“SECURE Act”: Open MEPs Still in Play?

Between the “Setting Every Community Up for Retirement Enhancement Act of 2019″ (the SECURE Act) currently under review in the House and the similar Retirement Enhancement and Savings Act of 2019 from the Senate, the stage is being set for small businesses to have more access to multiple employer plans (MEPs). MEPs allow unrelated employers, who would otherwise be too small to access competitive benefits packages, to bond together in order to offer various benefits to employees.

 

Open MEPs

Open MEPs allow completely unrelated employers to work together to offer retirement plan benefits instead of requiring the employers be related in some way. The new legislation would also allow professional organizations to offer association retirement plans. It is unclear how the open MEPs would coordinate with the DOL’s recent proposed rule. Last fall, the Department of Labor (DOL) proposed a rule to define “employer” under ERISA that does require some degree of connection between the businesses offering the plan. Further, employers choosing to work together must have some other common nexus, such as being part of the same industry or being in the same geographical area, to form a MEP.

SECURE Act and RESA

The new legislation contains provisions that benefits professionals believe will make it easier for small businesses with fewer employees to offer retirement plans. All businesses participating in an open MEP would have to work alongside a pooled plan provider. The provider is responsible for ensuring the plan, and the businesses that participate in the plan, are managed in line with ERISA and other federal and state regulations.

There is some question if, with this new legislation, DOL’s definition of employer will still require entities to be related or if this will open the door for truly open MEPs. Further, since open MEPs will be a new type of plan, regulations will have to be written, reviewed, and finalized to clarify a number of likely issues. These issues include:

  • Who is responsible for choosing administrative providers and recordkeeping providers?
  • Will there be an independent fiduciary responsible for the plan?
  • How much control will businesses maintain over the plans they select and how will this impact employers?

While the final product may look different than anything else on the market, there is certainly additional room for disruption and innovation. Open MEPs allow smaller employers to be able to offer competitive benefits plans and access retirement plans at rates that are currently only available to large providers with significant negotiating and purchasing power.

The benefits attorneys at Hall Benefits Law are paying close attention to this legislation as it works its way through the legislature. The bill has strong bipartisan support and seems likely to pass much as it currently reads. Our attorneys will also pay close attention as the government proposes and finalizes regulations to help govern open MEPs. If your business is interested in learning more about different benefits options or needs help handling benefits compliance issues, reach out to our team today by calling 678-439-6236, or visit the Hall Benefits Law website.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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