A final rule issued by the Department of Labor (DOL) in July allowing for companies to more easily establish Multiple-Employer Plans (MEPs) to offer retirement benefits takes effect today, Sept. 30.
The Trump DOL is now calling these collective efforts Association Retirement Plans (ARPs), explaining:
Under the rule, ARPs could be offered by associations of employers in a city, county, state, or a multi-state metropolitan area, or in a particular industry nationwide. In addition to association sponsors, the plans could also be sponsored through Professional Employer Organizations (PEOs). A PEO is a human-resource company that contractually assumes certain employment responsibilities for its client employers.
A survey by the Pew Charitable Trusts found that only 53 percent of small- to mid-sized businesses offer a retirement plan; 37 percent of those not offering a plan cited cost as a reason.
By expressly permitting these new plan arrangements, the rule enables small businesses to offer benefit packages comparable to those offered by large employers.
The department said it expects the plans to reduce administrative costs through economies of scale and to strengthen small businesses’ hand when negotiating with financial institutions and other service providers.
If not administered and organized by a PEO, a bona fide group of employers such as a chamber of commerce would be able to sponsor such a plan. One major aspect of a bona fide sponsoring group is a commonality of interest. The commonality of interest test is the same as the commonality of interest test set forth in the final rule for association health plans.