Multiple Employer Plans, Revisited

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The center of the discussion may be the DOL’s concern of firms marketing the elimination of fiduciary responsibility for the employer. Adopting employers will retain a residual amount of fiduciary responsibility. As with all endeavours due diligence is crucial when choosing a multiple employer plan for your company.

As would be expected from such large numbers, there will be a wide variation in outcomes. Some sponsors of MEPs retain highly experienced independent fiduciaries that are well-versed in the intricacies of MEPs. These sponsors require that the investment options in their MEPs have low and transparent costs, and have broad and deep diversification–which results in keeping more money in the pockets of plan participants. This requirement is in line with what should be the ultimate goal of every retirement plan: to provide plan participants (and their beneficiaries) with retirementincome security that maximizes the odds that they will have a comfortable retirement.Other sponsors of MEPs retain experienced independent fiduciaries that restrict plan participants to investment options with high and hidden costs, and poor diversification–which results in keeping less money in the pockets of plan participants. Then there are those MEP sponsors that are soundly incompetent: They don’t know what they don’t know. Their MEPs are run poorly and have poor investment options, which, of course, directly harm the very people that they’re supposed to benefit: plan participants (and their beneficiaries).

Multiple Employer Plans have been under increased scrutiny by the retirement plan industry. There are many in the industry that see MEPs as a threat to their business model and therefore criticize their existence. The MEP is an excellent alternative for those looking to outsource this responsibility.

Please comment or call to discuss how this affects you and your company.

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