If you don't know what a 401(k) MEP is, you need to find out. If you'rerunning a business, you really need to find out.

Remember when you were a kid and you wanted that piece of candythat cost 45 cents, but you only had 40 cents? Then you discoveredif you bought a package of five, the cost per piece was only 35cents. All you needed was to find four other friends with 40 cents.You could then pool your money and buy the package, enabling eachof you to enjoy that candy for a “reduced” cost.

Ah, the classic advantage of economies of scale. On the mostsuperficial level, pooling together the 401(k) plans of differentfirms presents this same benefit. The larger the plan, the betterable it will be to negotiate more favorable terms with the variousthird party service providers. But 401(k) MEPs offer much more than lower expenses— to both plan sponsors and plan participants.

Most immediately, 401(k) MEPs permit corporate executivescurrently exposed to fiduciary liability to mitigate a significantportion of that liability. Under the traditional setup, companyofficers with little to no experience in operating retirement plansmust nonetheless oversee them. With this responsibility comes graveconsequences. What business leader wouldn't jump at the opportunityto remove this career downside?

Look at this from the perspective of a plan participant. Is itin their best interests to have this oversight duty conducted byfull-time experienced professionals or their own company'sexecutives (who stand as amateurs in comparison)? Would you nothave more confidence that such a specialist would have betteraptitude when it comes to negotiating with plan providers? Thiswill result both in reduced plan costs (thus letting employeesenjoy a greater portion of their investment return) as well asgreater value through higher quality service providers (thusnudging those investment returns a bit higher).

Returning to company leadership, in completely outsourcingretirement plan operations to a 401(k) MEP, the internal costs of administeringsuch a plan are virtually eliminated. How much are these costs? Interms of HR staffing alone, companies pay anywhere from $131,617 to$221,117 for every 100 people employed. With staff of the 401(k)MEP taking on these duties, that money falls directly to the bottomline. At the very least, increasing corporate margins makes the401(k) MEP option something to look at.

That's not all. Plan sponsor duties compete for a share of themind of C-suite staff, too. It's unlikely a firm will cut thesefolks since their retirement plan duties only make up a small partof their overall obligations. It is likely, however, that withoutthe burden of monitoring the company's retirement plan, those folksin the corner offices will have more time to focus on top-linematters. So, not only does a 401(k) MEP improve the bottom-line,but it also enhances the top-line.

Better results for employees. Better results for employers.What's not to love about 401(k) MEPs?