MEPs Need to Comply With Toughest Rules When Regulations Overlap, Speaker Says

Multiple employer plans, when facing overlapping requirements from the Department of Labor and the Internal Revenue Service, should comply with the more stringent rules, a speaker said during an Oct. 10 webcast sponsored by Bloomberg BNA, titled Multiple Employer Plans—The Evidentiary Law on Open MEPs and Alternatives for the Small to Mid-Sized Employer.

Requirements under the Employee Retirement Income Security Act and the tax code are usually coordinated and overlap harmoniously, but in the case of MEPs, it does not work out that way, Erin Turley, a partner at K&L Gates, Dallas, said.

“I think in this particular instance, because of the lack of clarity on DOL's side with respect to what is an MEP, we don't have that same clarity,” she said.

Employers participating in MEPs need to be aware of the different requirements for such plans from the two agencies and be cognizant of where those requirements overlap, Turley said.

They need to comply with the tax code to qualify as a MEP for IRS purposes, and they also need to comply with ERISA reporting and disclosure requirements, she said.

“Where we have an overlap between the two requirements, the [tax] code and ERISA, I think the easiest answer there is: Comply with the more stringent requirements, and you should stay within the zone of reasonableness,” Turley said.