283 / MEP Impact

The SECURE Act relaxed the “one bad apple rule” for small business owners interested in the multiple employer plan (MEP) structure. Under the one bad apple rule, the entire MEP could be disqualified based upon the actions of only one employer that participated in the plan. The SECURE Act provides that if one employer’s actions would disqualify the plan, only that employer’s portion of the MEP will be disqualified. The SECURE Act relief from one-bad-apple violations applies if the MEP terms provide: (1) the assets of the plan attributable to employees of the employer will, in most cases, be transferred to a plan maintained only by that employer and (2) the employer (and not the plan in which the failure occurred) will be held liable for any liabilities with respect to such plan attributable to the employees of the employer.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about whether recent changes to the MEP rules will have a positive impact on the availability of retirement savings options.

Below is a summary of the debate that ensued between the two professors.