The DOL small business retirement plan rule is not the cure-all that’s needed
In a nod to the small business community, the Department of Labor issued a final rule earlier this week that may nudge more employers to offer joint retirement plans—MEPs—but it’s not all that employers were hoping for. “This is NOT the MEPs that everyone has been so excited about,” says Nevin Adams, chief of marketing for the American Retirement Association via email.
What small businesses really want is “open” MEPs, or plans that cover employees of employers with no relationship other than their joint participation in the MEP. The DOL says that this issue deserves further consideration, and at the same time it issued the final rule, it issued a.
Technically, what the DOL rule does is broaden the definition of employer. So, “bona fide” employer groups or associations and Professional Employer Organizations may act as an “employer” for purposes of sponsoring a MEP. The idea is that by banding together they can negotiate lower fees and pass those cost savings on to employees.
Note: These multiple employer plans are not to be confused with the faltering defined-benefit multiemployer plans, which face severe funding shortfalls putting 10 million union workers’ retirement prospects at risk, that Congress is trying toThe DOL rule is a good first step, says Turley, and may help some small businesses.
There’s no question there is a lack of coverage: more than 28 million full-time private sector employees and more than 23 million part-timers do not have access to a workplace 401 retirement plan, according to theWhy won’t these plans be adopted wholesale? With a MEP the employer offloads the plan administrator role and that fiduciary responsibility. But the employer is still the plan sponsor and has that fiduciary role. That’s something else that the DOL RFI hopes to address.
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