By MEPP or Multiple Employer Pension Plan is a retirement plan like 401(k) and it is sponsored by various employers at the same time. Under Retirement Income Security Act, MEPP must meet requirements of Internal Revenues Code to receive contribution by employer for retired employee benefits.
Business franchises, Farmers’ Cooperatives, Charitable, Religious, Chamber of Commerce and Educational institutions are some common examples for affiliated or connected employers that might cover MEPP.
MEPP is not similar to Multi Employer Plans that include unions and is described by the Labor Management Act 1947 that was known as Taft Hartley Act. The Multi Employer Plan is usually found in businesses like trucking, hotels and construction. These types of plans are also controlled by ERISA.
The key sponsor of MEPP is only entity that arranges the pension benefit. Every day operational liabilities of plan and related fiduciary responsibilities are held by the principal sponsor.
An employer that links to such plan is also called as co-sponsor of the plan. It relies on principal sponsor for the administration and oversight of the pension plan. As a result, co-sponsor usually does not have any fiduciary liability or responsibility related to the MEPP. Because of this, MEPP is rather attractive to companies as they can provide benefits of employee pension without all fiduciary risks.
A single document governs the MEPP and this controlling document is written particularly for a single plan or can be purchased through any vendor adopted by Multiple Employer Plan. However, in both of the cases, the plan should be put forward to Internal Revenue Service (IRS) for confirmatory determination letter. Typically all the adopted employers have an agreement to put up with one consistent series of rules with respect to the eligibility of plan, vesting other aspects.
Cases that result in ERISA legal action and any other legal conflict for MEPP includes the following’
- If a particular co-sponsor fails to meet all requirements of participation like the rules that are ‘top-heavy’, the greater Multiple Employer Pension Plans and all of the members might be declared ineligible by IRS.
- The Sponsor or the Settler responsibilities should clearly be classified and followed to avoid the expenses of the plan that may not be actually permissible.
- The Fiduciary responsibilities should clearly be defined and realized by each relevant participant of Principal Sponsor of the plan.
Sponsors of the plan who have any questions about management of MEPP must seek the recommendation of experienced and qualified ERISA consulting services.
