Pooled employer plans (PEPs) enabled unrelated employers who don’t share a common industry or location to participate in a single shared 401k plan so they can take adequate profit from their collective purchasing to negotiate cheaper fees and excellent services. A pooled plan provider, such as a financial or professional services company, acts as the plan administrator and is a plan fiduciary. Decisions about PEP investment may be made by the pooled plan provider, members, employers, or another designated third party, such as an investment advisory company.
Pooled employer plans, which existed before the secure Act was passed, allow related businesses, such as those in the same industry, to band together like PEPs but with somewhat different rules. MEPs can be sponsored by employers or groups or associations, which the DOL refers to as association retirement plans (ARPs)—or by professional employer organizations (PEO MEPs).
Before the SECURE Act, the idea for a PEP of unrelated employers was referred to as an open MEP and closed MEP explained a plan limited to employers in the same industry or location.
Being part of a shared plan can decrease compliance costs, advocates contend. Nevertheless, there is meticulous debate over the level of savings employers participating in shared programs will achieve
What Are Taft-Hartley Plans?
Taft-Hartley plans are multiemployer plans promoted by a panel of trustees. The board consists of members that equally represent management and labor. They are in charge of the entire administration and operation of this kind of plan. It’s their work to find people who are qualified for specific administrative duties.
Specific industries also choose multiemployer plans that aren’t considered Taft-Hartley plans. The sports industry is a prime example. These kinds of projects include donations from one or more collective bargaining agreements and additional employers. Unlike a Taft-Hartley plan, there is no panel of trustees to manage the trust funds.
In a pooled employer plan, prudent investment management is the plan sponsor’s primary responsibility. This service is typically provided by an investment adviser who is an ERISA 3(38) fiduciary, also known as an investment manager. A pooled 401(k) plan can be a great way to reduce your plan-sponsor fiduciary liability.
The Benefits of Multiemployer Plan
Employees in the unionized company reap the benefits of multiemployer plans. Their services are more secure because multiple employers take on the risk associated with the project. Multiemployer plans make it easier for these employees to change employers in the same company while still having the same benefits within the program.
The MEP was created to encourage more small businesses to offer their employees a tax-advantaged retirement savings plan. Companies that don’t have the resources or the bureaucracy to handle a retirement plan independently can pool together to share the burden.
Multi-employer bargaining typically occurs when several employers in one industry join an association to negotiate with a single. union.’ Small employers in highly competitive businesses are usually eager to bargain through an association because it enables them.