A team at Massachusetts Mutual Life Insurance Company is out to show employers and financial professionals that MassMutual is a great source of information about the new “open multiple employer plan” proposals.
MassMutual today released a white paper that explains what open MEPs are and talks about some of the pros and cons.
The Springfield, Massachusetts-based life insurer and asset manager is positioning itself as a source of a sober, balanced assessment of a hot retirement plan concept.
Today, under current federal laws and U.S. Department of Labor regulations, employers that want to join together to sponsor a 401(k) plan or other defined contribution retirement plan must show that they have a “commonality of interest” — in other words, something more in common than that the managers breathe air, eat food, and want to offer retirement benefits.
An open MEP could help two or more unrelated employers team up to sponsor the same multiple-employer defined contribution retirement plan.
Bob Carroll, head of workplace distribution at MassMutual, said in a statement about the white paper: that the opportunity for employers to join an open MEP sounds like an outstanding new opportunity.
“However, employers and their financial professionals will need to carefully consider what they want to achieve and how when participating in an open MEP,” Carroll said.
Here are three points about MassMutual’s white paper:
1. MassMutual is focusing on a concept that’s getting a great deal of attention in Washington right now.
The Employee Benefits Security Administration (EBSA), the DOL arm that oversees retirement plans, has been looking at the idea of making open MEPs possible through the regulatory process, by eliminating the DOL commonality of interest requirement.
The Senate is now considering H.R. 1994, the Setting Every Community Up for Retirement Enhancement Act bill, or Secure Act bill. The Secure Act bill includes a statutory open MEP provision. Members of the House approved H.R. 1994 by a 417-3 vote May 23.
Senate Majority Leader Mitch McConnell could bring H.R. 1994 up for a vote on the Senate floor as early as today.
(Related: Secure Act May Get Senate Vote Thursday)
2. MassMutual is explaining why employers and retirement benefits advisors should care.
MassMutual is pointing out that joining an open MEP could help an employer reduce some kinds of administration and compliance costs.
MassMutual and other companies already have plenty of experience with helping trade groups and other organizations offer traditional MEPs that meet the DOL commonality of interest standard, the company says in the white paper.
Depending on how the final MEP rules work, an open MEP could help an employer be part of one big retirement plan that will file one big Form 5500 annual plan report, MassMutual says.
An employer could also be part of just one big plan audit, if and when the plan is audited, and it could be able to delegate many administrative duties and enjoy increased purchasing power, the company says.
3. MassMutual is warning that open MEPs may not be right for every employer.
MassMutual notes that employers that join an open MEP may lose some ability to customize their retirement plans.
The employer sponsors will still have to submit payroll information to an open MEP administrator and monitor employees’ retirement plan loans, and the employer sponsors will probably end up continuing to face fiduciary responsibilities related to tasks such as submitting payroll and loan information to the open MEP administrator, MassMutual says.
The company is also emphasizing that, even after Congress passes a bill, regulators’ interpretations and implementation may affect how a new program really works.
“At MassMutual, we stand ready for whatever comes next,” the company says. “As a longtime provider to multiple employer plans, we have the knowledge and experience to deliver the right retirement plans for every employers’ needs, as well as the service model to support third party plan administrators.”
The company ends the white paper with a “call to action” that encourages readers to call a toll-free telephone number, along with a blank page for notes after the call to action.
A copy of the MassMutual open MEP white paper is available here.
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