A concerted effort in Washington to get more
employers to offer retirement
plans has raised the
profile of multiple employer plans, a largely untapped market for institutional
money managers and other service providers.
Unlike multi employer plans, which serve
employers in a specific industry and are typically collectively bargained and
managed, a multiple
employer plan is adopted by
two or more unrelated employers that do not want the administrative burdens and
fiduciary responsibilities of sponsoring a plan themselves.
The three types of MEPs are those sponsored by
a professional employer organization such as an employee leasing company, which
can offer it to clients; by a trade group for its members; or “open” MEPs
co-sponsored by employers with no business connection.
Some MEPs are several decades old, with the
concept well established among professional organizations and associations as
well as large corporations with numerous subsidiaries. It has not, however,
taken off with small and midsize firms. That's because there has been a lack of
guidance or sometimes conflicting guidance from the Internal Revenue Service,
which has authority over the tax status of retirement plans, and the Department
of Labor, which enforces the participant protections of the Employee Retirement
Income Security Act. The Labor Department has reservations about open MEPs in
particular.
Now, with four legislative proposals making
the rounds on Capitol Hill to help clear up the confusion and make it easier to
form multiple plans, “it's going to help conquer what I consider the last
frontier,” said Edward Ferrigno, vice president for Washington affairs for the
Plan Sponsor Council of America. Read More…
