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MEPS VS. PEPS In some ways, the SECURE Act included the most sweeping changes to the retirement
plan industry since ERISA in 1974. It represents the first time Congress explicitly endorsed Multiple Employer Plans (MEPs) in the retirement industry, even though open MEPs have always been legal. The IRS and DOL have opined on MEPs, but nothing from our federal legislators until now. Now that Pooled Employer Plans (PEPs) will be available on Jan. 1,
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2021, which will be better for your retirement plan clients? If you already have participating employers (PEs) in a MEP arrangement, should you force them to move to a PEP? Should you always put your new clients into a PEP? Since the SECURE Act was signed into law, I have lost track of the number of times I have heard, “Effective Jan. 1, 2021, we are moving all our MEP clients into PEPs.” My immediate response: “Why?”
First things first. Open MEPs are not, and have never been, illegal. Many open MEPs existing today have been in existence for decades. I encounter many players in this business who believe open MEPs were killed by the Department of Labor’s Advisory Opinion 2012-04A. Did that letter set guidelines for open MEPs? You bet—but it did not make open MEPs illegal. It said that open MEPs now had to file separate 5500s for each PE. Open MEPs continue to be popular and valuable among
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Which will be best for your clients? By R.L. “Dick” Billings
9/2/20 10:19 AM