Multiple Employer Plans (MEP)

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Multiple Employer Plans (MEP)

The definition of a Multiple Employer Plan (MEP) is “an employer sponsored retirement plan maintained by two or more employers”. These employers are ‘unrelated’ as defined by the IRS and DOL, the governing agencies that oversee qualified retirement plans. Each MEP is organized and operated by an entity known as the ‘MEP sponsor’. Additional companies that join the MEP are known as “adopting employers.” The MEP sponsor is responsible for ongoing administrative duties and has fiduciary liability for the plan in most cases. MEPs were created to encourage more small businesses to offer their employees a retirement savings plan. It was thought that companies which don't have the resources or staff to handle a retirement plan independently would be able to pool together and share the burden.

There are different types of MEPS. Each is described below.

How do you know if a MEP is good for your company? PPC has experts that design all types of retirement plan structures. Please allow our experts the opportunity to help you know what works best for your retirement plan goals.

Closed MEP

A Closed MEP is made up of at least two unrelated employers each having employees and a sponsor that is a designated group, association or organization with adopting employers sharing a ‘nexus’ or interest other than the retirement plan. Only adopting employers of a certain group can participate in the plan and adopting employers must also be able to make decisions regarding their retirement plan.

Open MEP

The Open MEP concept allows unrelated adopting employers to have no connection with each other, except for their participation in the same retirement plan. The Open MEP plan initially required each adopting employer to have and report on its own individual plan. But with the passage of the SECURE Act, beginning in 2020, a single retirement plan can be established for all adopting employers of an Open MEP.

Associational MEPs

Associational MEPs are a relaxed form of a closed MEP. An associational retirement plan (often referred to as an ARP) allows unrelated employers, as well as self-employed working owners, in different industries but with physical presence in the same geographical area, region or state to join the same single-plan MEP. The rule also allows companies in the same industry even if they don’t share a geographical connection to join the same MEP.