My daughter is 11 and will be celebrating her 12th birthday this October 25th. When she was only 5 years old, the Department of Labor (DOL) issued an advisory opinion regarding a single multiple employer plan (MEP) that wanted a DOL opinion on whether it was a single employer plan for Form 5500 purposes. The DOL opined that the plan was not a single plan because the plan was sponsored by an entity created by the plan’s financial advisor for purposes of having a plan sponsor and more importantly, there was no commonality among the adopting employers. That effectively hurt the Open MEP business because one of the great selling points was the single 5500 for the plan, rather than a separate 5500 for each adopting employer.
For 6 years, we awaited further guidance from the DOL on what would make an acceptable Open MEP and we heard nothing. When President Obama wanted states to offer an IRA type program, the DOL issued guidance. Yet they punted the ball on Open MEPs and no Open MEP legislation was able to get passed. Thankfully President Trump signed an executive order for the DOL to issue guidance on allowing MEPs. But as plan providers, let’s not just uncork the champagne just yet.
Until we get guidance from the DOL and/or the Internal Revenue Service, you can probably just use the executive order to wrap fish. Until we get guidance, we don’t even know if there will be Open MEPs or whether the DOL will demand some type of nexus or commonality between adopting employers. We don’t know who can be a MEP sponsor and whether the DOL will allow one company that is a plan provider or created by a plan provider to serve as a plan sponsor. Until we get guidance, it’s going to be a waiting game.