Tag Archives: Multiple Employer Plan

Retirement Plan Outsourcing Allows You to Focus on Your Business

Increasing operational and compliance concerns are causing employers to consider alternatives to traditional “single employer retirement plan” programs. In the past, employers needed to assume full responsibility for investment fund selection and monitoring, changing regulatory requirements, approval of QDRO’s, employee hardship requests, beneficiary payments, Form 5500 filings, plan documents, annual notice requirements, and much more. Quarterly investment and plan committee meetings tie up senior employee schedule time as employers struggle with what seems like an ever-increasing workload of regulatory and compliance hurdles. Additionally, in most cases employers shoulder personal financial responsibility for any mistakes that might be inadvertently made in operating their plan. This is unacceptable when there are other options available to the employer.

The Platinum 401k Can Handle All Of These Challenges And More!

Our unique multi-provider program is the leader in the retirement plan industry. With over 25 years of experience in working with multiple employer plan clients and with the flexibility to tailor investment providers – and pricing – to each client, our professionals enjoy a unique reputation for retirement plan excellence across the country.

Multiple Employer Plan

What Does All Of This Mean To You And Your Company’s Retirement Plan?

Investment Provider Flexibility

The Platinum 401k allows you the ability to choose from a selection of leading investment providers.

Plan Design Flexibility

Our program can seamlessly accommodate any existing prototype document plan design.

Pricing Flexibility

By custom pricing each adopter individually, clients can receive pricing concessions as assets grow.

Reduce Your Fiduciary Liability and Focus On Running Your Company

You can eliminate your role as a Plan Trustee, and also reduce or eliminate many of the traditional duties associated with running a retirement plan. Save time, save money, and enjoy peace of mind.

Lower your costs, lower your liability, and have less headaches. Run your 401k plan just like you run all of your other employee benefit programs – hire a provider who then assumes the responsibility for virtually all of the day-to-day fiduciary oversight! Read More

Multiple Employer Plan

It’s Time for the DOL to Rescind their Advisory Opinion 2012-04A

On May 29, 2012, the U.S. Department of Labor issued Advisory Opinion 2012-04A.

This document explained the Department of Labor’s position, at that time, on the use of multiple employer plans as they relate to companies who did not have any specific commonality or nexus that would otherwise tie them together.

It did not change the Internal Revenue Code Section 413(c) one bit, nor did it appear to change the position of the Internal Revenue Service on these types of programs. It did require multiple employer plan adopters to file individual Form 5500’s, incur the cost for an individual annual plan audit as required under current regulations, and to possess an ERISA bond for their portion of the plan.

Perhaps a walk down memory lane might offer some perspective as to why the Advisory Opinion was issued in the manner in which it was.

Multiple Employer Plan

In April 2012, noted “fiduciary expert” and multiple employer plan proponent Matthew Hutcheson was indicted on charges of stealing millions of dollars from a multiple employer plan that he oversaw (Hutcheson was eventually found guilty and sentenced to 17 years in federal prison for his crimes in 2013). The DOL issued a press release on June 14, 2012 (two weeks after the Advisory Opinion 2012-04A was released) announcing that they had obtained an injunction against Hutcheson relating to ERISA violations surrounding that case. They were right to do so.

Why is this timeline important? Clearly, during the time that the DOL was considering attorney Robert Toth’s request for a favorable opinion from them, the entire Hutcheson mess came to light…..and had the kneejerk effect of creating an “all multiple employer plans are bad” reaction from the DOL.

While on the surface, this could appear to be a rational reaction to the theft of millions and millions of dollars from plan participants.

A deeper dive into the Department of Labor’s own records of enforcement from their website, however, show much greater problems with operational compliance and theft occurring from single employer defined contribution and defined benefit plans when compared to multiple employer plan by an enormous margin.

It’s not even close. It’s not the plan structure that led to the theft, it was the criminal who was running the plan. Read More...

The Platinum 401k Open Multiple Employer Plan

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The Platinum 401kAmerica’s Multiple Employer Plan and 401k Outsourcing experts! With over 35 years of industry experience, we help employers focus on running their businesses instead of their 401k plan!

Learn more about us at http://www.theplatinum401k.com/.

We assist retirement plan trustees in reducing their fiduciary responsibilities and liability by outsourcing many of the duties to experienced independent ERISA fiduciaries. We also work with retirement plan advisers all across the country to provide them with an outstanding multi-provider fiduciary solution for their clients.

If you are responsible for overseeing a corporate retirement plan and would like to lessen your liability, responsibilities, workload, and expenses, we probably need to talk.

Contact Terrance Power, at 813.774.3366 or tpower@theplatinum401k.com for more information about our multiple employer plan solutions!

Senate Bill 3471 Would Greatly Expand Multiple Employer Plans in 2020

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U.S. Senator Orrin Hatch has introduced the Retirement Enhancement Savings Act (RESA) of 2016 in the U.S. Senate. It is widely anticipated that this bipartisan legislation will be included in the Continuing Resolution Bill that is expected to be signed into law on December 9, 2016.

RESA will greatly expand multiple employer plans for unrelated employers beginning with the 2020 plan year. I was interviewed by Investment News last week on the developments: Read More

The Pep Talk – What’s Coming for MEP’s

I was recently interviewed by Ary Rosenbaum for his web blog site, that401ksite.com, concerning recent developments that impact multiple employer plans.5khikk4ydtogbmotlxtltzl72ejkfbmt4t8yenimkbvvk0ktmf0xjctabnaljim9

Proposed bipartisan legislation will allow “open multiple employer plans” to be replaced by “pooled employer plans” – “PEPs” beginning in 2020 if the U.S. Senate Finance Committee has its way. Pooled Plan Providers – “PPP” or “P3” will be able to oversee these plans according to yet to be released regulations.

We’ll be making a new website that discusses the conversion process live shortly after the legislation is enacted, which is anticipated to be as early as December 2016 or early in the next Congress. Look for an announcement about http://www.MEP2PEP.com down the road. Read More

Multiple Employer Plans Have Bright Future

As the election nears, 401(k) experts are keeping an eye on legislation that could make multiple employer plans (MEPs) an extremely favorable option.

MEPs have been around in some form since the 1960s, says Terry Power, president and CEO of The Platinum 401(k) Inc. A retirement plan established by one plan sponsor, a MEP can also be adopted by one or more participating employers. This vehicle transfers the fiduciary responsibilities and liabilities from employers to a Mindex-2EP plan sponsor.

A closed MEP, explains Power, is where a nexus, or commonality, exists between the adopting companies (e.g., an association-sponsored plan exclusively for members).  An open MEP has no nexus between adopters, although they might share a common payroll provider or geography.

 Power became an “expert by proximity” — his practice was located in the Tampa Bay area, which in the mid-1980s was a veritable hotbed of employee leasing firms. By the early 2000s, these firms needed a professional employer organization (PEO) in order to use MEPs. His firm today is a third-party administrator for numerous MEPs.

“Initially, multiple employer plans gave companies leverage through economy of scale and service while mitigating fiduciary responsibility and requiring only one overall audit,” he says.

That all changed in 2012, when the Department of Labor (DOL) issued an opinion affecting open MEPs[1]: If there was no commonality between employers — beyond a mutual administrative provider — the MEP would not be considered a single plan under ERISA. This meant that participating employers would have to file individual Forms 5500, conduct separate audits and adhere to other compliance requirements of individual plan sponsors.

Jason Grantz, QPA, AIFA, managing director/East for the Retirement Planning Consultant Group at Unified Trust Co., remembers this time clearly.

“Leading up to 2012, I was hearing about MEPs all the time,” he said. “Then, the letter came out.”

The conversation on MEPs turned silent, Grantz says.

“I don’t believe it was meant to be a ‘hammer’ by the DOL,” he says. “They were just accurately interpreting ERISA at the time.”

MEPs have picked up again, though, over the past two years, thanks to a bipartisan effort to loosen DOL restrictions. Read More

Multiple Employer Plans – an Enticing Alternative for Plan Sponsors

AN INTRIGUING new use of a long-established concept is catching the attention of small to mid-size plan sponsors seeking a way to simplify 401(k) plan oversight: Multiple Employer Plans (MEPs). By merging their plan into a properly structured MEP, employers cease to be a plan sponsor and effectively transfer many of the responsibilities and liabilities associated with being a named fiduciary to the MEP.l6019022dstbai776952

The MEP concept is exploding in popularity. Established under ERISA 413(c), MEPs historically have been used by companies that share a common industry or payroll provider, primarily association plans and professional employer organizations (employee leasing). However, as interest in outsourced fiduciary solutions has grown in recent years, a new generation of “open” MEPs for unrelated companies has sprung up. While MEPs can deliver tremendous benefit to many plan sponsors, an MEP is a solution in search of a problem for others. This article is written to help plan sponsors determine if this approach is a good fit for their organization.

The MEP sets up a single plan that covers all adopting employers, with the plan document generally written to allow for variation in plan design among the participating companies. Fund selection and monitoring generally are handled by the MEP. Discrimination testing and plan design (with some limitations) generally remain with the adopting employer. The shift in responsibility results in several potential benefits:

Elimination of annual plan audit:

Plans that cover more than 100 employees typically are required to have an annual plan audit performed as part of their annual plan Form 5500 filing. Under the MEP arrangement, there is still a plan audit, but only one that is performed at the overall MEP level. The annual audit that is required by each employer (now known as an “adopter”) is eliminated, resulting in significant savings to the employer.

Mitigation of fiduciary risk:

Independent fiduciary W. Michael Montgomery described the impact on fiduciary liabilities in Multiple Employer Plans as a Fiduciary Risk Mitigation Tool:

“Employers adopting a sound Multiple Employer Plan…achieves a profound reduction in fiduciary risk exposure. The reason is a simple one: The adopting employer ceases to perform certain key roles that incur fiduciary status. When an employer merges its current single-employer plan into a properly structured MEP, it is no longer the sponsor of the plan. It also should cease to be a trustee, plan administrator, or any sort of named fiduciary. Those central roles move to the MEP, and the inherent fiduciary liability transfers with them.”

The relief offered by MEP participation is extensive but not total. Certain responsibilities generally remain with the adopting employer, and even this reduced role must be taken seriously. Those responsibilities include:

  • The need to make timely and accurate plan contributions.
  • Plan design decisions, such as the level of match.
  • The decision to adopt or de-adopt the MEP including necessary due diligence and monitoring of the MEP.
  • Distribution to participants of required notices and information, though this may at times be handled directly by the MEP plan sponsor.
  • Communication and enrollment assistance for participants.

Streamlining of plan operations:

In addition to the audit elimination, MEP adopting employers no longer file a Form 5500, maintain a fidelity bond, or shoulder the responsibility for 408(b) (2) compliance. These are handled by the plan sponsor that is associated with the MEP, not the adopting employer. For some employers, this benefit is inconsequential. For others, the desire to let outside experts run the plan can be more important than either the audit relief or fiduciary risk mitigation.

MEPs are not a good fit for every employer. Some plan sponsors already are mitigating their fiduciary exposure through a comprehensive, well-documented fiduciary process. Others don’t consider the cost or effort of an annual audit to be significant enough to justify making a change. Still others take satisfaction in staying engaged in plan oversight and fund monitoring. Simply put, if the advantages of an MEP appear to be solving a problem you don’t have, this approach is not for you.

An employer also should consider the potential limitations inherent in most MEPs. These may include the following:

  • The adopting employer does not select its own fund menu. For many, this is a relief. Others want to have more involvements in investment decisions and consider this a takeaway.
  • Loss of current provider. Though some MEPs offer a degree of flexibility, most are tied to a single record keeper or third-party administrator, so you will most likely have to leave behind your current providers to enjoy the benefits of adopting an MEP.
  • “Bad Apple” impact: one adopting employer with serious compliance violations could cause the entire MEP to be disqualified, though a more likely scenario is that corrective measures will be taken. In the 20-plus years that I’ve been associated with Multiple Employer Plan clients, I’ve yet to see this occur. It is important that employers confirm the availability of a “disgorgement provision” in any MEP that they may be considering. This important plan design feature allows the MEP to quickly eject and thereby isolate any noncompliant adopter from the plan.

If these features are appealing and the limitations are acceptable, you may want to look further into the Multiple Employer Plan approach to your company’s retirement plan solutions.

I’ve been told by plan sponsors that they decided to join an MEP because these programs are handled the same way as their other employee benefit programs, where the benefit providers handle all the details. For example, while an employer could, at least in theory, negotiate with doctors, hospitals, MRI service providers, pharmacies, etc., for their employees’ medical coverage, most find it easier to outsource these micro-managed decisions to a third party—in that case, a health insurance provider that offers a group health-care policy.

There is a trade-off in control, options, etc., but there also is comfort in knowing that there are professionals at the helm and that they have a vested interest in making sure that their employees are taken care of in accordance with the terms of the arrangement.

Plan sponsors and their advisers will, of course, need to determine on a case-by-case basis whether these programs are a “fit” for their plans and their plan participants.