As the election nears, 401(k) experts
are keeping an eye on legislation that could make multiple employer plans (MEPs) an extremely favorable
option.
MEPs have been around in some form
since the 1960s, says Terry Power, president and CEO of The Platinum 401(k)
Inc. A retirement plan established by one plan sponsor, a MEP can also be
adopted by one or more participating employers. This vehicle transfers the fiduciary
responsibilities and liabilities from employers to a MEP plan sponsor.
Power became an “expert by proximity” -- his
practice was located in the Tampa Bay area, which in the mid-1980s
was a veritable hotbed of employee leasing firms. By the early 2000s,
these firms needed a professional employer organization (PEO) in order to
use MEPs. His firm today is a third-party administrator for numerous MEPs.
“Initially, multiple employer plans
gave companies leverage through economy of scale and service while mitigating
fiduciary responsibility and requiring only one overall audit,” he says.
That all changed in 2012, when the
Department of Labor (DOL) issued an opinion affecting open MEPs[1]: If there
was no commonality between employers -- beyond a mutual administrative provider
-- the MEP would not be considered a single plan under ERISA. This meant that
participating employers would have to file individual Forms 5500, conduct
separate audits and adhere to other compliance requirements of individual plan
sponsors.
Jason Grantz, QPA, AIFA, managing
director/East for the Retirement Planning Consultant Group at Unified Trust Co., remembers this time clearly.
“Leading up to 2012, I was hearing
about MEPs all the time,” he said. “Then, the letter came out.”
The conversation on MEPs turned
silent, Grantz says.
“I don’t believe it was meant to be a
‘hammer’ by the DOL,” he says. “They were just accurately interpreting ERISA at
the time.”
