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Reporting Rules for ‘Groups of Plans’ Cleared for Release

Regulatory Compliance

Final regulations implementing changes under the SECURE Act updating the Form 5500 filing requirements and instructions for a group of plans (GoP) may be released in the coming weeks. 

The White House’s Office of Management and Budget completed its review of the final regulations (RIN: 1210-AB97), according to a report by Bloomberg. This is typically one of the last steps before a regulation is released publicly.

Under the Setting Every Community Up for Retirement Enhancement (SECURE) Act enacted in December 2019, a GoP can file a single Form 5500. The legislation defines a group of plans as individual account plans that have the same trustee, named fiduciary, plan administrator and investment options. 

However, when the proposed regulations were issued jointly in September 2021 by the departments of Labor, Treasury and Pension Benefit Guaranty Corporation, the departments took the position that a large plan that elects to participate in a Defined Contribution Group (DCG)—or what is described as a GoP—must continue to be subject to an independent qualified plan accountant audit (IQPA) and that the audit report for the plan would have to be filed with the consolidated Form 5500 of the DCG reporting arrangement. 

This move reportedly dashed the hopes of those who expected a GoP to have a single consolidated audit like that of multiple employer plans (MEPs). 

In its November 2021 comment letter, the ARA expressed support for the proposed changes to revise the small plan audit waiver, but also expressed concern over the new DCG reporting arrangement in relation to subjecting the DCG to a trust-level audit (regardless of the size of the DCG or the participating plans) in addition to plan-level audits for each large plan in the group. 

The ARA noted, among other things, that the proposal would increase the filing burden for small plans that may have benefitted from GoP, contrary to congressional intent in the SECURE Act. Most notably, the ARA argued that the addition of a trust-level audit was unnecessary and contrary to the statute and its intent. 

Subsequently,  in December 2021 the Department of Labor’s Employee Benefits Security Administration (EBSA) unveiled final revisions to the Form 5500 and Form 5500-SF for the 2021 plan year, implementing changes for multiple employer plans, including PEPs, under Section 101 of the SECURE Act. The DOL also advised, however, that the agencies intend to address the other changes to the Form 5500 and related regulations in relation to the September 2021 proposal in separate guidance. 

There are no details yet on what may be contained in the final regulations or whether the DOL addressed industry stakeholders’ concerns about the ongoing audit requirement and other issues.