“Aggregating” plans has now taken center stage with the passage of the SECURE Act. We now often find ourselves a bit muddled by the new array of terms with which we now need to deal. Keep this as a handy glossary to guide when you find yourself caught in the middle of a conversation about “Multiple Employer Plans:”
Continue Reading A Basic “Comparison Glossary” for MEPS and MEP Types After the SECURE Act
The TAG Comment to the DOL MEP proposal: The DOL’s Own Reasoning Supports MEPs Being “Open”
The comment letter addresses the DOL’s main concern in initially prohibiting non-PEO commercial enterprises from becoming MEP sponsors. The Department is concerned that allowing any commercial enterprise to sponsor a MEP would turn ERISA into a purely “commercial” statute. Any company- whether or not it is a large financial service company or a smaller service provider-who can meet all of the MEP sponsor compliance rules should be entitled to sponsor a MEP, and the marketplace would be better for it. And ERISA would maintain its validity as a strong, employment based set of laws.
Continue Reading The TAG Comment to the DOL MEP proposal: The DOL’s Own Reasoning Supports MEPs Being “Open”
The Fundamental Question Sought to be Answered under the DOL Proposed MEP Reg: Is Controlling and Maintaining a Retirement Plan a “Substantial Employment Function?”
The key to the regulation is the DOL’s extensive request for comments. It has identified are two major, unresolved issues for comment. The first is what should constitute a “corporate MEP.” The second The seconds the pooled employer plan, the classic MEP of unrelated employers. The DOL proposes drawing this line at the “substantial employment function.”
Continue Reading The Fundamental Question Sought to be Answered under the DOL Proposed MEP Reg: Is Controlling and Maintaining a Retirement Plan a “Substantial Employment Function?”
Will the Association Health Plans Regs Open the Door for “Association MEPs” (“AMEPS”)?
The DOL’s proposed regulation permitting Association Health Plans which cover unrelated employers is likely to have a significant impact on the market’s ability to offer Multiple Employer retirement plans to unrelated employers. This is because the regulation permits AHPs through the regulatory modification of ERISA’s definition of the term “employer” under Section 3(5).
Continue Reading Will the Association Health Plans Regs Open the Door for “Association MEPs” (“AMEPS”)?
DOL Advisory Opinion Demonstrates Structure for Bundling Plans
This Opinion demonstrates that the scale we seek is not exclusively the purview of the MEP. Vendors have the ability to safely “bundle administrative services” to the same effect of a MEP, provided that they have enough scale on their own to negotiate the sort of investment pricing and expert services which the market seeks.
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MEPS Aren’t What They Are Seem; Alternative More Efficient at Achieving Scale
A more effective alternative at providing scale than the MEP platform, and one which really is made possible by technology, is what the DOL describes in its MEP IB as the “Prototype Approach,” versions of which are apparently being considered by several states. It provides those small plans the buying power and access to expertise which are at the heart of MEPs, doing so without that platform’s inherent difficulties.
Continue Reading MEPS Aren’t What They Are Seem; Alternative More Efficient at Achieving Scale
MEP and the Common Paymaster: A Siren’s Call
MEPs are very valuable tools for the right circumstances, and there can be some PEOs which do fit within the DOL’s guidelines. Even better, non-MEP aggregation arrangements are a valuable alternative to MEPs. It is risky behavior, however, to attempt to manufacture an employment bond that doesn’t really exist-especially when there are viable alternatives.
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MEP Reform: Is it Necessary? A Rebuke
There is a serious, and important, debate occurring whether, and to what extent, should there be MEP reform following the DOL’s restrictive advisory opinion on the matter in 2012. There appears to be bi-partisan support for the changes proposed in Senator Hatch’s SAFE Act, which makes wholesale changes to the current MEP rules, and will
Using an Aggregation Program as a Solution to the Multiple Employer Plan Risk
Multiple Employer Plans continue to be an issue for not only PEOs, but for a number of organizations which has successfully used the MEP method in the past to provide “scale” which is otherwise unavailable in the smaller end of the 401(k) marketplace.The DOL Advisory Opinion 2012-04 has caused us to take a closer look at how to otherwise achieve this scale. Scale in investments and services, we find, is still possible without using MEP, and in ways which tend to have a lower risk profile for both the MEP sponsor and participating employers.
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