Does it take a village to get a savings plan to employees? Nah, but it sure helps.
A multiple employer plan (MEP) is a 401(k) option that enables companies that otherwise might not be able to manage their own plans to merge under one oversight umbrella. There’s one plan sponsor covering many unrelated employers, meaning one entity deals with audits, fund selection, and maintenance. . . and holds nearly all the liability for the plan.
Because that one entity isn’t you, work life gets better without getting busier, employees get happier, and you grab a celebratory corndog.
Can it really be that easy? Pretty much.
With today’s MEPs, you still get flexibility in choosing your plan and making decisions about vesting, matching, and employee eligibility. Usually for a low cost of admission.
The downsides come if you already have a plan with a well-documented fiduciary process and aren’t particularly put out by an annual audit. Or if giving up plan oversight doesn’t appeal to you; getting into an MEP does come with a trade-off in control. For instance, you won’t have a say in the fund menu. In many cases, employers are happy to let that go to reap the benefits that come from handing off liability and audits.
And I don’t want to oversell it. You don’t choose an MEP and then move on without ever giving it another thought. There’s still an annual 5500 form (but just one) to file. Your company still is responsible for some due diligence of monitoring the MEP and for keeping participants up to date by distributing necessary notices.
Plus, you can’t underestimate the importance of finding a diversified MEP with low and transparent costs. Without that, the whole endeavor falls apart. But we can help you sort through the options. It’s what we’re here for.
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