Small employers will have access to pooled plans to offer employees retirement options under a rule finalized by the Department of Labor.
“Pooled employer plans will give employers, especially small unrelated employers, a way of offering their employees a workplace retirement savings option with reduced burdens and costs,” said Acting Assistant Secretary of Labor for the Employee Benefits Security Administration Jeanne Klinefelter Wilson. “This final rule lays the groundwork for a sensible registration process so that providers can get pooled plans up and running.”
The rule establishes registration requirements for pooled plan providers for multiple employer plans (MEPs) under the SECURE Act. The SECURE Act allows pooled plan providers to start operating pooled employer plans starting Jan. 1, but requires that pooled plan providers register with the Secretary of Labor and the Secretary of the Treasury before they begin operations as a pooled plan provider.
The American Council of Life Insurers vice president, taxes and retirement security Howard Bard said the new rule will help hundreds of thousands of Americans start saving.
“The Labor Department took an important step forward today toward helping small businesses nationwide offer retirement plans to their employees,” Bard said. “The SECURE Act enacted last year made it easier for unrelated small employers to pool resources to provide retirement plans for their employees – and is expected to lead to at least 700,000 new savers.”
The rule establishes a reasonable registration process that will enable life insurance companies serve as pooled plan providers to start offering pooled employer plans.
“Three-fifths of small employers (those with 99 or fewer employees) rely on life insurer products and services in their employment-based retirement plan,” Bard said. “Pooled employer plans provide a major opportunity to enhance coverage under the private sector employee benefit plan system.”
The process requires pooled plan providers to register at least 30 days before beginning operations. Plans must also submit supplemental filings regarding specific reportable events and a final filing after the provider’s last pooled employer plan has been terminated and ceased operations. For the period of Nov. 25, 2020 to Jan. 31, 2021, the requirement to register at least 30 days prior to operating a pooled employer plan is waived, provided registration occurs no later than the start of the plan.