What is a Multiple Employer Plan and Is it Right for Your Organization?
On August 31, 2018, President Trump signed an executive order directing the federal government to make Multiple Employer Plans (MEP) more accessible. A MEP is a plan design created by a group of employers who are willing to share the costs and fiduciary burdens of providing a 401(k) retirement plan for their employees. MEPs are run by a Board of Directors. They offer some scale and present an easier way to manage a retirement program.
MEPs feel like other 401(k) plans, but the responsibilities are outsourced to professionals. From an employee’s perspective, operationally the plan functions the same as any other 401(k) plan. Importantly, no two participating employers have to offer the “same” plan. Each employer can individually customize their plan by choosing plan provisions and the specific features and benefits they want to offer to their own employees, just as if adopting a single stand-alone plan. A shared Board of Directors is responsible for the appointments and monitoring of the plan’s fiduciaries, such as the professional administrator and the investment manager.
The principal advantage of joining a MEP is that an employer can offer a retirement plan without the everyday operational burdens and legal complexities of running it. A MEP can provide fiduciary outsourcing, expert oversight, streamlined recordkeeping, and professional investment management and administration, all resulting in time and labor savings and freedom from fiduciary responsibility and liability for the employer.
If you are a plan sponsor or employer and do not have the expert HR staff to properly and effectively administer your organization’s 401(k) plan, do not personally want to shoulder the responsibility and liability for the investment decisions of the plan, do not want to bear the responsibility and liability of appointing and monitoring the fiduciaries of the plan, AND outsourcing all of these duties sounds good to you, you may be an ideal candidate for a MEP. If you would like to learn more about joining a MEP in the Greater Rochester area contact us for more information.