The Department of Labor (DOL) killed off what we call open multiple employer plans (MEP) six years ago. It did so by saying that MEPs—where there was no commonality between adopting employers—wouldn’t be considered a single plan for ERISA (and Form 5500) purposes.
It spelled the end for the savings strategy because a big MEP selling point is that they wouldn’t require an adopting employer to complete their own Form 5500.
Six years on, and the DOL issued no clear guidance that expanded on their original view concerning their definition of an effective open MEP, since their advisory opinion that was only specific to one particular case.
President Trump’s executive order, signed and sealed with great fanfare a few months back, directed the DOL to issue MEP regulations. It gave many in this industry the idea that the DOL would allow open MEPs, eliminate the one bad apple rule (meaning if one employer within the plan was disqualified for some reason, so too would the entire plan), and allow plan providers to perhaps sponsor a MEP.
Unfortunately, the proposed DOL rules as offered pretty much state nothing.
While it provided more guidance on how associations and professional employer organizations (PEOs) could sponsor MEPs, it did nothing with its restriction on requiring commonality among adopting employers.
Bottom line—the open MEP door actually (and sadly) remains closed.
What’s next? The DOL could further expand their proposed rule, or Congress could revive the open MEP with legislation. Otherwise, we’re pretty much at the same point we were in 2012.
Ary Rosenbaum is an author and ERISA/retirement plan attorney for his firm, The Rosenbaum Law Firm P.C.
He is also the host of That 401(k) Conference, a fun and informative retirement plan conference at Citizens Bank Park, Philadelphia, Friday, November 9, 2018, 9:00 am – 2:00 pm.
Rosenbaum’s latest book, humbly titled “The Greatest 401(k) Book Sequel Ever,” is available in Kindle and paperback at Amazon.com.
Ary Rosenbaum is an author and ERISA/retirement plan attorney for his firm, The Rosenbaum Law Firm P.C.
