Compliance November 12, 2020

DOL Announces Final Rule on PEP Registration

The rule is in line with DOL’s proposed rulemaking that it announced in August and streamlines the electronic process by using the same system as the Form 5500.

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The Department of Labor (DOL)’s much anticipated final rule on registration requirements for pooled employer plans (PEPs), pursuant to the Setting Every Community Up for Retirement Enhancement (SECURE) Act, has just been announced.

The SECURE Act amended the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC) to establish PEPs. These plans are administered by pooled plan providers (PPPs).

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“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 (EBSA) Jeanne Klinefelter Wilson. “This final rule lays the groundwork for a sensible registration process so that providers can get pooled plans up and running.”

PEPs may start operating on January 1, 2021, but their pooled plan providers must first register with the secretary of labor and the secretary of the Treasury at least 30 days prior, which they can do electronically by submitting the new EBSA Form PR. The new electronic filing system will be available starting November 25 at www.efast.dol.gov/. Sometime within the coming days, an informational version of the new Form PR and instructions will be made available at www.dol.gov/agencies/ebsa.

However, between November 25 and January 31, the requirement to register at least 30 days prior to operating a PEP is waived, provided registration occurs no later than the start of the plan.

Plans must also submit supplemental filings regarding specific reportable events and a final filing after the provider’s last PEP has been terminated and ceased operations.

The DOL first announced its Notice of Proposed Rulemaking (NPRM) on these registration requirements in August. The proposal said the EBSA believes the most efficient approach is to integrate the Form PR registration filing process into the current electronic filing system that employee benefit plans use to file their Form 5500 Annual Return.

Compliance November 11, 2020

Amway Faces Excessive Fee Lawsuit

Among other allegations, the complaint says defendants continued to offer certain funds in the plan despite the availability of alternative, lower-cost ones.

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Former participants in the Amway Retirement Savings Plan have filed a lawsuit accusing fiduciaries of breaching their duties under the Employee Retirement Income Security Act (ERISA) by failing to monitor appropriate investment costs.

Plaintiffs claim that at all times during the class period, which runs from November 9, 2014, through the date of judgement, Amway’s retirement savings plan had at least $1.1 billion in assets under management, qualifying it as a jumbo plan in the defined contribution (DC) space. As a jumbo plan, plaintiffs say, the plan had substantial bargaining power regarding investment fees and expenses. Instead, plaintiffs claim the defendants—including various retirement plan committees and Alticor Inc., the corporate parent of Amway—did not attempt to reduce the plan’s expenses or exercise appropriate judgement to scrutinize each investment option within the plan to ensure it was prudent.

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Additionally, the complaint says defendants continued to offer certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories and failed to control the plan’s recordkeeping costs by using revenue sharing.

The complaint further states that the company, acting through its board of directors, had a fiduciary duty in monitoring and supervising the plan’s investment committee.

The lawsuit seeks to determine that defendants had breached their fiduciary duty under ERISA, to make good on all losses to the plan resulting from the fiduciary breach during the class period, and for actual damages in the amount of losses to be allocated to participants’ individual accounts. The complaint also requests that an independent fiduciary or fiduciaries be added to run the plan in place of any fiduciaries deemed to have breached their duties.

In a statement to PLANSPONSOR, Amway said, “Amway has always been fair, generous, and competitive in its delivery of retirement benefits. We stand by the management of the Retirement Savings Plan we offer, and we will vigorously defend against these baseless accusations.”

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