“Plan Aggregation” Update: Find Pooled Plan Providers In E-Fast2; SECURE Act Section 202’s “Group of Plans” Comes to the Forefront

By Robert Toth on March 1, 2021

Posted in Group of Plans, Meptech, Multiple Employer Plans, Pooled Employer Plans

The title I’ve used for this blog is a bit unusual, because the term “plan aggregation” is not yet commonly used within the retirement industry. But this is the underlying common element between Multiple Employer Plans, Pooled Employer Plans, “Groups of Plans” and other industry efforts at providing scale of sorts to the small, plan market. If you think about it, this should also refer to the ever growing Collective Investment Trust (CIT, which, btw would include ETFs-which are funded using CITs) market, which generally has the effect using scale to drive down prices for the smaller plan.

None of the MEPS, PEPS, GoPs or CITs are silver bullets in and of themselves; but instead they are all tools to an end with substantially different features. But they all do commonly use the aggregated power of a collection of plans of unrelated employers to provide (each in different measure) advantageous investment pricing and selection; professional fiduciary services; and reduced compliance costs to a sorely underserved market.

Benefit professionals have been trying to familiarize themselves with each of these arrangements, but this is not particularly a simple task. This is reflective of the fact that successful operation of MEPS, PEPs and GoPs are heavily dependent on technology which is not easy to either build or maintain. They actually require a high level of sophistication and a substantial investment in technology to effectively accomplish their tasks. This “meptech” is at the heart of it all, used for the unique sort of data collection, manipulation, consolidation and control which is fundamental to success with these platforms. This means, for example, the decision to serve a Pooled Plan Provider should not be undertaken lightly, as I’m afraid that some new PPPs are doing. Even the legal structures necessary for the running of any of these arrangements are unfamiliar to most.

So, with that introduction, there a couple of “meptech” developments worth noting. I am hopeful to occasionally post developments here from time to time as they arise.

Finding Pool Plan Providers. The DOL began making the Pooled Plan Provider applications available to the general public, with little fanfare, in its Form 5500 finder. There is a drop-down box called “Search Type” at top of the Form 5500 filing search site which allows you to select “Registration for Pooled Plan Provider.” To find all of the Pooled Plan Providers, go to the bottom of the page and type in the range under “Filing Received Date” November 25, 2020 (the date the first PPP registration was filed) and Today’s date. You can download each P3’s registration statement there.
Section 202 “Group of Plan’s” to the forefront. The Secure Act amended the Form 5500 rules under Code Sections 6058 and ERISA Section 104 to permit unrelated employers to file an “aggregated” Form 5500 beginning with the 2022 plan year, and required publication of regulatory guidance by January 1, 2022. The GoP had not received a lot of press in the hoopla leading up to the creation of PEPs, but the requirements that regs be developed (and the January 1, 2022 plan year 5500 effective date) has brought it to the forefront. Conceptually, the GoP is much like the MEP and the PEP, requiring much of the same sort of “meptech” data aggregation technology, but without the difficulties of merging and spinning off of plans under MEPs and PEPs. What this means is that Plans will eventually have 3 valuable alternatives from which choose, should they be considering joining an aggregation arrangement.

Take a few minutes to read closely the definition of a GoP at SECURE Section 202:

PLANS DESCRIBED.—A group of plans is described in this subsection if all plans in the group— (1) are individual account plans or defined contribution plans (as defined in section 3(34) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(34)) or in section 414(i) of the Internal Revenue Code of 1986); (2) have— (A) the same trustee (as described in section 403(a) of such Act (29 U.S.C. 1103(a))); (B) the same one or more named fiduciaries (as described in section 402(a) of such Act (29 U.S.C. 1102(a))); (C) the same administrator (as defined in section 3(16)(A) of such Act (29 U.S.C. 1002(16)(A))) and plan administrator (as defined in section 414(g) of the Internal Revenue Code of 1986); and H. R. 1865—630 (D) plan years beginning on the same date; and (3) provide the same investments or investment options to participants and beneficiaries. A plan not subject to title I of the Employee Retirement Income Security Act of 1974 shall be treated as meeting the requirements of paragraph (2) as part of a group of plans if the same person that performs each of the functions described in such paragraph, as applicable, for all other plans in such group performs each of such functions for such plan.

A few interesting notes on GoPs. 403(b) plans can be in a GoP, where they cannot be in a PEP; that ERISA and non-ERISA plans can be in the same GoP; the “one bad apple rule” isn’t an issue with a GoP; and that none of the MEP “commonality and control” rules apply to the GoP.