DOL Proposes Registration Requirements for Pooled Plan Providers
Stephen Miller | August 28, 2020
As the new year approaches, benefits managers may find they're being pitched to jump into a "pool"—by jettisoning their current 401(k) plan in favor of a plan shared with other employers. The Setting Every Community Up for Retirement Enhancement (SECURE) Act, which became law in December 2019, created a new type of multiple-employer 401(k) plan called a pooled employer plan (PEP). Under the act, "pooled plan providers" may start operating PEPs beginning on Jan. 1, 2021, although benefits brokers and financial services firms are already marketing soon-to-launch pooled plans and seeking to sign-up employers. PEPs allow unrelated employers that don't share a common industry or location to participate in a single, shared 401(k) plan so they can take advantage of their collective purchasing power to negotiate lower fees and better services. The aim is to help organizations, especially small and midsize employers, offer low-cost retirement plans to their workers with fewer compliance burdens than stand-alone defined contribution plans.