COLLECTED WISDOM™ on Multiple Employer Plans (MEP)
This page gathers relevant information related to DOL's proposed regulations on Multiple Employer Plans (MEP). Other items related to MEPs may also be covered.
This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.
If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.
It looked great on paper, Pooled Employer Plans needed an audit only if they hit 1,000 participants or if they had an adopting employer with 100 or more participants. The IRS and DOL clarified that PEPs with 100 participants or more are subject to audit, rather than the 1,000-participant threshold that we thought was the interpretation in the SECURE Act.
Source: Jdsupra.com, January 2024
Multiple employer plans and pooled employer plans are subject to the same automatic enrollment and escalation requirements as other defined contribution plans, as outlined by SECURE 2.0. Any such plan adopted after December 29, 2022, must automatically enroll participants between 3% and 10% unless the participant elects otherwise, starting in 2025. Plans adopted before December 29, 2022, are grandfathered in.
Source: Planadviser.com, January 2024
This guide to PEPs is a resource for employers interested in providing 401k or 403b benefits using a pooled employer plan. Each section of the Guide takes 401k and 403b plan sponsors through the steps of how PEPs work and whether they are an appropriate approach for an employer; how to evaluate pooled plan providers; best practices for implementation and monitoring; and reviewing plan design and investment menus that can help meet the retirement needs of their participants.
Source: Pionline.com, January 2024
Congress added some "PEP" to the retirement plan industry. Section 101 of the SECURE Act affects multiple employer plans and creates a new pooled employer plan (PEP) which expands the tools in a plan sponsor's toolbox of retirement plan options. Here is a review of the possible advantages of a PEP.
Source: Belfint.com, December 2023
A PEP is a type of multiple-employer plan that allows unrelated employers to participate in a single, shared defined contribution plan, which is treated as a single plan for purposes of satisfying ERISA requirements. This is a nice overview of PEPs.
Source: Belfint.com, October 2023
PEPs were established in section 101 of the SECURE Act of 2019. In the past, the "one bad apple" rule jeopardized a plan's tax-qualified status when one employer had an operational failure. With the SECURE Act, a PEP is not treated as failing the IRS qualification requirements solely because a single employer fails to satisfy those requirements. Noncompliant PEP members are a bad apple turned a hot potato. This article provides a good review of PEPs.
Source: Belfint.com, October 2023
The growth of pooled employer plan registration has slowed in 2023 even as the industry gears up for more small and midsized businesses to introduce new retirement plans, according to an industry expert. An IRS clarification that expanded audits for PEPs may be a factor for some providers in leaving the market.
Source: Planadviser.com, July 2023
After underperforming growth for years, value equities finally had their time in the sun in 2022. While both value and growth stocks declined last year, growth stocks fell much further than value thanks in large part to rising interest rates.
Source: Asppa.org, April 2023
The reach of SECURE 2.0 is extensive. Its general provisions affect all types of retirement plans, but SECURE 2.0 also has some provisions targeted at plans subject to their own set of statutory and regulatory requirements. Sponsors of 403b plans, ESOPs, and employers participating in or considering joining multiple employer plans should keep these changes on their radar.
Source: Cohenbuckmann.com, February 2023
An information letter recently released by the Department of Labor addresses the application of ERISA's bonding requirements to a pooled employer plan established under the SECURE Act.
Source: Napa-net.org, December 2022
A DOL information letter clarifies how ERISA's bond requirements apply to a pooled employer plan. A PEP is a type of multiple-employer plan created by the SECURE Act to make it easier for unrelated employers to participate in group retirement plans.
Source: Mercer.com, November 2022
A new survey finds that small employers are interested in learning more about pooled employer plans, although there is still some hesitancy on the road to implementation. More than half of smaller employers surveyed by the Secure Retirement Institute that are considering a DC plan are interested in learning more about PEPs, regardless of whether they have a retirement plan currently in place.
Source: Napa-net.org, May 2022
Set against the backdrop of the continuing wave of ERISA litigation that is being brought against employers who sponsor retirement plans, Pooled Employer Plans ("PEPs") are emerging in the marketplace as an alternative that may limit employers' risk of retirement plan-related litigation. There have been over 220 ERISA class action suits filed in connection with retirement plans since 2018, and the top ten ERISA settlements for 2021 alone totaled $840 million in the aggregate. Since ERISA litigation is a serious and relevant concern, many plan sponsors, including private equity sponsors and their portfolio companies, would benefit from evaluating whether a PEP is a viable retirement plan solution for them.
Source: Ropesgray.com, April 2022
The IRS has released a new proposed rule providing for an exception, if certain requirements are met, to the application of the "unified plan rule" for multiple employer plans when there is a failure by one or more participating employers to take actions necessary to satisfy requirements of the Internal Revenue Code. The unified plan rule specifies that the failure by one participating employer to satisfy an applicable qualification requirement would result in the disqualification of the MEP for all employers maintaining the plan.
Source: Ascensus.com, March 2022
More employees need to be able to contribute to retirement plans, and many employers without plans would like to offer 401k plans to their employees. This article discusses a new option for outsourcing fiduciary responsibility and why more employers should consider PEPs.
Source: Rpaconvergence.com, January 2022
The SECURE Act created a new type of defined contribution multiple employer plan, the pooled employer plan. Unlike previous versions of multiple employer plans, it need not be limited to employers sharing a nexus or interest or located in the same geographical area. Moreover, the plan as a whole is protected from disqualification due to the non-compliance of a participating employer, as long as the plan provides a mechanism for expelling a chronically non-compliant employer and holding such employer responsible for its noncompliance. As a result, pooled employer plans may be an attractive option for some employers.
Source: Venable.com, August 2021
The case for pooled employer plans is compelling, especially to address the fact that there are 5 million to 6 million companies in the U.S. and just 650,000 DC plans. But as we wait for the DC market to adopt PEPs, the results so far have been muted. A few vendors have applied to be pooled plan providers, but not in the numbers many predicted.
Source: Investmentnews.com (registration may be required), July 2021
The SECURE Act sought to broaden retirement plan coverage for American workers. With many of the provisions only now taking effect, the question turns to whether the newly established and expanded plan types -- pooled employer plans (PEPs), group of plans (GoPs), and multiple employer plans (MEPs) -- will live up to the hype.
Source: Captrust.com, May 2021
As companies seek efficiency, lower cost, and reduced fiduciary headaches by joining a multiple-employer plan, the MEP providers are encountering the same ERISA challenges to their 401k or 403b plans as those faced by single-employer sponsors. Allegations range from excessive investment fees to poorly performing investments to inadequate monitoring of administrative costs.
Source: Pionline.com, May 2021
This article reviews some of the considerations employers may need to address when trying to decide whether to participate in a particular PEP. There will be many PEPs available in the market from which to choose; thus, employers will need to look to a PPP's and/or a PEP's marketing or other materials for more detailed information. But, there is some essential information employers seek and consider.
Source: Actuary.org, May 2021
A PEP is a new type of retirement plan that was created by the Setting Every Community Up for Retirement Enhancement Act (SECURE) Act. A PEP allows plan sponsors to pool their retirement resources with the resources of other employers, as well as delegate many plan operations and fiduciary responsibilities to a third party. Download a free FAQ.
Source: Multnomahgroup.com, April 2021
As MEP solutions begin to accumulate participants and assets, plaintiffs' lawyers will inevitably train their sights on MEPs as a fiduciary litigation target. Indeed, they have already begun to do so.
Source: Napa-net.org, April 2021
The SECURE Act introduced an entirely new retirement plan fiduciary structure called the Pooled Employer Plan. PEPs allow unrelated employers to pool resources to help achieve economies of scale and administrative efficiencies. As with any retirement plan strategy, PEPs come with benefits, limitations, and risks that should all factor into an employer's decision to join. This is a review of the benefits, limitations, and risks.
Source: Lockton.com, April 2021
Pooled employer plans are coming to market at a clip, three months after the first ones were given the DOL's blessing. In the past week alone, at least three pooled employer plans, or PEPs, have been announced. Those include plans from American Trust, Access Retirement Solutions, and a new entity from venture capital firm Magis Capital Partners, Sallus Retirement.
Source: Investmentnews.com (registration may be required), April 2021
The law firm of Capozzi Adler, P.C. has found another 401k plan to sue, and this one a multiple employer plan. The plan -- more specifically the plan fiduciaries -- targeted are those of Nextep, Inc., a Professional Employer Organization, as well as the firm's board of directors, the investment committee, and members of that committee.
Source: Asppa.org, March 2021
The platform may be different, but the excessive fee allegations directed toward a multiple employer plan are all too familiar. The plaintiff this time was employed by Heartland Coca-Cola Bottling Company an employer that participated in the Coca-Cola Bottlers' Association 401k Retirement Savings Plan, a multiple employer plan. The plan covers about 19,000 participants, and as of December 2019 had nearly $800 million in assets spread across 24 investment options, including a Coca-Cola Common Stock Fund.
Source: Napa-net.org, February 2021
The DOL has issued final regulations on registration requirements for pooled plan providers administering pooled employer plans. The final regulations retain much of the same structure as the proposed rule issued last August, with some added clarification on registration requirements.
Source: Hallbenefitslaw.com, February 2021
The IRS in its January 20, 2021 edition of Employee Plans News has revealed that pre-approved qualified retirement plan documents may be used to establish arrangements known as pooled employer plans, or PEPs.
Source: Ascensus.com, January 2021
The goal of the provisions of the SECURE Act that created pooled employer plans was to encourage employers that didn't have retirement plans for employees to offer one. But employers that already sponsor a plan may also decide a PEP is a better choice for them and their participants. With a lack of regulatory guidance, plan sponsors can rely on certain existing rules to know the steps to take if they decide to move from a single-employer plan to a pooled employer plan.
Source: Plansponsor.com, January 2021
The forthcoming plans present challenges and opportunities. Retirement plan recordkeepers see some promise in pooled employer plans, but they also anticipate even more risk to their businesses, regardless of whether they provide them.
Source: Investmentnews.com (registration may be required), January 2021
Ultimately, while the PEP may become a valuable tool for small business owners to be able to offer employees competitive retirement plan options, RIAs will need to carefully consider whether to choose to take on the role of a PPP for their small business clients plans and the associated ramifications if they do choose to do so. Including asking the question of whether branching out into plan administration would result in more business anyway, or if it will be better to find a third-party administrator to partner with instead?
Source: Kitces.com, December 2020
A bipartisan trio of U.S. Senators has introduced legislation that would expand Multiple Employer Plan access to 403b plans, along with other MEP enhancements.
Source: Asppa.org, December 2020
Supporters claim PEPs can offer lower fees for retirement savers and greater liability protection for business owners than a single-employer 401k plan. If you're a business owner, you should understand the differences between PEPs and SEPs to make the best choice for your company.
Source: Employeefiduciary.com, December 2020
Pooled Employer Plans must be administered by a Pooled Plan Provider, which must register with the Department of Labor before commencing operations. On August 20, 2020, the DOL issued a proposed rule regarding the registration process for PPPs which is reviewed here.
Source: Hallbenefitslaw.com, December 2020
Pooled Employer Plans become a real thing as of the first of the year, though there is still a lack of guidance related to them. Many of you may now be pressed on the question of whether or not you or your clients should choose this road. This glossary should help you in your assessment of these arrangements.
Source: Businessofbenefits.com, December 2020
The Department of Labor's final rule on registration requirements for pooled plan providers, or PPPs, takes effect this month. Notably, the final version of the rule extends a waiver for PPP applicants between Nov. 25 and Jan. 31, allowing them to forgo the normal 30-day period between filing and beginning a PEP.
Source: Investmentnews.com (registration may be required), November 2020
There can be some reticence to offer a MEP until we have really firm guidance. Some are waiting to see what happens with all the rules. This is important so you know what you're supposed to be doing from a practical standpoint and a process standpoint.
Source: Asppa.org, November 2020
The Department of Labor announced a final rule establishing registration requirements for pooled plan providers. The rule implements the registration requirements for pooled plan providers pursuant to the SECURE Act.
Source: 401kspecialistmag.com, November 2020
Among its many popular provisions, the SECURE Act amended ERISA to allow for pooled employer plans, referred to as "PEPs." Even so, the legal complexities that emerge when a single employer operates a retirement plan for its workforce are already immense and the same will certainly be true when it comes to building pooled employer plans.
Source: Plansponsor.com, November 2020
Nonprofits and colleges would able to join the SECURE Act's much-anticipated pooled employer plans under a bill introduced last week by Rep. Ron Kind. If the bill passes, it will be very big news for any business that is lining up to become a pooled plan provider. There is expected to be a flood of applications for that status, once the DOL finalizes its criteria for those plan providers.
Source: Investmentnews.com (registration may be required), October 2020
One provider getting ready to launch a SECURE Act-enabled pooled employer plan on January 1 says he is already in conversation with advisers about combining 3(38) fiduciary oversight with PEP recordkeeping and administration.
Source: Planadviser.com, October 2020
Human resources outsourcing firm TriNet is among the latest companies to be targeted over the multiple-employer plans it sponsors, having been sued last week by several participants. The Sept. 29 class-action complaint was brought by law firm Capozzi Adler, which this year has filed by far the most new 401k excessive-fee lawsuits. The case against TriNet is different, however, because it involves MEPs rather than a single-employer 401k plan.
Source: Investmentnews.com (registration may be required), October 2020
At least three cases were filed recently against providers of multiple employer plans, and two other cases have been settled. This year also has seen a wild rise in the number of 401k lawsuits, though relatively few of them have involved MEPs.
Source: Investmentnews.com (registration may be required), October 2020
The IRS and DOL have not issued much-needed comprehensive guidance on PEPs. With such a short time before the rules become effective, practitioners are worried that we may not have timely guidance to make decisions regarding the addition of PEP services to their businesses. This is a two-page overview of what we currently know.
Source: Asc-net.com, September 2020
The law firm of Schlichter Bogard & Denton has a new target, multiple employer plans. They've just filed their second excessive fee suit in that genre. This time the target is the Pentegra Defined Contribution Plan for Financial Institutions, a multiple employer plan, or MEP.
Source: Napa-net.org, September 2020
The SECURE Act created a new structure through which completely unrelated employers can participate in a single defined contribution plan beginning on January 1, 2021. These Pooled Employer Plans must have a Pooled Plan Provider, and each PPP must register with the Department of Labor prior to beginning operations. On August 20, 2020, DOL released a proposed regulation detailing the PPP registration requirements.
Source: Groom.com, August 2020
The DOL has issued highly-anticipated proposed regulations on registration requirements for entities that will function as "pooled plan providers" for retirement plans that will be known as pooled employer plans, or PEPs.
Source: Futureplan.com, August 2020
One downfall of our retirement saving system is the cost and quality of the plan that you have access to can be significantly dependent on the size of your employer. Small employers have fewer employees to join their plans and generally fewer collective assets to invest, resulting in limited bargaining power to negotiate low fees and barriers to accessing low-cost investment options that may have higher minimum investments. As the debut of pooled employer plans draws near, the current MEP system provides a useful test case for what can go right and wrong.
Source: Morningstar.com, July 2020
Advisers and broker/dealers hoping to work with open multiple employer plans now have a short window to offer their perspectives to the DOL and the IRS. Attorneys with the Wagner Law Group note that the RFI also requests information on issues facing two other types of multiple employer plans, multiple employer plans sponsored by employer groups or associations with "commonality of interest," dubbed "association plans," and those sponsored by professional employer organizations, dubbed "PEO MEPs." Together, the DOL refers to these two plan types as "MEPs."
Source: Planadviser.com, July 2020
A key component of the SECURE Act, passed at the end of 2019, was the expansion of opportunities to combine the 401k plan assets of multiple unrelated employers. The SECURE Act relaxed the rules on multiple employer plans and created a new vehicle, the pooled employer plan to allow employers to come together under a single 401k plan. By providing additional pooling opportunities, Congress hoped to allow smaller employers to enjoy economies of scale available only to very large employers, and thereby reduce participant fees and enhance services. The DOL is now looking for suggestions on what guidance may help create additional MEP and PEP opportunities.
Source: Beneficiallyyours.com, June 2020
This Article shows that the bipartisan enthusiasm for expanding multiple-employer arrangements rests on shaky theoretical and empirical considerations. Drawing on newly hand-collected data for multiple-employer plans in effect before 2019, it argues that overlooked agency costs, market opacity, and the limits of the fiduciary governance regime have undermined the gains from asset pooling and centralized plan administration in existing multiple-employer plans.
Source: Ssrn.com, June 2020
MEPs loom as the elephant in the retirement industry room. With the SECURE Act allowing open Multiple-Employer Retirement Plans beginning in January of 2021, service providers cannot ignore this beast. It has the potential to become a behemoth, swallowing existing business models. An academic conclusion, like any credible science, must be careful with its words. Some may view this as hedging, but a scientist would call this exacting. It not surprising then that several academic paper's conclusions offered a mixed review of the 401k MEP.
Source: Fiduciarynews.com, June 2020
Multiple-employer plans have been hailed as a cure for the lack of access that at least a third of U.S. workers have to workplace retirement plans, but a recent academic paper highlights the glaringly outsize fees some MEPs charge. The most recent data available from the Department of Labor, for the year 2016, show that MEPs carried higher administrative fees on average than similarly sized plans sponsored by individual employers, according to the paper, written by Natalya Shnitser, assistant professor at Boston College Law School.
Source: Investmentnews.com (registration may be required), May 2020
The lawsuit alleges the ADP defendants "have allowed unreasonable recordkeeping/administrative expenses to be charged to the plan; failed to adequately monitor the plan's recordkeeper and its affiliates, who the ADP defendants have permitted to design an investment menu unreasonably favorable to them despite the recordkeeper's clear conflicts of interest; and, along with NFP Retirement, selected, retained, and/or otherwise ratified high-cost and poorly-performing investments, when more prudent alternative investments were available."
Source: Planadviser.com, May 2020
A new excessive fee suit has been filed, one that purports to represent a class of some 5,000 employers participating in a multiple employer plan, or MEP. The suit was filed in the U.S. District Court for the District of New Jersey by McCaffree Financial Corp., individually as a participating employer co-sponsor and a fiduciary of the ADP TotalSource Retirement Savings Plan.
Source: Napa-net.org, May 2020
The SPARK developed this tool for preparing and evaluating Requests for Proposal for Association Retirement Plans, which are a special type of defined contribution plan, to assist Associations and advisors/consultants in this important task. While the use of this tool is completely voluntary, the Society is encouraging widespread use of this tool to enable service providers to prepare consistent responses, resulting in reduced response time and improved evaluations.
Source: Sparkinstitute.org, April 2020
The Pooled Employer Plan and Multiple Employer Plan provisions are some of the most hyped elements of the SECURE Act. PEPs and MEPs are new plan structures that allow employees of more than one employer to participate in a single retirement plan, with the goal of expanding retirement plan access for all individuals. This is a quick review of what these plans are.
Source: Cammackretirement.com, February 2020
Are PEPs available to 403bs? The new PEP rules, do not apply to 403b plans. Thus small 403b plans are still somewhat limited in their opportunities to band together into a single plan to increase their purchasing power.
Source: Plansponsor.com, February 2020
When passage of the SECURE Act in late December opened the door for unrelated small and medium-sized employers to band together to offer a Multiple Employer Plan, the idea behind it was to expand the availability of employer-sponsored retirement plans to more workers at small businesses. New Secure Retirement Institute study finds even larger employers showing interest in exploring benefits of Open Multiple Employer Plans.
Source: 401kspecialistmag.com, February 2020
A PEP or Pooled Employer Plan is a new way, created by the SECURE Act, for unrelated employers to collectively participate in a defined contribution plan which is professionally run, and because of economies of scale, could charge lower fees than "traditional" plans. While PEPs aren't the right fit for every plan sponsor, they promise to be a major development in the pension plan market.
Source: Jdsupra.com, February 2020
The one SECURE Act topic which seems to be on the forefront of a significant number of professionals is the attempt to make sense of the new MEP and PEP rules. Commentators seem to be taking a common misstep in that (with rare exception) each of these analyses are missing the assessment of the use of the "Group of Plans,"or "GoP," in relation to MEPs and PEPs.
Source: Businessofbenefits.com, February 2020
Bradford P. Campbell, with Drinker Biddle, recently discussed specific requirements for open MEPs, now called pooled employer plans, included in the SECURE Act. There are still some unanswered questions and guidance that needs to be released and Campbell expects the DOL will provide that guidance.
Source: Planadviser.com, January 2020
Open multiple employer plans have the potential to shake up the 401k industry, and banks and insurance companies stand to benefit from the disruption. As such plans begin to emerge in the wake of the SECURE Act's passage, they could consume some of the assets that would otherwise flow into traditional employer-sponsored plans. But the plans will also present an enormous opportunity for financial advisers who have some level of retirement plan business.
Source: Investmentnews.com (registration may be required), January 2020
The SECURE Act has answered many of the questions of 401k MEP proponents. Here, attorney Ary Rosenbaum is interviewed about the main points addressed by this new legislation, where there were concerns, and to what extent the SECURE Act alleviates those concerns.
Source: Fiduciarynews.com, January 2020
The 5-page article discusses how federal regulators and lawmakers have been moving toward making plans more attractive for small business by expanding the "multiple employer plan."
Source: Steptoe.com, January 2020
Open MEPs are an exciting policy change, but it is far from clear how they will work in practice. Their effectiveness in improving retirement-plan quality and their overall appeal depends on how this niche industry reacts. There is also the matter of how regulators nudge MEPs along, as they will have to balance concerns regarding the soundness and proper regulation of these plans with maintaining their appeal to the industry for use and promotion. This article discusses a few questions employers and plan sponsors may have around open MEPs.
Source: Morningstar.com, December 2019
New regulations from the Department of Labor regarding Multiple Employer Plans are set to take effect later this year. Specifically, they outline three different types of MEPs and how the DOL will look at the unrelated businesses banding together to form the MEP. In particular, Association MEPs (also called Association Retirement Plans) are of interest to many employers, as they arise for a "bona fide group or association" of employers.
Source: Hallbenefitslaw.com, November 2019
It appears all but certain the floodgates will soon open wide, unleashing a torrent of trade association sponsored 401k MEPs. Even with the DOL's final rules, not all the fiduciary risks for associations starting a 401k MEP plan have been eliminated.
Source: Fiduciarynews.com, November 2019
Proponents of open MEPs hail them as a means of reducing both the burden and cost of sponsoring a retirement plan for smaller employers, but as MassMutual explains in its white paper, these benefits may prove elusive depending upon the specific needs and preferences of the participating employer and the plan options selected.
Source: Asppa.org, November 2019
In an effort to expand retirement plan coverage to more Americans, the DOL recently finalized a regulation that should simplify the administrative burdens, and thereby reduce costs, for sponsoring and maintaining a defined contribution retirement plan for smaller employers. Under the Regulation, smaller employers, including "working owners," can band together to participate in defined contribution multiple employer plans, sometimes referred to by the DOL as "association retirement plans."
Source: Troutman.com, October 2019
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