PC
RECORD KEEPING
81-100 Trusts vs. Open MEPs Delivering a solution to your clients that includes some level of “pooling” can give you lower costs – and great outcomes.
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e’d like to adopt a plan, but it’s just too costly and complicated.” If you have been in the retirement plan market for any amount of time, you have encountered this retort from a plan sponsor. Many prospects simply focus on the cost. As I was told early in my TPA career, “Cost is only relevant in the absence of value.” Your prospect’s dilemma is this: Does a cost-effective solution exist that also meets their other needs? I think so. Delivering a retirement plan solution to your clients that includes some level of “pooling” can give you lower costs – and great outcomes. However, unless you are well-versed in the law, it can be confusing to understand some of the nuances in our marketplace. We hear many terms like group trusts, 81-100
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trusts, MEAPs, closed MEPs and open MEPs. My intent here is not to provide an exhaustive analysis that gets into the weeds on each term. Rather, this article will concentrate on the two terms we seem to hear the most: open MEPs and 81-100 trusts. From a technical viewpoint, comparing these two entities is like comparing apples to oranges. Both are good – but totally different from each other. An 81-100 trust is “a group of trusts” to hold qualified assets; nothing more. MEPs connotate a “plan.” When a client adopts a pre-approved adoption agreement, even though there are just a few words and a signature on the agreement, the client is legally adopting a plan and a trust. The plan sets out eligibility, vesting, etc., while the trust (the piece most clients never read) outlines how the investments are held and invested.
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BY R.L. “DICK” BILLINGS
PLAN CONSULTANT | FALL 2019
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9/10/19 11:40 AM