More Firms Are Addressing the Group Plan Market

Franklin Templeton has selected a new group plan recordkeeper in Transamerica, while PRI and Waypoint have formed a new joint company called Group Plan Systems.

Franklin Templeton Selects New Group Plan Recordkeeper

Franklin Templeton has selected Transamerica as the recordkeeper for a new retirement plan solution. The Franklin Templeton Group Plan Solution is offered exclusively through Franklin Templeton and was created for employers seeking to benefit from group pricing and access to services that are not always available, particularly to smaller companies.

“We believe every U.S. worker and household should have the right to experience financial well-being throughout each phase of life and access to a workplace retirement plan is a critical step toward achieving that,” says Yaqub Ahmed, Franklin Templeton U.S. head of retirement, insurance and 529. “In this strategic partnership, we look forward to empowering financial professionals with a retirement plan offering for small to midsize businesses that has advantages similar to what many larger-scale plans can offer.”

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Under the arrangement, Transamerica will serve as recordkeeper for these retirement plans. In addition, DWC – The 401(k) Experts will provide 3(16) plan administrator fiduciary services, and LeafHouse Financial be the 3(38) investment fiduciary.

“This solution enables employers to offload the responsibility for typical day-to-day tasks to DWC, which saves time for their human resources [HR] departments. Support includes approval of distributions and loans, and monitoring plan eligibility,” says Darren Zino, Transamerica U.S. retirement distribution senior managing director. “This solution gives employers access to professional plan services that they might not otherwise be in a position to afford.”

PRI and Waypoint Launch Fiduciary Services Firm

The Pension Resource Institute LLC (PRI), a retirement plan compliance, technology and consulting firm for banks, broker/dealers (B/Ds) and investment advisers, and Waypoint Fiduciary LLC, a fiduciary consulting firm serving plan sponsors and financial institutions, have formed a new company, Group Plan Systems (GPS), to serve as an independent, operational fiduciary for group plan arrangements.

GPS leaders say they believe that the retirement plan industry has done well at supporting employers in managing investments, but it still has room to grow in terms of supporting them from an operational perspective.

Pete Swisher, Waypoint founder and GPS managing partner, says GPS plans to “elevate retirement plan governance by applying the same rigor to operations that employers expect from their investment professionals.

“By thoughtfully leveraging technology and well‐defined processes, we are able to deliver named fiduciary oversight of operations to group plan arrangements at scale,” he says.

GPS is available to serve in a variety of capacities, including as a pooled plan provider (PPP) for pooled employer plans (PEPs), as a named fiduciary on group or individual plans, and as a consultant to help others bring their own solutions to market.

“We believe we are well‐positioned to help financial institutions and employers take advantage of the opportunities created by [the Setting Every Community Up for Retirement Enhancement Act] and maintain compliance with new and evolving laws and regulations,” says Jason C. Roberts, PRI CEO and GPS managing partner.

2021 Required Amendments List Includes Changes for Multiemployer Plans

The only changes in requirements that would necessitate a plan amendment relate to the multiemployer plan financial assistance program, and there were no changes that may require an amendment.

The IRS has published Notice 2021-64, which sets forth the 2021 Required Amendments List (RA List).

It applies to both individually designed plans qualified under Internal Revenue Code (IRC) Section 401(a) and individually designed plans that satisfy the requirements of Section 403(b). In general, an RA List includes statutory and administrative changes in requirements that are first effective during the plan year in which the list is published. The RA List might include changes that would require an amendment as well as changes that may require an amendment.

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Under Section 5.05(3) of Revenue Procedure (Rev. Pro.) 2016-37, the remedial amendment period for a plan that is not a governmental plan within the meaning of IRC Section 414(d) is extended to the end of the second calendar year that begins after the issuance of the RA List on which the change in qualification requirements appears. That is December 31, 2023, for a change that appears on the 2021 RA List. Section 5.06(3) provides a special rule for governmental plans that may further extend the remedial amendment period in some cases.

The IRS notes that Rev. Pro. 2019-39 provided a recurring remedial amendment period with respect to a form defect in a 403(b) individually designed plan. Generally, the remedial amendment period arising as a result of a change in 403(b) requirements ends on the last day of the second calendar year that begins after the issuance of the RA List on which the change in 403(b) requirements appears. December 31, 2023, generally is the last day of the remedial amendment period with respect to a disqualifying provision arising as a result of a change in qualification requirements that appears on the 2021 RA List, and a form defect arising as a result of a change in 403(b) requirements that appears on the 2021 RA List.

On the 2021 RA List, changes in requirements that would necessitate an amendment to most plans or to most plans of the type affected by the change relate to the special financial assistance (SFA) program for financially troubled multiemployer plans that was established with the passage of the American Rescue Plan Act (ARPA) of 2021.

Among other things, IRS Notice 2021-38 provides that if an eligible multiemployer plan receiving special financial assistance was previously amended to suspend benefits, or had suspended benefits operationally without adopting a plan amendment, the plan must be amended to reinstate those suspended benefits, effective as of the month in which the special financial assistance is paid to the plan, for individuals who are participants or beneficiaries as of that month.

Notice 2021-38 also provides that an eligible multiemployer plan that receives special financial assistance must be amended to provide makeup payments to individuals who are participants or beneficiaries on, and who have commenced benefits by, the date the special financial assistance is paid to the plan. The makeup payments to a participant or a beneficiary must be paid, as determined by the plan sponsor, either as a lump sum within three months of the date the special financial assistance is paid to the plan or in equal monthly installments over a period of five years, commencing within three months of the date the special financial assistance is paid. The plan amendment providing for the makeup payments must also specify which distribution form will apply for the makeup payments to a participant or beneficiary.

There are no changes on the 2021 RA List that may require an amendment.

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