Want to let the DOL know what you think of Open MEPs and PEPs under the SECURE Act? You have 30 days, starting tomorrow.
The Department of Labor has released its Open MEP “Request for Information,” which will be published in the Federal Register on June 18, kicking off the 30-day comment period.
The RFI is an opportunity for the public to provide data and information that may be used to evaluate whether the Department’s Employee Benefits Security Administration (EBSA) should propose a new prohibited transaction class exemption.
“We encourage all interested parties to submit comments in response to this request,” said Acting Assistant Secretary of Labor for the EBSA Jeanne Klinefelter Wilson. “The responses will help the Employee Benefits Security Administration evaluate the need for a proposal on a new exemption.”
Titled, “Prohibited Transactions involving Pooled Employer Plans under the SECURE Act and Other Multiple Employer Plans,” the RFI requests information on the possible parties, business models, conflicts of interest and prohibited transactions that might exist in connection with PEPs that respondents anticipate will be involved in the formation and ongoing operation of PEPs.
The document also requests information on similar issues involving multiple employer plans (MEPs) sponsored by employer groups or associations or professional employer organizations.
“We are encouraged that the Department is moving quickly to enable a variety of different open MEP business models,” said Jack Dolan, spokesman for the American Council of Life Insurers. “By pooling employees in one retirement plan, an open MEP can obtain increased purchasing power in the marketplace for investment products and administrative services—making it more cost effective for small businesses and their employees.”
As a quick refresher on what necessitated the RFI, the SECURE Act passed at the end of 2019 amended ERISA to allow for PEPs, which are required to designate a pooled plan provider who is a named fiduciary of the PEP.
As a fiduciary, the pooled plan provider is subject to standards and restrictions in ERISA and the Internal Revenue Code, including the prohibited transaction provisions restricting fiduciaries of plans from engaging in conflict of interest transactions.
The DOL is considering whether to propose a class exemption on its own motion to cover prohibited transactions involving PEPs and MEPs, and the information provided during the comment period will help inform decisions about such an exemption.
MEP Final Rule, previous Open MEP RFI
The SECURE Act amendments furthered an existing regulatory initiative of the DOL to “expand access to affordable, quality retirement savings options,” per President Trump’s Executive Order 13847, “Strengthening Retirement Security in America.”
In 2019, the DOL issued a MEP Final Rule clarifying the circumstances under which an employer group or association or a professional employer organization (PEO) may sponsor a single pension plan under ERISA for the employees of multiple employer members or clients.
On the same day it issued the MEP Final Rule, the DOL published an additional request for information which sought comments on whether to amend the regulations to facilitate the operation of Open MEPs by expressly permitting financial institutions or other persons/entities to maintain a single ERISA plan on behalf of employers with no relationship other than their joint participation in the plan.
The request for information included a series of questions directed at the conflicts of interest that might exist for the persons/entities that would operate Open MEPs and the need for additional prohibited transaction exemptions if such arrangements were permitted.
In the new RFI, it states, “While the Department received valuable input on those issues, the request did not specifically address the structure of PEPs as established by the SECURE Act or the amendment to Code section 413.”
How to provide comments
Written comments can be submitted to the DOL on or before July 18, identified by Z-RIN 1210-ZA28, in either of the following forms:
- Federal eRulemaking Portal: http://www.regulations.gov at Docket ID number: EBSA-2020-0001.
- Email to: e-OED@dol.gov
All comments and hearing requests will be made available to the public at http://www.regulations.gov and http://www.dol.gov/agencies/ebsa, and at the Public Disclosure Room, Employee Benefits Security Administration, Suite N-1513, 200 Constitution Avenue NW, Washington, DC 20210.
The complete RFI document, which includes a number of questions, can be accessed here. Respondents are also encouraged to address any other matters that pertain to the topic.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
