiple
employer plans, such as pooled
employer plans. The Department
expects this expansion to produce
administrative savings and new
opportunities to provide retirement
savings plans for many small employers.
Section 101 of the SECURE Act allows
commercial service providers to serve as
plan administrators and named
fiduciaries of defined contribution
pension plans that offer retirement
benefits to the employees of more than
one unrelated employer. Expanding the
ways in which service providers and
employers may craft and join multiple
employer plans (including pooled
employer plans) should reduce costs
and administrative burdens for
participating employers. For example, a
single Form 5500 filing by the pooled
plan provider would satisfy the annual
reporting requirement for all the
participating employers, instead of
separate Form 5500 filings and audits
for each individual employer. Pooled
plan providers would be both a named
fiduciary and plan administrator for the
pooled employer plan, and they are
required to register with the Department
before operating any such plans.
The Department has identified certain
existing entities that it believes would
be most likely to serve as pooled plan
providers. For example, recordkeepers
that currently administer retirement
plans may be well positioned to serve as
pooled plan providers and some
recordkeepers have affiliated entities
that may seek to provide investment
alternatives and services to the plan.
Similarly, many Professional Employer
Organizations (PEOs) have served as
plan administrators and would likely
have relevant experience to serve as
pooled plan providers. Further,
insurance companies have expressed
interest in serving as pooled plan
providers and some have prior
experience providing similar services.
Chambers of Commerce have
connections with employers, but many
are small with few full-time staff. Also,
few Chambers of Commerce have
sponsored MEWAs. While retirement
plan advisors such as broker-dealers and
registered investment advisers are also
plausible candidates, the Department
believes that some would be reluctant to
assume the named fiduciary and plan
administrator roles. Entities such as
registered investment advisors may be
more comfortable serving as section
3(38) investment managers for the
pooled plan providers.
Given these considerations, the
Department estimates that
approximately 3,200 unique entities
will initially register to serve as pooled
plan providers. Recordkeepers and plan
administrators of existing defined
contribution plans are most likely to
enter the market, followed by PEOs,
direct annuity writers, Chambers of
Commerce, and plan advisors.
E
STIMATED
P
OOLED
P
LAN
P
ROVIDER
Universe Expected
share
(%)
Estimated
number
Unique Recordkeepers and Plan Administrators for existing DC Plans
a
................................... 2,378 50 1,189
Professional Employer Organizations
b
....................................................................................... 907 25 227
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STIMATED
P
OOLED
P
LAN
P
ROVIDER
—Continued
Universe Expected
share
(%)
Estimated
number
Chambers of Commerce
c
........................................................................................................... 4,000 5 200
Large Broker-Dealers
d
................................................................................................................ 173 5 9
Registered Investment Adviser Firms
d
....................................................................................... 30,246 5 1,512
Direct Annuity Writers (Insurance Companies)
e
......................................................................... 386 25 97
Total ...................................................................................................................................... 38,090 8 3,233
a
2017 Form 5500 Schedule C Data.
b
National Association of Professional Employers, https://www.napeo.org/what-is-a-peo/about-the-peo-industry/industry-statistics’’ https://
www.napeo.org/what-is-a-peo/about-the-peo-industry/industry-statistics.
c
Association of Chamber of Commerce Executives reports that there are 4,000 Chambers with at least 1 full-time staff person.
d
2019 FINRA Industry Snapshot. FINRA reported 3,607 FINRA registered firms in 2018. There were 173 with 500 or more registered rep-
resentatives.
e
National Association of Insurance Commissioners.
1.4. Benefits
The SECURE Act requirement that
pooled plan providers first register with
the Department before beginning
operations alerts regulators to the
presence and intent of new entities.
Registering allows potential pooled plan
providers access to this newly created
market. These registrations would
require contact information, the address
of any public website(s) of the pooled
plan provider or affiliates used to
market such person as pooled plan
provider to the public, and the date
operations are expected to commence.
The registrations will be publicly
available and provide a complete list of
registered pooled plan providers. In
addition, the supplemental filing
requirement ensures that providers
update their initial filing to report
changes relevant to the pooled plan
provider’s and participating employers’
fiduciary duties (including, for example,
inception of bankruptcy and criminal or
regulatory enforcement actions against
the pooled plan provider involving a
claim of fraud or dishonesty with
respect to any employee benefit plan, or
involving the mismanagement of plan
assets). This will help provide
transparency regarding the provider’s
management and business practices,
allowing employers to better survey the
market when choosing a pooled plan
provider or deciding whether to
continue to rely on an existing provider
and enabling the Department and
Treasury Department to carry out their
statutory oversight duties.
Some commenters were concerned
that the information required in the
registration would expose pooled plan
providers to litigation risk and a
heightened degree of regulatory
scrutiny. Some commenters also were
concerned that disclosing ongoing
criminal, civil, or administrative
proceedings against the pooled plan
providers would deter employers from
engaging with pooled plan providers.
While the Department acknowledges
these concerns, the Department believes
that the registration and supplemental
filing requirements will provide the
Department, other agencies, and
potential or participating employers
information (including transparency
regarding fraud, dishonesty, and
mismanagement of plan assets) they
need to discharge their legal obligations
under the law.
In the Department’s view, the
statutory purpose of the registration
requirement is to provide the
Department with sufficient information
about entities acting as pooled plan
providers to engage in effective
monitoring and oversight of this new
type of ERISA retirement plan. As
discussed above, the potential for
inadequate employer oversight of the
activities of a pooled employer plan and
its plan fiduciaries and other service
providers may be greater than is true of
other plans sponsored by employers
because the participating employers in
pooled employer plans give more
responsibility to the pooled plan
provider than they typically give service
providers in other plan arrangements.
The final regulation’s information
collection, which the Department has
limited to minimize burden, will assist
the Department in fulfilling its oversight
responsibilities. Disclosure of any
websites containing marketing
information for any pooled employer
plan(s) established by the provider, the
date operations are expected to
commence, and changes relevant to the
pooled plan provider’s fiduciary duties
(including, for example, bankruptcy,
litigation, and ongoing criminal or
regulatory enforcement actions
involving fraud or dishonesty) all serve
to help with monitoring and oversight.
As stated above, the SECURE Act
amended ERISA to remove possible
barriers to the broader use of multiple
employer plans. This objective was
accomplished primarily by allowing
multiple unrelated employers to
participate in an open MEP called a
pooled employer plan that does not
require commonality among
participating employers or a genuine
organizational relationship unrelated to
participation in the plan. By allowing
most of the administrative and fiduciary
responsibilities of sponsoring a
retirement plan to be transferred to
pooled plan providers, pooled employer
plans give employers the option of
providing a workplace retirement plan
to their employees with reduced
burdens and costs as compared to
sponsoring their own separate single
employer retirement plan.
Consequently, more plan formation and
broader availability of workplace
retirement plans should occur,
especially among small employers.
The Department is uncertain of the
number of pooled employer plans that
could be created based on the final rule,
the number of employers that will
participate in such plans, and the
number of participants and beneficiaries
that will be covered by them. The
Department is confident, however, that
pooled employer plans will be created
to take advantage of the new statutory
structure.
It is possible that each pooled plan
provider that registers will offer at least
one new pooled employer plan and
larger pooled plan providers will offer
more than one new pooled employer
plan. As is the case with multiple
employer plans generally, pooled
employer plans are likely to vary
substantially in size, although small
pooled employer plans are less likely to
offer the economies of scale that could
exist for large or very large pooled
employer plans.
The effects on coverage are somewhat
uncertain because of the possibility of at
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Workplace retirement plans often provide a
more effective way for employees to save for
retirement than saving in their own IRAs.
Compared with saving on their own in IRAs,
workplace retirement plans offer employees (1)
higher contribution limits; (2) generally lower
investment management fees as the size of plan
assets increases; (3) a well-established uniform
regulatory structure with important consumer
protections, including fiduciary obligations,
recordkeeping and disclosure requirements, legal
accountability provisions, and spousal protections;
(4) automatic enrollment; and (5) stronger
protections from creditors. At the same time,
workplace retirement plans provide employers with
choice among plan features and the flexibility to
tailor retirement plans that meet their business and
employment needs. See 84 FR 37528.
29
84 FR 37508 (July 31, 2019) (Definition of
‘‘Employer’’ Under Section 3(5) of ERISA—
Association Retirement Plans and Other Multiple-
Employer Plans); see also 83 FR28912 (June 21,
2018) (Definition of ‘‘Employer’’ Under Section 3(5)
of ERISA—Association Health Plans).
30
Section 101 of SECURE Act itself contemplates
such conversions and provides a special rule for
existing plans to elect pooled employer plan status
(new section 3(43)(C)) of ERISA).
31
Private Pension Plan Bulletin: Abstract of 2018
Form 5500 Annual Reports, Employee Benefits
Security Administration (forthcoming 2020).
32
84 FR 37508, 37535.
33
Deloitte Consulting and Investment Company
Institute, Inside the Structure of Defined
Contribution/401(k) Plan Fees, 2013: A Study
Assessing the Mechanics of the ‘‘All-in’’ Fee (Aug.
2014). Deloitte Consulting LLP conducted a survey
of 361 defined contribution plans for the
Investment Company Institute. The study calculates
an ‘‘all in’’ fee that is comparable across plans
including both administrative and investment fees
paid by the plan and the participant. Deloitte
predicted these estimates by analyzing the survey
results using a regression approach calculating basis
points as a share of assets. See 84 FR 37508, 37535.
34
The total ten-year cost is $1,215,000 with a
three percent discount rate and $1,084,000 with a
seven percent discount rate. The annualized ten-
year cost is $142,000 using a three percent discount
rate, and $154,000 using a seven percent discount
rate.
least some zero-sum gain. Some new
pooled employer plans will attract
participating employers that currently
do not offer retirement savings
opportunities to their employees. The
result in this situation would be a net
coverage increase, and retirement
security could be improved to some
extent for the employees of these
participating employers.
28
At the same
time, however, the Department expects
that some existing retirement plans,
most likely those of small single
employer plan sponsors, could
terminate or otherwise cease to operate
in their current form and merge into
pooled employer plans. A dominant
influence in this direction would be the
administrative cost savings and other
operational efficiencies that come with
economies of scale. The Department has
repeatedly acknowledged the potential
benefits that could accrue to small
employers and their employees if they
join together in multiple employer plans
and similar cooperative arrangements.
29
For different reasons, though, it also
is possible that some existing multiple
employer plans would convert to pooled
employer plans.
30
According to the
most recent Form 5500 data, there are
4,523 defined contribution multiple
employer plans.
31
Conversions of this
type might occur, for example, if a
multiple employer plan were to
conclude that restrictions under section
3(5) of ERISA, such as the geographic
limitations imposed pursuant to 29 CFR
2510.3–55(b)(2), the substantial
employment function test for bona fide
professional employer organization
arrangements in 2510.3–55(c)(1), or the
tests articulated in the Department’s
subregulatory guidance for an entity to
be considered a bona fide group or
association of employers were
disadvantageous or inefficient relative
to the conditions for being a pooled
employer plan.
The total number of defined
contribution plans, therefore, could
decrease as a result of these mergers and
conversions. Even so, however, net
coverage (i.e., the number of total
defined contribution plan participants)
could increase, because (1) participants
in plans that merge or convert into
pooled employer plans would continue
to be covered under a retirement plan,
and (2) some employers that do not
currently provide their employees with
retirement plan access would join
pooled employer plans and their
employees would count as newly-
covered participants.
Pooled employer plans generally
would benefit from scale advantages
that small businesses do not currently
enjoy, and the Department expects that
such plans will pass some of the
attendant savings onto participating
employers and participants. Large scale
may create two distinct economic
advantages for pooled employer plans.
First, as scale increases, marginal costs
for pooled employer plans would
diminish and pooled plan providers
would spread fixed costs over a larger
pool of member employers and
employee participants, creating direct
economic efficiencies. Second, asset
managers commonly offer
proportionately lower prices, relative to
money invested, to larger investors,
under so-called tiered pricing practices
resulting in decreased expense ratios
based on the aggregate amount of money
invested by a single pooled employer
plan.
For example, larger plans tend to have
lower fees overall.
32
Generally, small
plans with 10 participants pay
approximately 50 basis points more
than plans with 1,000 participants.
33
Small plans with 10 participants pay
about 90 basis points more than large
plans with 50,000 participants.
Grouping small employers together into
a pooled employer plan could facilitate
savings through administrative
efficiencies and sometimes through
price negotiation (market power). The
degree of potential savings may be
different for different types of
administrative functions, e.g., scale
efficiencies can be very large with
respect to asset management, and may
be smaller, but still meaningful, with
respect to functions such as marketing,
distribution, asset management,
recordkeeping, and transaction
processing.
Other potential benefits of the
expansion of MEPs through the creation
of pooled employer plans could include
(1) increased economic efficiency as
small businesses can more easily
compete with larger companies in
recruiting and retaining workers due to
a competitive employee benefit package;
(2) enhanced portability for employees
that leave employment with an
employer to work for another employer
participating in the same pooled
employer plan; (3) higher quality data
(more accurate and complete) reported
to the Department on the Forms PR and
5500; and (4) increased operating
efficiency for small businesses by
shifting the administrative burden
associated with establishing and
maintaining a retirement plan to a
pooled plan provider.
1.5. Costs
The costs most directly associated
with this rule are those incurred to
prepare and submit the registration
statement. The PRA section, below,
discusses these costs in detail. As
required under E.O. 13771, the
estimated cost is $688,000 in the first
year and $72,400 in subsequent years.
34
The perpetual time horizon annualized
cost is $106,100 in 2016 dollars, using
a seven percent discount percent rate,
discounted from 2016. Other indirect
costs may also be attributed to the
regulation, depending on the extent of
pooled employer plan formation, as well
as the extent of conversions, mergers,
and contractions among existing plans.
The likely extent of these actions and
associated costs is highly uncertain.
With respect to any new pooled
employer plan, these indirect costs
would relate to a pooled plan provider
complying with the requirements of the
SECURE Act that are not codified by
this final regulation.
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Employer contributions to qualified pension
plans and, generally, employee contributions made
at the election of the employee through salary
reduction are not taxed until distributed to the
employee, and income earned on those amounts is
not taxed until distributed. The tax expenditure for
‘‘net exclusion of pension contributions and
earnings’’ is computed as the income taxes forgone
on current tax-excluded pension contributions and
earnings less the income taxes paid on current
pension distributions.
Some commenters suggested that the
final rule’s reporting requirements
would be burdensome and duplicative
of other ERISA-required reporting
requirements. One commenter asserted
that the pooled plan provider should
not be required to report any
information other than the pooled plan
provider’s basic contact and identifying
information. While the Department
acknowledges these concerns, the Form
5500 data generally is not available for
18 months after a plan starts operation.
Therefore, the Form PR will provide the
Department with more immediate
access to pooled plan provider
information. This will allow the
Department to monitor pooled plan
providers and assess the need for further
guidance, which will help protect the
interests of plan participants and
beneficiaries. In addition, changes to the
proposed rule have been made to
address overbreadth and redundancy
concerns.
Another commenter suggested that
disclosing the pooled plan provider’s
compliance officer would be
burdensome, positing that the
Department was effectively requiring
pooled plan providers to create a
compliance officer role. The Department
has now clarified that this is not the
case. The final rule simply requires an
identification of, and basic contact
information for, the person, unit, or
element designated by the pooled plan
provider as the point-person responsible
for fielding and addressing questions
about the pooled plan provider’s status
under ERISA and the Code. Put
differently, this provision requires
nothing more than for the company to
identify whom it wishes to receive and
address status and compliance-oriented
questions. The Department has tailored
this provision as narrowly as possible to
advance its intended objective without
requiring any changes in business
practices. Thus, the Department does
not expect that pooled plan providers
will incur costs to hire additional
employees to serve as responsible
compliance officials.
1.6. Transfers
Several potential transfers could
occur because of this final rule. To the
extent the formation of pooled employer
plans leads employers that previously
sponsored retirement plans to terminate
or freeze these plans and join a pooled
employer plan, there may be a transfer
if the pooled employer plan has
different service providers and asset
types than the terminated plan. A
similar transfer might occur in cases
where employers who previously did
not offer their employees a retirement
plan join a pooled employer plan.
Employees of these employers may have
been saving for retirement previously in
different ways, such as through an IRA,
which would have different service
providers. Service providers that
specialize in providing services to
pooled employer plans or are affiliated
with a pooled plan provider might
benefit at the expense of other providers
who specialize in providing services to
small plans or IRAs. Those different
service providers would experience
gains or losses of income or market
share.
The rule could also result in asset
transfers if pooled plan providers invest
in different types of assets than plans
that merge or convert to pooled
employer plans. For example, small
plans tend to rely more on mutual
funds, while larger plans have greater
access to other types of investment
vehicles such as bank common
collective trusts and insurance company
pooled separate accounts, which allow
for specialization and plan specific fees.
This movement of assets could see
profits move from mutual funds to other
types of investment managers.
Finally, the Code generally gives tax
advantages to certain retirement savings
over most other forms of savings.
35
Consequently, all else being equal,
workers who are saving money in tax
qualified retirement savings vehicles
generally can enjoy higher lifetime
consumption and wealth than those
who do not. The magnitude of the
relative advantage generally depends on
the worker’s tax bracket, the amount
contributed to the plan, the timing of
contributions and withdrawals, and the
investment performance of the assets in
the account. Workers that do not
contribute to a qualified retirement
savings vehicle because they lack access
to a workplace retirement plan do not
reap this relative advantage. This rule
would likely increase the number of
American workers with access to tax-
qualified workplace retirement plans,
which would spread this financial
advantage to some people who are not
currently receiving it. If access to
retirement plans and savings increase
because of this rule, a transfer will occur
flowing from all taxpayers to those
individuals receiving tax preferences as
a result of new and increased retirement
savings.
As is evident from the foregoing, the
exact magnitude of the potential
transfers is uncertain at this stage, as are
the precise identities of the transferors
and transferees. Much depends on the
number of pooled employer plans that
eventually come into existence, the
extent of plan consolidation, the
number of employers that begin
participating anew in pooled employer
plans, and the savings habits of the
employees of these employers (who
might have heretofore been saving
through an IRA). Major influences on
each of these factors include, among
other things, the nature, extent, and
timing of the regulatory intervention
needed to implement the SECURE Act,
as well as the general state of the
economy.
1.7. Uncertainty
While the Department has identified
types of service providers that it
believes will be well positioned to act
as pooled plan providers, it is unclear
how many will choose to enter the
market and whether they will do so in
the first year of enactment or in later
years. The Department solicited
comments on which and how many
entities are likely to register as pooled
plan providers. However, the
Department did not receive comments
that specifically addressed this
question. Thus, the Department has
based its assumptions on discussions
with stakeholders and articles on
emerging markets.
1.8. Regulatory Alternatives
Section 101 of the SECURE Act
requires pooled plan providers to
register with the Secretary and provide
such other information as the Secretary
may require, before beginning
operations as a pooled plan provider.
The Department considered several
alternative forms of information to be
included that are discussed below.
The Department could have required
fewer data elements, such as contact
information only, including address and
email. While slightly less burdensome
than the final rule’s requirements,
requiring fewer data elements would
provide substantially less information to
the Department, which would impede
its ability to fulfill its critical oversight
role of protecting participants and plan
assets. Employers also would receive
less information to survey the market
when choosing a pooled plan provider
or deciding whether to continue to rely
on an existing provider.
The Department considered requiring
pooled plan providers to file a
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3,223 pooled plan providers * 0.75 hours =
2,425 hours. 2,425 hours * $165.63 = $401,653.
Labor rates are EBSA estimates, found at https://
www.dol.gov/sites/dolgov/files/EBSA/laws-and-
regulations/rules-and-regulations/technical-
appendices/labor-cost-inputs-used-in-ebsa-opr-ria-
and-pra-burden-calculations-june-2019.pdf.
37
3,460 pooled plan providers * 0.50 hour =
1,730 hours. 1,730 hours * $165.63 = $286,540.
Labor rates are EBSA estimates, found at https://
www.dol.gov/sites/dolgov/files/EBSA/laws-and-
regulations/rules-and-regulations/technical-
appendices/labor-cost-inputs-used-in-ebsa-opr-ria-
and-pra-burden-calculations-june-2019.pdf.
38
Pension plans face additional burdens in
terminating, and so using welfare plans termination
rates as a proxy may overstate the number of
incidents.
registration for each pooled employer
plan. This would have required pooled
plan providers to file multiple similar
filings. The Department did not choose
this option, because it would have
required pooled service providers to
make multiple filings while providing
minimal additional benefits.
The Department also considered not
requiring pooled service providers to
make supplemental filings. While this
option would have been less
burdensome than the chosen option, it
would have provided less information
to the Department and interested
employers. Requiring pooled service
providers to report updated information
to the Department can provide key
information the Department needs to
fulfill its oversight role. Therefore, the
Department determined that the benefits
of requiring supplemental filings justify
any additional cost that pooled plan
providers would incur to furnish the
updated information.
2. Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995 (PRA 95) (44
U.S.C. 3506(c)(2)(A)), the Department
solicited comments concerning the
information collection request (ICR)
included in the Registration
Requirements to Serve as a Pooled Plan
Provider to Pooled Employer Plans ICR
(85 FR 54288). At the same time, the
Department also submitted an
information collection request (ICR) to
the Office of Management and Budget
(OMB), in accordance with 44 U.S.C.
3507(d).
The Department did not receive
comments that specifically addressed
the paperwork burden analysis of the
information collection requirement
contained in the proposed rule.
In connection with publication of this
final rule, the Department submitted an
ICR to OMB requesting approval of a
new collection of information under
OMB Control Number 1210–0164,
which expires on November 30, 2023.
OMB approved the ICR on November
16, 2020.
A copy of the ICR may be obtained by
contacting the PRA addressee shown
below or at www.RegInfo.gov. PRA
ADDRESSEE: G. Christopher Cosby,
Office of Regulations and
Interpretations, U.S. Department of
Labor, Employee Benefits Security
Administration, 200 Constitution
Avenue NW, Room N–5718,
Washington, DC 20210; cosby.chris@
dol.gov. Telephone: 202–693–8410; Fax:
202–219–4745. These are not toll-free
numbers.
The SECURE Act requires a person to
register as a pooled plan provider with
the Secretary, and provide other
information the Secretary may require,
before beginning operations. This
information collection contains the
requirements to register with the
Secretary under section 3(44) of the Act.
The information collection will use the
same EFAST 2 electronic filing system
that pooled plan providers will use to
file the Form 5500 required to be filed
on behalf of the pooled employer plan
the provider operates.
The Department has designed a two-
part approach for this requirement. The
first consists of a simple registration of
mainly contact information and links to
marketing websites. Pooled plan
providers must electronically register
with the Department at least 30 days
before beginning operations. Pooled
plan providers that will initiate
operations of a plan as a pooled
employer plan on or after January 1,
2021, can register anytime before
February 1, 2021, provided that the
registration is filed ‘‘on or before’’ the
initiation of operations of a plan as a
pooled employer plan. The 30-day
waiting period between registration and
the start of plan operations for these
pooled plan providers will be waived.
The information included in the
registration should be collected by the
pooled plan provider during its normal
course of business, so collection should
not require additional effort by the
administrator. The Department
estimates that compiling and submitting
the initial registration information will
take about 45 minutes and impose no
additional costs on the administrator.
To limit costs, a pooled plan provider
needs to file only one registration
regardless of the number of pooled
employer plans it operates, provided
that a supplemental statement is filed
identifying each pooled employer plan
before the initiation of operations of the
plan as a pooled employer plan.
Assuming roughly 3,200 pooled plan
providers, the Department estimates a
burden of 2,425 hours, with an
equivalent cost of $402,000, in the first
year.
36
If the pooled plan provider does not
begin operating any new pooled
employer plans, does not change its
contact information, or does not
experience any changes as described in
the final rule, it may go for a period of
months or years without needing to
supplement its registration. The
Department anticipates that this will
often be the case.
Pooled plan providers are required to
file a supplemental filing within the
later of 30 days after the calendar
quarter in which a reportable event
occurred or 45 days after a reportable
event. The supplemental filing
requirement is similar to, although more
limited than, filers’ obligations with
respect to the Form M–1, which requires
entities to submit additional filings to
document changes. Approximately
seven percent of entities filing a Form
M–1 in 2017 submitted an additional
filing after undergoing a change.
Assuming pooled plan providers will
behave in a similar manner, the
Department estimates that
approximately 230 pooled plan
providers will submit supplemental
filings documenting changes annually,
including in the first year.
The supplemental filing amends the
original registration to include
information either for pooled employer
plans that begin operations or cease
operations, or for material changes
relevant to the pooled plan provider’s
fiduciary duties (including, for example,
bankruptcy, litigation, and criminal or
regulatory enforcement actions
involving fraud or dishonesty).
Accordingly, the Department estimates
the supplemental filing will take 30
minutes for pooled plan providers to
submit. The Department does not
believe, however, that the pooled plan
provider will incur any additional costs
beyond the labor costs necessary to
collect and submit this information. The
Department estimates that there will be
3,460 filings under the second part of
this requirement in the first year,
imposing a burden of 1,730 hours, with
an equivalent cost of $287,000.
37
In subsequent years, the Department
believes that the percentage of pooled
plan providers reporting beginning or
ceasing operations of pooled employer
plans will roughly parallel the
experience of Form M–1 filers.
Approximately 14 percent of Form M–
1 filers indicated they began operations
in 2017, while six percent indicated
they ceased operations.
38
Assuming
pooled plan providers behave in a
similar manner, the Department expects
an additional 650 registrations related to
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3,233 * 0.14 = 453 pooled plan providers report
pooled employer plans beginning operation, 453
pooled plan providers * 0.50 hour = 227 hours. 227
hours * $165.63 = $37,598 3,233 * 0.06 = 453
pooled plan providers report pooled employer
plans ending operation, 194 pooled plan providers
* 0.50 hour = 977 hours. 97 hours * $165.63 =
$16,060.
40
873 filings * 0.5 hours = 437 hours. The 873
filings in subsequent years are 453 pooled plan
providers reporting pooled employer plans
beginning operations, 194 pooled plan providers
reporting pooled employer plans ending operations,
and 226 pooled plan providers filing other changes.
41
5 U.S.C. 601 et seq. (1980).
42
5 U.S.C. 551 et seq. (1946).
43
Some possible affected industries by NAICS
code are as follows: 524292 third-party
administration, more than 90 percent small
Continued
beginning or ceasing operations
annually in subsequent years.
39
These
filings have an associated hour burden
of 324 hours with an equivalent cost of
nearly $54,000 in subsequent years.
The estimated total burden of this
information collection is 4,155 hours,
with an equivalent cost of $688,000, in
the first year and 437 hours, with an
equivalent cost of $72,400, in
subsequent years.
40
The Department expects many pooled
plan providers will file the first part of
registrations in the initial year, and
significantly fewer will file in
subsequent years as the market
stabilizes. Incidents of filing updated
and amended registration statements are
expected to increase after the first year,
as pooled employer plans enter and exit
the market, change service providers,
and change pooled employer plan
offerings.
A summary of paperwork burden
estimates follows:
Type of Review: New collection.
Agency: Employee Benefits Security
Administration, U.S. Department of
Labor.
Title: Registration Requirements To
Serve as a Pooled Plan Provider To
Pooled Employer Plans.
OMB Control Number: 1210–0164.
Affected Public: Businesses or other
for-profits.
Estimated Number of Respondents:
1,660 3-year average (3,233 first year,
873 subsequent years).
Estimated Number of Annual
Responses: 2,813 3-year average (6,693
first year, 873 subsequent years).
Frequency of Response: Occasionally.
Estimated Total Annual Burden
Hours: 1,676 3-year average (4,155 first
year, 437 subsequent years).
Estimated Total Annual Burden Cost:
0.
3. Regulatory Flexibility Act
The Regulatory Flexibility Act
(RFA)
41
imposes certain requirements
with respect to Federal rules that are (1)
subject to the notice and comment
requirements of section 553(b) of the
Administrative Procedure Act
42
and (2)
likely to have a significant economic
impact on a substantial number of small
entities. Unless an agency determines
that a final rule is not likely to have a
significant economic impact on a
substantial number of small entities,
section 604 of the RFA requires the
agency to present a final regulatory
flexibility analysis of the final rule. The
Department has determined that this
final rule, which would require
prospective pooled plan providers to
register with the Department prior to
beginning operations, is not likely to
have a significant economic impact on
a substantial number of small entities.
Therefore, the Department certifies that
the final rule will not have a significant
economic impact on a substantial
number of small entities. The
Department estimates that only about
eight percent of the potential market
will be subject to the rule as pooled plan
providers. Each of these entities would
incur an estimated cost of $124 to
register and $83 to update the
registration if needed. Below is
justification for this determination.
3.1. Need for and Objectives of the Rule
Section 101 of the SECURE Act
requires pooled plan providers to
register with the Department, the
Treasury Department, and the IRS. As
noted above, the Treasury Department
and the IRS have indicated that filing
the registration statement with the
Department will also satisfy the Code’s
registration requirement. The
information required to be reported
under the final rule would allow
regulators to identify and monitor
pooled plan providers. While some of
the required information may be found
in the Form 5500, which pooled plan
providers will also be required to file on
behalf of each participating employer
plan they operate, this reporting is not
available for more than 18 months after
the pooled plan providers begin
operating. The Form 5500, however,
would not necessarily include some
important information regarding the
pooled plan providers themselves, such
as bankruptcy filings, or the
commencement of any criminal, civil, or
administrative proceedings involving a
claim of fraud or dishonesty with
respect to any employee benefit plan or
involving the mismanagement of plan
assets. Requiring pooled plan providers
to register gives both the agencies and
the public, including participating
employers, more immediate access to
the information for monitoring
purposes, and enables the agencies to
monitor how this new market develops
and assess whether further guidance is
needed.
3.2. Affected Small Entities
The Department has identified certain
existing entities that it believes would
be most likely to serve as pooled plan
providers. For example, recordkeepers
that currently administer retirement
plans are well positioned to serve as
pooled plan providers. Similarly, many
PEOs have served as plan administrators
and would likely have little trouble
taking on the role of pooled plan
provider. Further, many insurers have
expressed interest in serving as pooled
plan providers. While retirement plan
advisors such as broker-dealers and
registered investment advisors are also
plausible candidates, the Department
believes that many would be reluctant
to assume the named fiduciary and plan
administrator roles. Entities such as
registered investment advisors may
likely be more comfortable serving as
section 3(38) investment managers for
the pooled plan providers.
Based on such considerations, the
Department estimates that roughly 3,200
unique entities will initially register to
serve as pooled plan providers.
Recordkeepers and plan administrators
of existing defined contribution pension
plans are most likely to enter the
market, followed by PEOs, chambers of
commerce, and plan advisors.
While the Department does not have
complete information on which of these
entities meet the Small Business
Administration’s definition of a small
entity, many of these entities likely are
small. The Department estimates that
about half of current recordkeepers and
plan administrators currently serving
defined contribution plans would
register to become pooled plan
providers. Other types of providers will
likely comprise a smaller share of
entities that register. Overall, the
Department estimates that about eight
percent of the universe of entities the
Department has identified as well-suited
to serve as pooled plan providers are
likely to register. The table below
includes both large and small entities.
The Department cannot estimate with
specificity the distribution by size of the
providers that will choose to become
pooled plan providers. However, most
of the providers in these service
categories meet the Small Business
Administration definition of small
entities. If the percentages in the
footnote are applied to the number of
affected entities in the table below,
about 2,600 businesses could be small
businesses.
43
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business; 524113 underwriting annuities and life
insurance, more than 70 percent small business;
523999 financial investment services, more than 95
percent small businesses; 523999 brokerage,
financial investment services, more than 95 percent
small business; 561330 professional employer
organization, more than 90 percent small business.
44
To register: 0.75 hours per pooled plan
provider; 0.75 hours * $165.63 = $124.23. To
update a registration: 0.50 hours * $165.63 =
$82.82. The total labor rate for a financial manager
is used as a proxy for the labor rate. Labor rates are
EBSA estimates found at www.dol.gov/sites/dolgov/
files/EBSA/laws-and-regulations/rules-and-
regulations/technical-appendices/labor-cost-inputs-
used-in-ebsa-opr-ria-and-pra-burden-calculations-
june-2019.pdf.
45
Data set supplied by the Small Business
Administration containing data on the number of
firms and revenue by NAICS codes. Estimates used
NAICS codes 524292, 56133, 523120, 52393,
523130, and 524113.
46
2 U.S.C. 1501 et seq. (1995).
47
Enhancing the Intergovernmental Partnership,
58 FR 58093 (Oct. 28, 1993).
48
Federalism, supra note 7.
E
STIMATED
P
OOLED
P
LAN
P
ROVIDER
Universe Expected
share
(%)
Estimated
number
Unique Recordkeepers and Plan Administrators for existing DC Plans
a
................................... 2,378 50 1189
Professional Employer Organizations
b
....................................................................................... 907 25 227
Chambers of Commerce
c
........................................................................................................... 4,000 5 200
Large Broker-Dealers
d
................................................................................................................ 173 5 9
Registered Investment Advisor Firms
d
....................................................................................... 30,246 5 1512
Direct Annuity Writers (Insurance Companies)
e
......................................................................... 386 25 97
Total ...................................................................................................................................... 38,090 8 3,233
a
2017 Form 5500 Schedule C Data.
b
National Association of Professional Employers, https://www.napeo.org/what-is-a-peo/about-the-peo-industry/industry-statistics.
c
Association of Chamber of Commerce Executives reports that there are 4,000 Chambers with at least 1 full-time staff person.
d
FINRA Industry Snapshot. FINRA reported 3,607 FINRA registered firms in 2018. There were 173 with 500 or more registered representa-
tives.
e
National Association of Insurance Commissioners.
One commenter was concerned that
the rule would expose pooled employer
plans to litigation risk. The commenter
suggested that this would dissuade
pooled plan provider from registering
and thus, there would be fewer pooled
employer plans available to small
employers. While the Department
acknowledges this concern, the
Department believes that the rule will
result in a greater availability of
workplace retirement plans among
small employers. By allowing most of
the administrative and fiduciary
responsibilities of sponsoring a
retirement plan to be transferred to
pooled plan providers, pooled employer
plans provide small employers with the
option of providing a workplace
retirement plan to their employees with
reduced burdens and costs as compared
to sponsoring their own separate single
employer retirement plan.
3.3. Impact of the Rule
The Department estimates that it
would take the average pooled plan
provider with a labor rate of $165.63
only 45 minutes to register, at an
expense of $124.23, because the
information necessary is readily
available through the normal course of
business.
44
Pooled plan providers
submit the filing only when data
elements change, the administrator
begins or ceases operations for any
pooled employer plan, or the pooled
plan provider undergoes a change. The
supplemental filing will require an
estimated 30 minutes to complete, at an
expense of $82.82. As with the initial
registration, the required information for
the supplemental filing is readily
available. The cost to file both a
registration and a supplemental filing in
a single year would be $207.16, which
would be less than one percent of
revenue if a business had more than
$20,700 in revenue. The Department
lacks complete data to determine the
number of firms that do not meet this
revenue threshold. Available data
suggests that 15 percent of possibly
affected firms have less than $100,000
in revenue.
45
To further illustrate how small a $207
burden is, note that a one-person firm
consisting of an individual with a labor
rate of $165.63 would need to work only
125 hours to have revenue of $20,700.
That same individual working 2,000
hours, a standard work year, would
produce revenue of $331,260, resulting
in $207.16 being significantly less than
one percent of revenue.
3.4. Duplicate, Overlapping, or Relevant
Federal Rules
The final rule does not conflict with
any relevant Federal rules. Section 101
of the SECURE Act requires pooled plan
providers to register both with the
Department and with the Treasury
Department and the IRS. The final Form
PR satisfies requirements under both
Title I of ERISA and the Code.
Moreover, the statute expressly
authorizes the Departments to require
reporting of additional information.
4. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates
Reform Act of 1995 requires each
Federal agency to prepare a written
statement assessing the effects of any
Federal mandate in a proposed or final
agency rule that may result in an
expenditure of $100 million or more
(adjusted annually for inflation with the
base year 1995) in any one year by State,
local, and tribal governments, in the
aggregate, or by the private sector.
46
For
purposes of the Unfunded Mandates
Reform Act, as well as Executive Order
12875, this final rule does not include
any Federal mandates that the
Department expects would result in
such expenditures by State, local, and
tribal governments, or the private
sector.
47
This rule simply requires
entities that choose to become pooled
plan providers to register with the
Department.
5. Federalism Statement
Executive Order 13132 outlines
fundamental principles of federalism,
and requires that Federal agencies
adhere to specific criteria when
formulating and implementing policies
that have ‘‘substantial direct effects’’ on
the states, the relationship between the
national government and states, or on
the distribution of power and
responsibilities among the various
levels of government.
48
Federal agencies
promulgating regulations that have
federalism implications must first
consult with State and local officials,
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then describe in the preamble to the
final rule the extent of their consultation
and the nature of the officials’ concerns.
This final rule does not have
federalism implications because it will
not have direct effects on the states, on
the relationship between the national
government and the states, or on the
distribution of power and
responsibilities among various levels of
government. This final rule simply
requires private companies that choose
to offer pooled employer plans to
register with the Department.
List of Subjects in 29 CFR Part 2510
Employee benefit plans, Pensions.
For the reasons stated in the
preamble, the Department of Labor
amends 29 CFR part 2510 as follows:
PART 2510—DEFINITIONS OF TERMS
USED IN SUBCHAPTERS C, D, E, F, G,
AND L OF THIS CHAPTER
1. The authority citation for part 2510
is revised to read as follows:
Authority: 29 U.S.C. 1002(1), 1002(2),
1002(3), 1002(5), 1002(16), 1002(21),
1002(37), 1002(38), 1002(40), 1002(42),
1002(43), 1002(44), 1031, and 1135; Secretary
of Labor’s Order No. 1–2011, 77 FR 1088 (Jan.
9, 2012); Sec. 2510.3–101 and 2510.3–102
also issued under sec. 102 of Reorganization
Plan No. 4 of 1978, 5 App. (E.O. 12108, 44
FR 1065 (Jan. 3, 1979)) and 29 U.S.C. 1135
note. Sec. 2510.3–38 is also issued under sec.
1, Pub. L. 105–72, 111 Stat. 1457 (1997).
2. Add § 2510.3–44 to read as follows:
§ 2510.3–44 Registration Requirement to
Serve as a Pooled Plan Provider to Pooled
Employer Plans
(a) General. Section 3(44) of the Act
sets forth the criteria that a person must
meet to be a pooled plan provider for
pooled employer plans under section
3(43) of the Act.
(b) Registration requirement.
Subparagraph (A)(ii) of section 3(44)
requires the person to register as a
pooled plan provider with the
Department and provide such other
information as the Department may
require, before beginning operations as
a pooled plan provider. For this
purpose, ‘‘beginning operations as a
pooled plan provider’’ means the
initiation of operations of the first plan
that the person operates as a pooled
employer plan, as described in
paragraph (b)(6) of this section. To meet
the requirements to register with the
Department under section 3(44) of the
Act, a person intending to act as a
pooled plan provider must:
(1) At least 30 days before beginning
operations as a pooled plan provider,
file with the Department the following
information on a complete and accurate
Form PR (Pooled Plan Provider
Registration) in accordance with the
form’s instructions.
(i) The legal business name and any
trade name (doing business as) of such
person.
(ii) The business mailing address and
phone number of such person.
(iii) The employer identification
number (EIN) assigned to such person
by the Internal Revenue Service.
(iv) The address of any public website
or websites of the pooled plan provider
or any affiliates to be used to market any
such person as a pooled plan provider
to the public or to provide public
information on the pooled employer
plans operated by the pooled plan
provider.
(v) Name, address, contact telephone
number, and email address for the
responsible compliance official of the
pooled plan provider. For purposes of
this paragraph (b)(1)(v), the term
‘‘responsible compliance official’’
means the person or persons, identified
by name, title, or office, responsible for
addressing questions regarding the
pooled plan provider’s status under, or
compliance with, applicable provisions
of the Act and the Internal Revenue
Code as pertaining to a pooled employer
plan.
(vi) The agent for service of legal
process for the pooled plan provider,
and the address at which process may
be served on such agent.
(vii) The approximate date when
pooled plan operations are expected to
commence.
(viii) An identification of the
administrative, investment, and
fiduciary services that will be offered or
provided in connection with the pooled
employer plans by the pooled plan
provider or an affiliate. For purposes of
this paragraph (b)(1)(viii), the term
‘‘affiliate’’ includes all persons who are
treated as a single employer with the
person intending to be a pooled plan
provider under section 414(b), (c), (m),
or (o) of the Internal Revenue Code who
will provide services to pooled
employer plans sponsored by the pooled
plan provider and any officer, director,
partner, employee, or relative (as
defined in section 3(15) of the Act) of
such person; and any corporation or
partnership of which such person is an
officer, director, or partner.
(ix) A statement disclosing any
ongoing Federal or State criminal
proceedings, or any Federal or State
criminal conviction, related to the
provision of services to, operation of, or
investments of, any employee benefit
plan, against the pooled plan provider,
or any officer, director, or employee of
the pooled plan provider, provided that
any criminal conviction may be omitted
if the conviction, or related term of
imprisonment served, is outside ten
years of the date of registration.
(x) A statement disclosing any
ongoing civil or administrative
proceedings in any court or
administrative tribunal by the Federal or
State government or other regulatory
authority against the pooled plan
provider, or any officer, director, or
employee of the pooled plan provider,
involving a claim of fraud or dishonesty
with respect to any employee benefit
plan, or involving the mismanagement
of plan assets.
(2) No later than the initiation of
operations of a plan as a pooled
employer plan, as described in
paragraph (b)(6) of this section, file with
the Department a supplemental report
using the Form PR containing the name
and plan number that the pooled
employer plan will use for annual
reporting purposes, and the name,
address, and EIN for the trustee for the
plan.
(3) File with the Department a
supplemental report using the Form PR
within the later of 30 days after the
calendar quarter in which the following
reportable events occurred or 45 days
after a following reportable event
occurred:
(i) Any change in the information
reported pursuant to paragraph (b)(1) or
(2) of this section unless otherwise
disclosed pursuant to paragraphs
(b)(3)(iii) through (v) of this section.
(ii) Any significant change in
corporate or business structure of the
pooled plan provider, e.g., merger,
acquisition, or initiation of bankruptcy,
receivership, or other insolvency
proceeding for the pooled plan provider
or an affiliate that provides services to
a pooled employer plan, or ceasing all
operations as a pooled plan provider.
(iii) Receipt of written notice of the
initiation of any administrative
proceeding or civil enforcement action
in any court or administrative tribunal
by any Federal or State governmental
agency or other regulatory authority
against the pooled plan provider, or any
officer, director, or employee of the
pooled plan provider involving a claim
of fraud or dishonesty with respect to
any employee benefit plan, or involving
the mismanagement of plan assets.
(iv) Receipt of written notice of a
finding involving a claim of fraud or
dishonesty with respect to any
employee benefit plan, or involving the
mismanagement of plan assets in any
matter described in paragraph (b)(1)(x)
or (b)(3)(iii) of this section.
(v) Receipt of written notice of the
filing of any Federal or State criminal
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charges related to the provision of
services to, operation of, or investments
of any pooled employer plan or other
employee benefit plan against the
pooled plan provider or any officer,
director, or employee of the pooled plan
provider.
(4) Only one registration must be filed
for each person intending to act as a
pooled plan provider, regardless of the
number of pooled employer plans it
operates. A pooled plan provider must
file updates for each pooled employer
plan described in paragraph (b)(2) of
this section, any change of previously
reported information, and any change in
circumstances listed in paragraph (b)(3)
of this section, but may file a single
statement to report multiple changes, as
long as the timing requirements are met
with respect to each reportable change.
(5) If a pooled plan provider has
terminated and ceased operating all
pooled employer plans, the pooled plan
provider must file a final supplemental
filing in accordance with instructions
for the Form PR. For purposes of this
section, a pooled employer plan is
treated as having terminated and ceased
operating when a resolution has been
adopted terminating the plan, all assets
under the plan (including insurance/
annuity contracts) have been distributed
to the participants and beneficiaries or
legally transferred to the control of
another plan, and a final Form 5500 has
been filed for the plan.
(6) For purposes of this section, a
person is treated as initiating operations
of a plan as a pooled employer plan
when the first employer executes or
adopts a participation, subscription, or
similar agreement for the plan
specifying that it is a pooled employer
plan, or, if earlier, when the trustee of
the plan first holds any asset in trust.
(7) Registrations required under this
section shall be filed with the Secretary
electronically on the Form PR in
accordance with the Form PR
instructions published by the
Department.
(8) For purposes of this section, the
term ‘‘administrative proceeding’’ or
‘‘administrative proceedings’’ means a
judicial-type proceeding of public
record before an administrative law
judge or similar decision-maker.
(9) For purposes of this section, the
term ‘‘other regulatory authority’’ means
Federal or State authorities and self-
regulatory organizations authorized by
law, but does not include any foreign
regulatory authorities.
(10) For purposes of paragraphs
(b)(1)(ix) and (x) and (b)(3)(iii) and (v)
of this section, employees of the pooled
plan provider include employees of the
pooled employer plan, but only if they
handle assets of the plan, within the
meaning of section 412 of the Act, or if
they are responsible for operations or
investments of the pooled employer
plan.
(c) Transition rule. Notwithstanding
paragraph (b)(1) of this section, a person
intending to act as a pooled plan
provider may file the Form PR on or
before beginning operations as a pooled
plan provider (dispensing with the 30-
day advance filing requirement) if the
filing is made before February1, 2021.
(d) Acquittals and removal of
information. A pooled plan provider
may file an update to remove any matter
previously reported under paragraph
(b)(1)(ix) or (b)(3)(v) of this section for
which the defendant has received an
acquittal. For this purpose, the term
‘‘acquittal’’ means a finding by a judge
or jury that a defendant is not guilty or
any other dismissal or judgment which
the government may not appeal.
Signed at Washington, DC.
Jeanne Klinefelter Wilson,
Acting Assistant Secretary, Employee Benefits
Security Administration, Department of
Labor.
[FR Doc. 2020–25170 Filed 11–13–20; 8:45 am]
BILLING CODE 4510–29–P
DEPARTMENT OF THE INTERIOR
National Park Service
36 CFR Parts 1 and 13
[NPS–AKRO–30677; PPAKAKROZ5,
PPMPRLE1Y.L00000]
RIN 1024–AE63
Jurisdiction in Alaska
AGENCY
: National Park Service, Interior.
ACTION
: Final rule.
SUMMARY
: This rule revises National
Park Service regulations to comply with
the decision of the U.S. Supreme Court
in Sturgeon v. Frost. In the Sturgeon
decision, the Court held that National
Park Service regulations apply
exclusively to public lands (meaning
federally owned lands and waters)
within the external boundaries of
National Park System units in Alaska.
Lands which are not federally owned,
including submerged lands under
navigable waters, are not part of the
units subject to the National Park
Service’s ordinary regulatory authority.
DATES
: This rule is effective on
December 16, 2020.
ADDRESSES
: The comments received on
the proposed rule are available on
www.regulations.gov in Docket ID: NPS–
2020–0002.
FOR FURTHER INFORMATION CONTACT
:
Donald Striker, Acting Regional
Director, Alaska Regional Office, 240
West 5th Ave., Anchorage, AK 99501.
Phone (907) 644–3510. Email: AKR_
Regulations@nps.gov.
SUPPLEMENTARY INFORMATION
:
Background
Sturgeon v. Frost
In March 2019, the U.S. Supreme
Court in Sturgeon v. Frost (139 S. Ct.
1066, March 26, 2019) unanimously
determined the National Park Service’s
(NPS) ordinary regulatory authority over
National Park System units in Alaska
only applies to federally owned ‘‘public
lands’’ (as defined in section 102 of the
Alaska National Interest Lands
Conservation Act, 16 U.S.C. 3102)—and
not to State, Native, or private lands—
irrespective of unit boundaries on a
map. Lands not owned by the federal
government, including submerged lands
beneath navigable waters, are not
deemed to be a part of the units (slip op.
17). More specifically, the Court held
that the NPS could not enforce a
System-wide regulation prohibiting the
operation of a hovercraft on part of the
Nation River that flows through the
Yukon-Charley Rivers National Preserve
(the Preserve). A brief summary of the
factual background and Court opinion
follow, as they are critical to
understanding the purpose of this
rulemaking.
The Preserve is a conservation system
unit established by the 1980 Alaska
National Interest Lands Conservation
Act (ANILCA) and administered by the
NPS as a unit of the National Park
System. The State of Alaska owns the
submerged lands underlying the Nation
River, a navigable waterway. In late
2007, John Sturgeon was using his
hovercraft on the portion of the Nation
River that passes through the Preserve.
NPS law enforcement officers
encountered him and informed him
such use was prohibited within the
boundaries of the Preserve under 36
CFR 2.17(e), which states that ‘‘[t]he
operation or use of a hovercraft is
prohibited.’’ According to NPS
regulations at 36 CFR 1.2(a)(3), this rule
applies to persons within ‘‘[w]aters
subject to the jurisdiction of the United
States located within the boundaries of
the National Park System, including
navigable waters’’ without any regard to
ownership of the submerged lands. See
54 U.S.C. 100751(b) (authorizing the
Secretary of the Interior to regulate
‘‘boating and other activities on or
relating to water located within System
units’’).
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