A MEP is a Multiple Employer Plan, a type of 401(k) plan allowing multiple employers to participate in a single plan. Over the past year, Ancora has been working to build our MEP. We believe that it will alleviate some of the burdens faced by a number of our current clients, while also providing an accessible solution for smaller employers who perhaps have not been able to offer their employees a retirement plan.
On July 29th, 2019, the Department of Labor made public a new rule which could help small businesses provide their employees with a retirement plan. The rule created a new safe harbor under ERISA, making it easier for non-related employers to band together and enjoy the economies of scale seen by larger plans. In addition, the IRS published for comment in the Federal Register on July 3, 2019, a rule addressing the “one bad apple” liability risk. Another form of MEP legislation, the SECURE Act, would go even further than the DOL rule in opening up MEPs to unrelated employers. It has passed in the House, but the Senate has yet act on the legislation.
With the DOL ruling in place and other legislation pending, the Ancora MEP becomes a more attractive concept and may be beneficial to companies that fit certain criteria – typically for employers with less than 200 employees and less than $7M in plan assets, to give a rough sketch.
The Ancora MEP was created especially so that we could help our existing clients who want to offer a 401(k) plan without the headaches of the fiduciary risk and administrative workload that is common with single employer plans. To make this possible, we partnered with Newport Group, who services over $250B in assets, to be a 3(16) administrative fiduciary, alleviating some of those fiduciary risks for the employer. Because of this, employers in the MEP do not have to handle terminations, rollovers, QDROs, plan notices or plan compliance, which can be a huge time saver for your HR staff. Ancora Retirement Plan Advisors serves as the investment manager providing 3(38) fiduciary services.
With the Ancora MEP, we hope to allow our clients to shed these extra risks and administrative burdens so they can focus on growing their business while still rewarding their employees with competitive retirement benefits.