Question 1

Why is a custodian important?

Accepted Answer

Custodians play a crucial role, particularly in this PEP for the cannabis industry.  As gatekeepers to the trust account, they hold the PEP’s assets, receive contributions, and manage the release of funds.  Their responsibilities include safeguarding employees’ retirement funds, ensuring compliance with ERISA laws, and guaranteeing availability of assets.

Question 2

Why would a custodian choose to exclude a market segment?

Accepted Answer

A custodian may choose to exclude a market segment like the cannabis industry due to the complex and ever-changing federal regulations. The legal ambiguity surrounding cannabis increases risk for financial institutions, leading many to avoid these challenges. Additionally, a custodian is required to complete Suspicious Activity Reports (SARs) on assets in a cannabis entity plan. If a custodian fails to recognize a cannabis entity, they breach their responsibilities and may be held accountable.  If a custodian resigns from a plan, the business must quickly find a replacement to prevent the plan from losing its tax-qualified status with the IRS. If a plan loses this status, assets can be deemed as taxable income by the IRS leading to substantial tax burdens and penalties for each participant in the plan.

Question 3

What should you do if your custodian resigns from your plan?

Accepted Answer

If this happens to you, timing is imperative. You must find a new custodian and ensure they are willing to do business in the cannabis space. It’s also important to hire a qualified ERISA attorney and find partners who are familiar with this niche.  They can guide you through the maze of complexity to move your plan to a new custodian, or set of providers that specialize in these types of programs.

Question 4

Why is it important to have Executive-level approvals?

Accepted Answer

When the approvals come from Executives like the Chief Legal Officer, Chief Compliance Officer, and Chief Executive Officers you can find confidence that the program has been thoroughly vetted adding to its ability to withstand market and regulatory pressures and more importantly offering a stable foundation for your employees’ retirement futures.

Question 5

Why would a PEP be a better option than a MEP?

Accepted Answer

A Pooled Employer Plan (PEP) is a specific type of Multiple Employer Plan (MEP), which is a retirement plan that allows multiple employers to join together to offer their employees retirement benefits they may not have had access to otherwise.

Reduced Fiduciary Liability
By choosing to join the GreenPath 401(k) Plan, you can rely upon operational experts instead of handling all aspects of plan management and compliance alone.  In the GreenPath 401(k) Plan, Group Plan Systems, LLC serves as the Pooled Plan Provider (“PPP”), and takes responsibility  for ensuring the plan operates according to its terms and meets regulatory requirements, which enables you to reduce your fiduciary liability and focus on the work you do best.

Reduced Audit Time and Costs
In the GreenPath 401(k) Plan, GPS takes on the task of selecting and engaging the plan auditor. The audit fees are shared by all adopting employers in the PEP, resulting in a significant reduction in cost for each individual adopting employer.

Question 6

How does a having a Pooled Plan Provider Reduce My Fiduciary Responsibility in the PEP?

Accepted Answer

GPS – Independent Fiduciary Oversight
There are over 400 operational fiduciary duties, most drawn directly from laws and regulations–far too many to supervise cost-effectively for most individual employers. In a GPS PEP, employers receive Independent Fiduciary Oversight – including a prudent process for overseeing plan operations: due diligence and plan governance.  These same two tools apply broadly to any fiduciary duty. We apply them in the Plan as follows:
Due Diligence. We evaluate the recordkeeper and third-party administrator with respect to most of the 400+ duties required by ERISA (not all are pertinent) by asking the question, “How will this get done in this arrangement?” Our due diligence is designed to ensure there is a process for each key duty and that service agreements and other plan documentation are consistent with this evaluation.
Monitoring. The Governance Committee will manage the plan’s compliance and administrative tasks, ensuring adherence to regulations and the plan service agreements. As part of regular Governance Committee meetings, GPS will focus on selected key tasks, based on the considerations below:
Risk of failure
Importance of failure
Known focus areas for regulators
Who is responsible
How the duty is fulfilled by vendors

Question 7

What makes GreenPath 401(k) different from other retirement plans for the cannabis industry?

Accepted Answer

GreenPath 401(k) has one of the first-to-market fully transparent retirement solutions for the cannabis industry. Our plan is supported and approved for use with a coalition of trusted financial institutions; Vanguard, Group Plan Systems, LLC, CuraFin Advisors, Mid Atlantic Trust, First Citizens Bank, PCSRetirement, and Green Check Verified to name a few. This unified backing ensures our solution is fully transparent and designed for long-term stability, even as other custodians and financial providers exit the market. Additionally, these partners are best in class at what they do. This means that you get a top-tier solution for your HR staff and employees. Operating in this space can be hard enough, choose the GreenPath 401(k) and hit the easy button for a change.

Question 8

Who are the key partners behind GreenPath 401(k)?

Accepted Answer

Mid Atlantic Trust - Providing custodial work to the plan as it does for many of the plans in the United States.
CuraFin Advisors - A leading Investment Fiduciary who serves as the 3(38) Discretionary Investment Fiduciary to the plan.
Group Plan Systems, LLC - A leading Operational Independent Fiduciary who serves as the Pooled Plan Provider (PPP) to the plan.
Green Check Verified - Providing cutting-edge support for AML, FinCEN, and OFAC compliance.
The NACC - This 501(c)(6) Not-For-Profit Association is the cornerstone partner that cleared the compliance hurdles for our provider partners. Each cannabis business will be invited for membership after completing the required AML, FinCEN, and OFAC compliance screening.

Question 9

How does Green Path 401k ensure transparency and compliance?

Accepted Answer

We started by finding best-in-class partners for each provider role in the GreenPath 401(k) Plan. Then, we obtained approvals and written contracts from each provider partner’s executive teams.

Question 10

Can we keep my current financial adviser?

Accepted Answer

We built this program to be inclusive. If you have a trusted financial adviser who provides you with amazing support, they can keep their role by providing education, investment advice, or support. CuraFin Advisors can sit in the background in the 3(38) role, enabling your adviser to continue their work with your team and employees.

Question 11

Why should I choose a PEP 401k for my cannabis business?

Accepted Answer

As PEPs are managed by professionals who specialize in retirement plans, employers can focus on doing what they do best.  For employers, a PEP is easier to join, less risky, and more cost-effective.  For employees, a PEP offers a secure, professionally managed plan.  Overall, a PEP simplifies retirement savings and makes a retirement plan more accessible for both parties.

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