DOL Releases Proposed Rule on MEPs

Under the proposed rule, association retirement plans could be offered by associations of employers in a city, county, state, or a multi-state metropolitan area, or in a particular industry nationwide, Labor explained.

“Sole proprietors, as well as their families, would also be permitted to join such plans. In addition to association sponsors, the plans could also be sponsored through professional employer organizations,” which are human-resource companies that contractually assume certain employment responsibilities for their client employers.

By expressly permitting these new plan arrangements, the proposal would enable small businesses to offer benefit packages comparable to those offered by large employers.

IRA guru Ed Slott told ThinkAdvisor in a Monday email message that ”there are many small employers who would like to offer more comprehensive retirement plans for their employees and to attract new hires, but the costs, compliance and paperwork requirements to implement their own company plans were overwhelming and deterred them. They were also worried about liability.”

With groups of small businesses banding together, Slott continued, “much of that cost and paperwork can be streamlined and simplified. I believe [Labor's MEP plan] would encourage many more small companies to offer their employees the retirement plans they always wanted to. These companies are competing for employees. Offering a company retirement plan is something many more small companies would jump on if the process can be simplified and the costs contained. Everyone wins here.”

Robin Traxler, vice president of advocacy policy & associate general counsel at the Financial Services Institute, said that while FSI is “still reviewing the details of the proposal,” the trade group “shares the administration’s desire to promote retirement security for Main Street Americans, and we look forward to working with them to further this important goal.”