Proposed Tax Bill Includes Language to Expand MEPs. Dramatically

Page 157, Line 10 of H.R. 1:

“(H) TREATMENT AS SINGLE PLAN.—For purposes of subparagraphs (E) and (G), a plan described in section 413(c) shall be treated as a single plan rather than as separate plans maintained by each participating employer."

The proposed language in the Tax Bill, if signed into law, will effectively negate the authority behind the Department of Labor's Advisory Opinion 2012-04(a) by acknowledging that the adopters within a 413(c)  multiple employer plan are not to be separated out with individual filing responsibilities.

This means that the current requirement for Open MEP's that include filing individual Form 5500's, requiring individual plan audits for those adopters whose size makes such an audit a requirement, and the need for an individual ERISA Bond will disappear under the new law if it is enacted. MEP adopters who currently have an annual audit requirement in connection with their Form 5500 filing (typically groups who have more than 100 eligible employees) will see a reduction in their annual plan audit fees of 90% or more. It's that dramatic.

We expect that the language in the bill will be expanded over the next week or so to reflect the desire to see the implementation of Pooled Employer Plans, clarification about who can become a Pooled Plan Provider and sponsor a Pooled Employer Plan, and the elimination of the liability of one adopting employer for the actions of another (the "one bad apple" issue).

Laws and sausage should never be watched being made. Tax laws even more so.

With that said, the bipartisan nature of the interest to expand multiple employer plans cannot be overstated. Additionally, President Trump's selection of Preston Rutledge to head the DoL's EBSA division (who served as a former legal staffer of the Senate Finance Committee and who apparently played a major role in the drafting of the Retirement Enhancement Security Act of 2016) underscores the support across the beltway for meaningful multiple employer plan expansion in 2017.

If the Congress is able to get a bill through both legislative chambers and onto the President's desk, multiple employer plans will be included. And it will be a game changer for the smaller end of the marketplace. Stay tuned.

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Created on Nov 20th 2017 06:35. Viewed 251 times.

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