Compliance October 11, 2019

IRS to Hold Public Hearing About Proposed MEP Rules

Although, the DOL has issued final rules on association retirement plans, some are disappointed that the rules fell short of allowing for what is called open MEPs.

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The IRS and Treasury have issued a notice of public hearing on proposed regulations relating to the tax qualification of plans maintained by more than one employer, often referred to as multiple employer plans (MEPs).

The public hearing is being held on Wednesday, December 11, at 10:00 a.m.  The IRS must receive speakers’ outlines of the topics to be discussed at the public hearing by Monday, November 25.

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In July, the Department of Labor (DOL) released final rules on Association Retirement Plans permitting employers to connect with associations of employers in a city, county, state, or a multi-state metropolitan area, or in a particular industry nationwide to provide retirement plans for their employees. While considered a positive step in closing the retirement plan coverage gap, some were still disappointed that the final rules stopped short of allowing for what is called “open multiple employer plans,” which would allow employers without a common nexus to band together to offer retirement plans for employees.

Allowing open MEPs, however, is a key component of the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). That bill remains stalled in the U.S. Senate.
Compliance October 11, 2019

Court Orders ESOP Fiduciary to Complete Fiduciary Training

This is in addition to $454,545 in restitution to the plan, paid by the company and its employee stock ownership plan fiduciaries, for causing the plan to pay more than fair value for stock purchases.

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The U.S. District Court for the Eastern District of Tennessee has approved a settlement between the U.S. Department of Labor (DOL) and Big G Express Inc., Stephen Thompson, and David Nolan involving the company’s employee stock ownership plan (ESOP).

In accordance with the consent judgment, Big G Express—a Shelbyville, Tennessee-based trucking company—paid $454,545 in restitution to the plan. The Department also assessed a civil penalty of $45,454 against the defendants. 

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In addition to the reimbursement to the ESOP, the court ordered Thompson, the ESOP’s former trustee, to be enjoined permanently and restrained from serving as a fiduciary, trustee or service provider to any Employee Retirement Income Security Act (ERISA) plan. The court also ordered Nolan, Big G Express’s chief financial officer, to complete 12 hours of fiduciary training within 12 months of his appointment as a fiduciary or service provider to any employee benefit plan.

The court’s action follows an investigation by the DOL’s Employee Benefits Security Administration (EBSA) which found that in October 2009, both Thompson and Nolan—acting as fiduciaries for the ESOP—caused the plan to pay more than fair market value when it purchased Big G Express common stock from Nolan and other shareholders.

The judgment also orders that Big G Express Inc., Thompson, and Nolan not seek direct or indirect contribution or indemnification from the ESOP either to pay the judgment or to pay its legal expenses.

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