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Will Your Company Benefit from a Multiple Employer Plan?
Employers and plan sponsors sift through many options when choosing components of their employee benefits plans. Employee demographics and your budget play a part, as well as the needs of workers in your industry. At some point, you may wonder if your company would benefit from a multiple employer plan ( MEP). As new regulations emerge to meet changing laws, that question may become more difficult to answer.

Considering the pros and cons of MEPs might help your decision making process.

Advantages to Forming a Multiple Employer Plan
Millions of Americans face a gap between their retirement needs and their retirement income . As an employer, you want to provide benefits that attract and retain employees, many of whom will be looking for solid retirement plans. MEPs might be the solution to your problem, and theirs, for the following reasons:

  • Employees have greater access to retirement accounts.
  • With one MEP, there should be only one plan audit that covers all employer participants.
  • Likewise, the MEP would file one Form 5500, Annual Return/Report of Employee Benefit Plan, that covers all participating employers.
  • Pooling the MEPs assets may lead to better negotiating for reduced investment costs.
  • Participating employers face a lower fiduciary liability burden.

Of course, no plan is perfect.

Disadvantages to Forming a Multiple Employer Plan
MEPs are not a cure-all. A MEP might not be right for your company under current law for reasons like the following:

  • Smaller employers may not be able to afford higher administration and investment costs associated with MEPs.
  • The “one bad apple” rule means the entire MEP could be held accountable for a single ‘bad’ member.
  • The current commonality rule prevents unrelated members from joining a MEP.

At this time, employers lack clear direction on MEPs until final regulations come down from the Department of Labor (DOL) and the Internal Revenue Service (IRS). It’s difficult to know whether your company will benefit from a MEP until changes are finalized.
Potential Regulation Changes Pertaining to MEPs
In an attempt to increase employee access to qualified retirement plans, President Donald Trump signed an executive order on August 31, 2018. The Executive Order on Strengthening Retirement Security in America proposes to increase employee access to workplace retirement plans by:

  • Decreasing costs by reducing the employer’s regulatory burden.
  • Expanding access to retirement savings through MEPs.
  • Increasing retirement security for non-traditional employees, such as freelancers, contract workers, independent contractors, and remote workers.

The DOL has already proposed new regulations. The IRS currently is formulating new, improved regulations to fulfill the proposals in the Trump Administration’s executive order. It is expected that the new rules will specifically address the following issues:

  • Eliminating the “one bad apple” rule.
  • Reduce administration and management costs to expand access to smaller employers.
  • Relax commonality restrictions.

In addition to the DOL and IRS proposals, Congress has been working on increasing employee access to MEPs through two pieces of legislation:

  • The Retirement Enhancement and Savings Act (RESA) proposes open MEPs called pooled employer plans (PEPs). Open MEPs could be treated as one plan under the Employee Retirement Income Security Act (ERISA). In addition, the law seeks to address the “one bad apple” rule and turn proposals supported by the retirement industry stakeholders into law.
  • The Family Savings Act, which includes many provisions also contained in RESA, was passed by the House of Representatives on September 27, 2018.

Efforts are being made to make MEPs a viable option for many employers. Will your company be one of them?

Do You Still Have Questions About MEPs?
It’s not easy to sift through all the options and come up with a plan that fits your circumstances. But, at Hall Benefits Law , that’s what we do.

In fact, we assist clients with employee benefit plans, including plan design, implementation, administration, and maintenance. Please call 678-439-6236 to discuss your concerns with an experienced attorney. Our website contains more information about our firm, a Contact Form , and free resources for your review. From our home office in Georgia, we assist clients throughout the United States.
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