IRS Signals Compatibility of Pre-Approved Plan Documents and PEPs
The IRS in its January 20, 2021 edition of Employee Plans News has revealed that pre-approved qualified retirement plan documents may be used to establish arrangements known as pooled employer plans, or PEPs. These arrangements are a type of multiple employer plan (MEP) in which several employers may participate in this common plan structure. But PEPs are less likely to have common interest or common ownership among participating employers than is required of conventional MEPs.
The IRS indicated in Employee Plans News that it is creating language that can be used to amend current pre-approved qualified retirement plan documents to add a PEP feature. Document providers are not required to use IRS-drafted amendment language, but if drafting their own they “will not have reliance on those provisions,” the IRS states.
The PEP structure was created by provisions of the Setting Every Community up for Retirement Enhancement (SECURE) Act of 2019. PEPs are intended to consolidate plan administration functions, and these functions are to be carried out by a pooled plan provider that must register as a named fiduciary with the Department of Labor’s Employee Benefits Security Administration.