people holding puzzle pieces Ilearned one of the biggest concerns was “Can my company leave theMEP if things change?” The simple answer is yes. Of course, as withmost answers, it all depends on the specifics of the particularplan design. (Photo: Shutterstock)

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No fancy prose this week. No pop culture allusions. Just thestraight dope. But first, a disclosure: Besides reporting on thissubject for some time now, several years ago, I helped a businessassociation create a 401(k) MEP or multiple employer plan. Iworked with several different service providers and researchedplenty more. This was not an “Open MEP,” but a true MEP. Unlike Open MEPs, ina true MEP the underlying plans were not required tocontinue to operate as if they were a separate plan.

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Within the last month, two things have occurred which havespurred concentrated interest in MEPs. The DOL has acted onPresident Trump's executive order and submitted their MEP proposalto the OMB. In addition, there has been a legitimate push inCongress towards broadening the definition of “true MEP” to includeOpen MEPs. Now more than ever, companies want to know more aboutthe MEP (see “What Every Company 401k Plan Fiduciary Needs toKnow about MEPs,” FiduciaryNews.com, September 25, 2018).

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I wasn't surprised, then, when I was asked by a businessassociation to present to them the “who-what-where-why-and-how” of401(k) MEPs plans. The group is a trade association comprised ofjust under one hundred small companies.

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Several of those companies already have their own stand-alone401(k) plans. Many don't even have a retirement plan and consist ofhusband and wife owners and maybe a couple of employees. For someof the owners, they expect the business to fund their retirement.We all know how that goes.

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In a way, it was a refreshing opportunity. I was careful tolimit my prepared remarks, so the bulk of the time could be used toanswer specific questions.

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Why was this strategy important?

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As a journalist specializing in the trade, I'm immersed in allthe nitty-gritty details. I don't include them all in my articles(because my writing is boring enough already), but I need to knowthem in order to make sure the story has some heft behind it.

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There comes a point where you not only see just the trees, butyou know all their names. Typically, though, companies firstlooking into the 401(k) MEP concept only want to get a feel for theforest. If you start mentioning the trees on a first-name basis,you'll lose the crowd.

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Instead, by focusing on their questions, you virtually guaranteeyou'll be addressing their real agenda, not some arbitrary outlineyou developed for your presentation.

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I learned a lot doing this.

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I learned one of the biggest concerns was “Can my company leavethe MEP if things change?”

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The simple answer is yes. Of course, as with most answers, itall depends on the specifics of the particular plan design.

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Another popular question is “Can I keep my current serviceprovider (e.g., recordkeeper, investment adviser, or eveninvestment options)?”

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The answer here is “probably not.” The bottom line: If you'regoing to delegate a significant portion of your fiduciaryliability, you're also going to delegate the decision-making thatcreates that fiduciary liability.

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Speaking of fiduciary liability, I learned a lot by what wasn'tasked. There's often a mistaken belief that a 401(k) MEP eliminatesall the company's fiduciary liability. In fact, while much istransferred to the MEP plan sponsor, the participating companyretains responsibility for the initial movement of money from thecompany coffers, through the payroll processor, to the retirementplan. The liability here is exactly the same as if the company hasits own standalone plan.

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That's just a snippet of the discussion. I'd divulge moredetails, but I fear that would just bore you.

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Christopher Carosa

Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).