ARA Provides Guidance on PEP & PPP Issues


The American Retirement Association, or ARA, offered the Department of Labor a series of recommendations involving potential service arrangements and proposed fee arrangements, as well as what the covered transactions may be under the possible exemptive relief. The ARA provided suggestions so the DOL can commence its reflection of certain issues, as the January 1st 2021 effective date for PEPs, like in the Setting Every Community Up for Retirement (SECURE) Act is eight months away.

The issue, the ARA writes, is that potential pooled plan providers (PPPs) and other providers of services to PEPs would like to confirm that they are able to provide services for compensation to a PEP under ERISA’s prohibited transaction rules and, to the extent there is a question, obtain exemptive relief to ensure their ability to do so”—with a goal in mind to operate in a way that best services the plan participants’ and beneficiaries’ best interests.

The ARA lists five instances in which a Pool Plan Provider may act as a service provider:

  • As a plan administrator for a fee;
  • As a service provider for a fee with delegation of the provision of the services to third parties; no additional fee charged;
  • As a service provider for a fee with delegation of the provision of services to third parties and pass-through of third-party fees;
  • As a service provider and 3(38) investment manager; and
  • As a service provider, 3(38) investment manager and provider of managed account services.

To learn more about the guidance, click here.

If you are a fiduciary that manages an employee benefit plan for your company, you can face personal exposure to claims alleging breach of fiduciary duty. Colonial Surety Company provides fiduciary liability insurance for plan administrators.  Fiduciaries are defended and indemnified from covered plan participant lawsuits with fiduciary liability insurance, and valuable company data and information of the plan and company are protected with cyber liability insurance—all found in our ERISA bond packages.  Cyber liability insurance protects the pension and the business from cyber breaches. Fully protect your plan, yourself, and your company all in one place, instantly online. Contact us today to get your coverage online, instantly. Contact us today to obtain your ERISA fidelity bond package today.