Pensions & Investments Turns to Joan Neri for Insight on Bundled Offerings, SECURE Act Provision

In “PEP lookalikes launched to reduce costs, headaches,” benefits and executive compensation counsel Joan Neri spoke to Pensions & Investments about retirement plan service providers offering package deals.

Regarding one difference between bundled offerings and pooled employer plans (PEPs), Neri said, “At this point in time, it offers an easier exit strategy.” However, the publication described how plan sponsors in a group of plans must file separate Form 5500s, and if they have more than 100 participants, they must conduct their own formal audits. According to Neri, providers of bundled services might soon overcome this drawback with a provision in the SECURE Act of 2019 that allows certain groups of plans to file a single, consolidated Form 5500 starting in 2022.

Neri explained that the provision applies only to defined contribution plans that have the same trustee, named fiduciaries, administrator, plan year and investment option offerings. There’s also a chance that the audit requirement could potentially be applied to the group and not to each plan separately. Neri further noted that while the audit requirement is not specifically addressed in the SECURE Act, “it would appear that given the intent of the rule,” it would be applied that way.

“I am expecting that the Department of Labor (DOL) will issue guidance about this,” Neri added. Overall, the new law is one of the driving forces behind the emergence of the new bundled offerings popping up in the marketplace, she stated.

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