Feeling overwhelmed by the idea of adding a retirement plan to your benefits package? Joining a Multiple Employer Plan (MEP) might be your solution. Designed for scale, this program can streamline plan administration and allow you to benefit from economies of scale.
MEPs have been around for some time, but until recently, certain regulations have limited their accessibility. SECURE Act 1.0 and SECURE Act 2.0 have changed the rules governing MEPs, enabling more businesses to take advantage of them.
This article will explain how MEPs work, discuss their advantages, and help you decide if it's the right approach for your business’ retirement benefit. Let’s jump in.
A MEP is a retirement savings plan that allows multiple employers to participate under a single plan structure. Essentially, it's a way for different companies to come together and pool their resources to offer retirement plans to their employees. This shared structure can lead to cost savings, reduced administrative duties.
There are two main types of MEPs:
Introduced by the SECURE Act, Pooled Employer Plans (PEPs) are a type of open multiple employer plan. The main difference is that PEPs have a Pooled Plan Provider (PPP) who manages all aspects of the program on behalf of multiple employers. This arrangement can reduce the administrative burden on participating employers.
Both MEPs and PEPs present valuable opportunities for employers looking to offer retirement benefits to their employees. Companies with close industry affiliations may prefer to join a MEP of related employers closely aligned with their needs, whereas a PEP is open to all employers and may be less custom to their plan’s demographics.
Groups of Plans (GoPs) offer a hybrid approach to the world of pooled plan structures. Unlike Multiple Employer Plans (MEPs) where multiple businesses share a single plan document, in GoPs, each company still has its own retirement plan but with some shared features.
GoPs allow several employers to file one Form 5500 (a report detailing a company’s employee benefits) instead of each doing their own, assuming they meet certain requirements. The businesses also pool their investments, which can help small plans negotiate better pricing. This gives small businesses the benefits of being part of a bigger group, without losing the ability to customize their retirement plans.
GoPs can be a great choice for smaller employers looking to pay only for services they actually need. However, it’s important to keep in mind that individual employers that would need an independent qualified plan audit still need one for their specific plan. Vestwell’s institutional consulting team can help you decide which plan makes the most sense for your business.
MEPs offer several advantages. Here are some of the top benefits:
By reducing the administrative responsibilities and consolidating resources, MEPs enable businesses that might not have the resources to offer a retirement plan on their own to offer their employees this valuable benefit.
While MEPs offer a range of advantages, there are a few considerations employers should be aware of:
It's important to weigh these considerations carefully against the benefits when determining if joining a MEP (or PEP) aligns with your business’s goals.
With the SECURE Act 2.0 legislation expanding access and offering additional benefits for employers, now is the perfect time to consider a multiple employer retirement solution from Vestwell. Our plans offer:
By bringing the entire plan set-up and onboarding process online, we’ve made establishing a MEP easier than ever. Our intuitive, user-friendly platform guides you step by step, streamlining the necessary paperwork and coordination. The process is designed to be straightforward, allowing you to set up your plan with minimal hassle while giving you the tools to maintain it with ease.
Vestwell streamlines MEP management for effortless oversight. Our modern platform is designed for businesses of all sizes. It simplifies many administrative tasks, from enrollment to reporting. Furthermore, Vestwell's tailored solutions cater to a diverse range of organizations, including PEOs, associations, and franchises, making it a versatile choice for retirement plan administration.
Vestwell’s white-labeled solutions put your logo front and center. We understand the important role of familiar and straightforward communications in conveying the benefits of MEPs to prospective participants. To this end, we provide an array of white-labeled solutions, which help foster trust and facilitate informed decision-making for all involved.
Vestwell offers a broad range of cost-effective 401(k) plan options. By pooling resources through MEPs, small and mid-sized businesses can provide their employees access to low-cost investments that were once exclusive to large companies. This means better savings opportunities for everyone involved.
The SECURE Act 2.0 has expanded access for businesses and employees seeking participation in long-term savings. By pooling resources in a MEP, small and mid-size businesses may be able to capitalize on the benefits of economies of scale to reduce costs and simplify plan administration. Plus, offering the right plan can make all the difference in attracting, retaining, and supporting a thriving workforce.
Vestwell offers multiple employer retirement plans of all types and sizes. We’re here to help you learn more about which group retirement plans are currently available, understand the advantages and disadvantages of each plan type, and select the right multiple employer retirement plan for you. Click here to get started.