Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
By Sean Forbes
Nov. 10 — Legislation in the Senate that could make it easier for small and medium-size employers to join forces to sponsor a 401(k) plan still has a shot at being passed during the lame-duck session.
Under current law, only a bona fide group or association of employers can sponsor a multiple employer plan (MEP). However, the legislation, which was approved by the Senate Finance Committee 26-0 in September, would allow employers without a common nexus to sponsor a “pooled employer plan,” or open MEP.
In a rarity for Washington, open MEPs is one area in which lawmakers and interest groups are on the same page. The concept of open MEPs has been supported by President Barack Obama in his 2016 budget, House Speaker Paul Ryan (Wis.) in his “A Better Way” policy proposals and by groups such as AARP, the U.S. Chamber of Commerce, the AFL-CIO and the American Benefits Council.
Under a MEP structure, only one annual reporting and disclosure form needs to be filed, rather than one for each participating employer. The MEP’s governing document establishes the plan’s operating rules and typically designates the provider as the plan sponsor, administrator and named fiduciary—all of which lightens the administrative and fiduciary load on employers.
Combine the fact that Sen. Orrin Hatch (R-Utah) is the sponsor of the bill and also chairman of the Finance Committee, which will have to consider a spending measure to continue running the government, and you have a good scenario.
Hatch “has said he likes this bill and wants to get it passed,” John Kalamarides, senior vice president for institutional investment solutions at Prudential Financial Inc. in Hartford, Conn., told Bloomberg BNA Nov. 9. “That doesn’t mean there won’t be bumps in the night, but boy, that’s lining up everything that is possible, and there is a path for it to be included in the lame-duck spending bill.”
“What we’ve been hearing is that the Senate and House leadership is trying to figure out what to move forward,” Jim Kais, Transamerica's senior vice president and national practice leader for retirement told Bloomberg BNA Nov. 10.
“It’s my understanding that Chairman Hatch is planning on passing the Senate Finance Committee-passed bill early next week,” Kais said.
Michael P. Kreps, a principal at Groom Law Group Chartered in Washington, also gave the bill good chances of passage. “The bill has broad support and is really a no-brainer if Congress is looking to do something to improve retirement security,” he told Bloomberg BNA. Kreps was previously senior pensions and employment counsel for the Senate Health, Education, Labor and Pensions Committee.
Even if the bill doesn’t pass this term, it could come up early next year, Lee Covington, senior vice president and general counsel at the Insured Retirement Institute in Washington, told Bloomberg BNA.
“We’re going to be pushing hard for it to move forward,” Covington said. But if Congress doesn’t pass it during the lame-duck session, there likely will be vehicles to attach it to next year, he said.
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