What is an Open Multiple Employer Plan?
A MEP is a single retirement plan – such as a 401(k) or pension plan – maintained by two or more employers. They may be sponsored by trade groups, Professional Employer Organizations (PEOs) or third party plan sponsors, or co-sponsored by a group of employers. MEPs should not be confused with “multiemployer plans,” which are commonly seen among unionized companies.
In a MEP, individual employers remain responsible for ensuring that the plan is functioning properly and for conducting nondiscrimination testing on their own employee group. But the MEP assumes many fiduciary and administrative responsibilities, including responsibility for investment monitoring, co-oridination of annual audit, Form 5500 filings, trustee functions, and other administrative duties.
MEPs offer a number of significant benefits, including:
Cost savings: MEPs often enjoy economies of scale, enabling them to get better pricing on products and services. (Individual employers continue to bear the cost of certain other administrative tasks such as annual audit when required).
Improved benefits: By creating larger asset pools, MEPs may attract higher-quality money managers and other advisors, and provide access to investments that otherwise would be unavailable to participating employers on their own.
Time savings: By shifting time-consuming administrative task to the MEP, the employer can devote more time to running the business.
Sophisticated technology: MEPs may offer access to sophisticated technology, such as online enrollment, account management and communication tools.
Reduced liability: The employer is removed as the Plan Sponsor (and in most cases the “Plan Trustee”), transferring most employer ERISA and investment fiduciary liability to independent professional resources acting as 3(16) and 3(38) fiduciaries.
Who are Potential AutoMEP Candidates?
Existing plans that would like to transfer the operation of their plan because of the related issues and liabilities of running their own plan.
New or growing companies who wish to offer a competitive retirement plan benefit to their employees.
Fee-based advisers looking for competitive large plan pricing for their small & midsized clients.
Existing SEP or Simple Plans seeking to bundle assets with other small employers to aggregate assets for pricing leverage.
- 401(k) plans allow owners to save more for their retirement and better manage the benefits by using a qualified plan.
Plan Sponsors seeking to outsource ERISA and investment liabilities in order to focus on core businesses or 408(b)(2) compliance concerns.
- Plan Design
- Independent Third Party Trustee
- Plan Document Maintenance
- Low Cost Active and Passive Fund Choices
- Fiduciary Investment Management 3(38)
- Automatic Enrollment Services
- Plan Administration provided by a 3(16) plan administrator