The Department of Labor (DOL) has issued a request for information (RFI) about pooled employer plans (PEPs) and other multiple-employer plans (MEPs), seeking input on potential prohibited transaction issues for these plans. The RFI also notes that DOL is considering proposing a class exemption for prohibited transactions involving PEPs and MEPs. Comments are due by July 20.
Recent years have seen significant legislative activity involving defined contribution (DC) MEPs. In addition, regulatory action on these plans has come in response to a 2018 executive order encouraging DOL and IRS to enhance retirement security — particularly by expanding the availability of MEPs to small employers.
PEPs. The Setting Every Community Up for Retirement Enhancement (SECURE) Act (Division O of Pub. Law No. 116-94), enacted in December 2019, lets unrelated employers join DC plans maintained by pooled plan providers acting as the plans’ administrator and named fiduciary. Employers can join these PEPs starting in 2021. IRS and DOL have yet to issue any implementation guidance, but employers and providers may comply in good faith with the law’s requirements until regulatory guidance is available. The RFI is DOL’s first attempt to gain information about prohibited transaction concerns involving PEPs.
Association, PEO MEPs. The SECURE Act followed DOL’s 2019 final rules allowing two types of MEPs:
DOL accompanied the 2019 final rules with a RFI seeking input on whether to amend its regulations to facilitate the sponsorship of open MEPs. That RFI sought input on the potential conflicts of interest for entities operating the MEPs and their need for additional prohibited transaction exemptions. But the RFI didn’t specifically ask about the types of plans later authorized as PEPs by the SECURE Act.
The new RFI covers PEPs in addition to the MEPs covered by DOL’s 2019 final rules. DOL is seeking information on the possible parties, business models, conflicts of interest and prohibited transactions that might exist for PEPs and MEPs. The RFI is split into three sections: