Open MEPs Provide Fiduciary and Cost Benefits

In a white paper, Pentegra Retirement Services notes that in the past few years, intensifying in mid-2011, the pension community’s attention has been drawn to a type of plan that has grown rapidly in popularity: “open” MEPs―those open to any participating employer (see “Feature: Strength in Numbers”). The paper explores a feared compliance risk―the concern that the Department of Labor (DOL) would not consider open MEPs to be single plans under the Employee Retirement Income Security Act (ERISA).    

According to Pentegra, open MEPs are among the safest and most beneficial retirement plan structures when properly governed. Proper governance includes ensuring that the plan meets the provisions of ERISA, and in particular the Annual Report (i.e., Form 5500) and audit requirements. The additional reporting and audit requirements do not impair a MEP’s status as a multiple employer plan under the Internal Revenue Code, nor its ability to provide fiduciary outsourcing and cost benefits.  

MEPs and other fiduciary outsourcing solutions are poised for sustained growth as part of the intensifying movement toward relieving employers of fiduciary burdens while controlling costs, Pentegra says. Whether an MEP is a single or multiple employer plan for ERISA purposes will have little impact on this trend, the paper concludes.