In July, the IRS proposed regulations that would provide an exception, if certain requirements are met, to the application of the “unified plan rule,” what the industry refers to as the “one-bad-apple rule,” for MEPs.
In a new Field Assistance Bulletin, the DOL addresses a set of common errors made by multiple employer plans as they attempt to comply with a reporting rule introduced in 2014.
In addition to the final ruling, the department has also released a 16-page request for information (RFI) on open MEPs.
A final rule would take care of one item being considered in legislation proposing the ability for employers to join open multiple employer plans (MEPs).
Eighty-nine percent of small employers surveyed said they have a high level of trust in retirement plan providers, compared to 53% for state governments.
This year, the IRI has also issued a state advocacy blueprint calling on states to focus on educating individuals about the importance of retirement planning and encourage federal policymakers to enact proposals expanding access to private-sector retirement plans.
Speakers during a webcast said passage of legislation to allow for open MEPs will be a disruptor affecting nearly all stakeholders in the retirement industry, including broker/dealers and advisers.
The bipartisan bill enjoys broad industry support; among other provisions, it would add flexibility for small businesses to join multiple employer plans.
Several commenters argued that without changes, the proposed rule would have little impact on expanding retirement plan coverage for American workers.
The majority of small business owners agreed that offering a retirement plan for employees is “the right thing to do."
The expanded distribution of the program seeks to take advantage of the Department of Labor’s recent focus on expanding MEP coverage, the firm says.
These plans allow small businesses to join together to offer defined contribution retirement savings benefits.
A hearing focused on four bipartisan proposals, but a couple of witnesses also urged passage of the Retirement Enhancement and Savings Act of 2018.
Brodie Wood, SVP of healthcare, education and not-for-profit markets at Transamerica Retirement Solutions, discussed the efficiencies and benefits a closed MEP can offer not-for-profit 403(b) plans.
The newly created multiple employer plan (MEP) will help plan sponsors reduce their administrative burdens.
In addition to expanding access to MEPs, the bill would facilitate lifetime income disclosure and clarify the current annuity selection safe harbor.
All employees would have 6% of their income contributed to a workplace retirement plan and have these contributions automatically escalated each year.
In a policy paper, Morningstar says state-run plans and multiple employer plans in their current form would create a more fragmented U.S. retirement system for employees.