Questions Employers Should Ask Before Joining a MEP

Multiple employer plans (MEPs) are close — a provision in the pending SECURE Act would ease the rules restricting them, and the Department of Labor issued a final rule in July that makes it easier for small businesses to offer retirement savings plans to their workers through association retirement plans. So a recent blog entry suggesting considerations before joining a MEP is well-timed.

In “A Company Fiduciary Must Ask These Questions Before Joining a 401k MEP,” Christopher Caruso writes for Fiduciary News that there are factors to consider first.

Caruso cites questions that four industry execs – Drew Carrington, Head of Institutional DC in Franklin Templeton; Dr. Guy Baker, Ph.D, founder Wealth Teams Alliance;  Neil Lloyd, Head of US Defined Contribution and Financial Wellness Research at Mercer; and Kyle P. Webber, Managing Partner at Quartz Partners Investment Management – suggest be considered.

Carrington suggests that employers that offer a plan and are considering joining a MEP need to balance the tradeoffs between the customization and control entailed in having their own plan and choosing their own investment menu as opposed to the possible cost savings and the degree of fiduciary relief over investment selection that they would enjoy.

Baker suggests asking the following questions:
 

1. Who picks the portfolio that is offered to my employees?
2. How is the portfolio monitored and what is done if there needs to be changes?
3. Does the employer participate in the decision?
4. What are the fees to participate in this plan?
5. How do the fees compare if the employer manages its own plan?

Lloyd suggests that employers need to consider the degree to which they want to take on the responsibilities of being a plan sponsor. And Webber suggests asking:

1. What administrative burdens of offering an employer sponsored retirement plan are reduced with the MEP?
2. Are employee enrollment, payroll submission and employee disclosures handled at the plan level or individually by each employer?
3. How does belonging to a MEP affect filing the Form 5500?