Why Multiple Employer Plans are Changingthe Retirement Plan Industry

Why Multiple Employer Plans are Changing the Retirement Plan Industry

Altura Financial Advisors

Disruption has occurred in every industry for centuries. Whether it’s Tesla’s robust form of powering a vehicle, or Netflix’s rise of television streaming apps, there will always be an appetite for disruption in the consumer world in which we live. In the history of retirement plans, public policy has been the catalyst for change. Most recently, the Secure Act of 2020 fundamentally altered the nature of Multiple Employer Plans (MEPs) which changed the future of how retirement plans are designed and delivered.

In today’s retirement plan industry, single employer plans can be costly and burdensome to administer. These plans also put the plan sponsors and trustees at risk because they often don’t understand their own fiduciary responsibilities. MEPs are changing the market because they address many of the inherent weaknesses found in single employer plans.

Through a MEP, companies access simplicity, economies of scale, and best in-class investment options for plan participants. MEP providers will not only act as an outsourced Chief Information Officer, taking on ERISA 3(21) fiduciary status, but also a fiduciary on the administrative and custody aspects of the plan.

WHAT IS A MEP?

A MEP is a retirement plan for businesses that typically have a common interest but are not commonly owned or affiliated. These businesses are referred to as adopting employers when they elect to join the MEP. The plan adopters pool their assets together to gain economies of scale while gaining added values typically only offered to mega- sized plans. Each adopting company, however, enjoys the flexibility of creating their own tailored plan design while only having access to their plan specific information.

UMA MEP 401(k) & Profit-Sharing Retirement Plan

Because the UMA constantly strives to provide value to its members, it created a MEP which launched on January 1, 2020. The program continues to grow in membership, total assets, and popularity.

BENEFITS

• More efficient due to Less Plan Maintenance

• No Annual Audits for larger plans

• Cost Savings on Investment Lineup & 3(21) Investment Fiduciary Services

• No Individual Form 5500 Reporting

• Reduced Liability with 3(16) Administrative Fiduciary Services

In simple terms, MEPs are easier to administer and often provide a better value than a traditional single employer plan.

Visit uma-401k.org to learn more