On this page you will find general information about the plan, commonly asked questions, and links to allow you to gather additional information.
A multiple employer plan (MEP) is simply a type of retirement plan that acts in an identical manner as 401k/profit sharing plans except: it allows businesses that have a common interest (like associations) to join together in order to enjoy better pricing advantages than smaller stand-alone 401k plans. As a plan allowed by ERISA, MEP’s are similar to multi-employer plans, another section of ERISA which is used by collective bargaining organizations to sponsor benefits for all of their participants, even though they have different employers. There are 3 types of MEPs: one sponsored by a professional employer organization, an association MEP, and an open MEP where there is no business connection amongst employers. SCMA MEP is an association MEP.
Because of the collective purchasing power of a larger group, a MEP offers employees and plan sponsors: lower fees, additional communication tools to participants, more personalized retirement planning tools, advanced website/technology capabilities, reduced administrative workload, and reduced liability. Importantly, these plans still allow tremendous flexibility for each company to still cater the specific provisions of their own plans, like vesting, matching, eligibility and profit sharing contributions. However, many of the administrative burdens and corresponding liabilities are outsourced to experts, who agree to take on these important tasks.
In 2012, the DOL issued an Advisory Opinion re-affirming that “association MEP” plans—like the SCMA MEP plan—can be considered one plan. Additionally, there are currently four bills in Congress looking to improve MEP plans, as it is believed cost is one of the reasons many smaller employers do not sponsor retirement plans for their participants.
Can I have my own match or profit sharing contribution?
Yes. MEP’s allow each employer to establish most of their own plan provisions—like vesting, matches, profit sharing contributions, safe harbors and eligibility.
How is liability reduced?
As a plan sponsor, regardless of any plan you choose, you will always have the liability of choosing a plan and vendors that are consistent with ERISA’s five main responsibilities: established exclusively for the benefit of participants, carrying out duties with prudence, is run in accordance to your plan documents, is adequately diversified, and has reasonable fees. Thus you will always be responsible for making sure the MEP is appropriate for your company. However, certain administrative and fiduciary responsibility functions your firm likely handles today would be outsourced to MEP administrators:
Why will my plan no longer need an audit?
The MEP plan will be audited, which takes the place of the audits from each individual plan. This can obviously save considerable time and expense for plans with more than 100 employees. Additionally, you will no longer file a 5500, which not only saves time, it keeps your name off the public 5500 document from prying eyes (like marketers or lawyers).
What are some of the technological improvements I might enjoy?
MassMutual has one of the most robust communication platforms in the industry specifically to help increase what the industry calls “retirement readiness”—simply the ability for your employees to be able to replace their working income when they retire. This platform is normally only available to clients of theirs with more than $10mm in assets… thus these same tools are available even for start-up plans. While fees, fiduciary and funds seem to gather more ‘press’ and are certainly important, we would argue that helping employees increase their ability to retire is just as important. Indeed, it is employee satisfaction with their plans’ communication tools that statistically shows far more influence with participation and deferral rates and perception of their 401k plan than most any other characteristic. Check out the website demo for yourself, as we believe you will find it first rate: http://retirementservicesdemo.massmutual.com. ID: retire, Password: consolidate. MassMutual even spends considerable monies on ‘behavioral finance’—making sure communication pieces to 50 year olds are different and appropriate compared to what they would send to a 20 year old. The end result of these efforts: increased participation and appreciation of the plan.
Participants will also have the option to receive ‘advice’ through the MassMutual website. This means that they will receive specific guidance on which funds to choose for their personal situation.
Who are the different vendors within the MEP?
MassMutual is the recordkeeper—they handle the statements, website, call centers, and hold the mutual funds where the monies are invested. They also have a full time enroller living in SC who can help with enrollments. Following is their MEP brochure.
Mesirow is the 3(38) fiduciary—they are responsible for choosing and monitoring the investment lineup out of over 2000 investment choices offered on the MassMutual platform. The investment lineup is chosen on a stringent list of criteria.
ADMIN Partners, LLC is the payroll aggregator — unique to a MEP, ADMIN partners aggregates the payroll for participating employers to assist with payroll submissions.
The plan auditor—yet to be chosen, but they will conduct the annual MEP audit
Harbour Wealth Management Group of Raymond James is the plan’s advisor—we accept 3(21) fiduciary status to help SCMA choose and oversee the previously stated vendors, assist plan sponsors in transitioning/evaluating the MEP assist in coordinating appropriate plan design and help communicate the plan to participants. Raymond James is not affiliated with MassMutual, Mesirow, ADMIN Partners, SCMA or LMC.
Will the pricing change?
Pricing will be based upon the actual size of the MEP after established and can be changed by the vendors periodically. While we will not move forward unless we have commitments to meet our minimum, it is anticipated that the MEP will grow and the fees will reduce through time below the amounts initially discussed. We will also be pricing the MEP every 3 years to be sure the pricing is competitive.
What are the downsides of joining a MEP?
If you want complete control over your available investment lineup, have a nonstandard plan design (like a money purchase plan), or a history of compliance issues with the DOL a MEP is not appropriate.
Additionally, plans that have compliance issues after joining the MEP (like failure to make submissions or keep census information up to date) will be kicked out of the MEP.
If I join, can I leave the MEP?
Yes. The process of moving into or out of the MEP is little different than changing any recordkeeper.
How does my plan size affect the MEP?
All plans receive the same price structure. However, the larger the MEP grows, the lower the fees will be for all members. The plan is currently priced such that plans below $10mm will very likely enjoy pricing advantages.
How do I evaluate the MEP for my company?
You will be receiving an email from Harbour with a link to a questionnaire. Please complete this form and send us the following: summary plan description, plan level asset statement, and the 408b2 fee disclosure document from your vendors. If any of these items are difficult to find, we can help—it shouldn’t take you more than a few minutes. We will then prepare a report that allows you to accurately compare your existing plan to the MEP.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Harbour Wealth Management and are not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice.
Raymond James is not affiliated with SCMA, LMC, or Mesirow Financial and does not endorse their products/services. Views expressed are the current opinion of the author, but not necessarily those of Raymond James & Associates. The author's opinions are subject to change without notice. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Past performance is not indicative of future results. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed web sites or their respective sponsors. Raymond James is not responsible for the content of any web site or the collection or use of information regarding any web site's users and/or members. Investors should consider the investment objectives, risks, and charges and expenses of mutual funds carefully before investing. The prospectus contains this and other information about this investment. The prospectus is available from Matthew Pardieck and should be read carefully before investing.