The paper, “Multiple Employer Plans: An Opportunity for Expanding Retirement Plan Coverage,” explains how small-business owners who want to provide their employees the same flexible features and benefits of a traditional 401(k) plan may not have the internal expertise to manage a stand-alone plan. Transamerica provides an analysis and specific recommendations for the enhancement of defined contribution MEPs.
Some of the recommended reforms to the MEP structure include:
- Implementing safe harbors from liability for the MEP sponsors and adopting employers
- Restricting the responsibility of an adopting employer for the delinquent obligations of another MEP employer
- Further simplifying the reporting and disclosure obligations of MEP sponsors and adopting employers
Transamerica explains what it sees as the greatest advantages of the MEP: the annual Form 5500 filing, periodic IRS determination letter filing, and annual independent audit requirements only need to be completed by the MEP as a whole, not by the individual employers participating in the plan. Regardless of the number of employers in the plan (which could range into the thousands for a single MEP), only one annual Form 5500 filing, one periodic IRS qualification filing, and one annual independent audit is required. This translates to substantial economies of scale and cost efficiencies over stand-alone plans for small businesses, which will ultimately benefit plan participants.
The paper outlines several more advantages for small businesses to participate in a MEP retirement solution. The complete paper is available on Transamerica’s Web site: https://www.ta-retirement.com/resources/5913-1010_final.pdf