DOL Issues Rule on Association Retirement Plans (ARPs)

The Department of Labor (DOL) today announced a rule to help strengthen retirement security for millions of small business employees across America.

The rule makes it easier for small businesses to offer retirement savings plans to their workers through Association Retirement Plans (ARPs), which would allow small businesses to band together to offer retirement plans to their employees.

Association Retirement Plans (AHPs) could help employers at small businesses offer retirement accounts without the costs and heaache.

Enhancing workplace retirement savings is critical to the financial security of America’s workers. Approximately 38 million private-sector employees in the United States do not have access to a retirement savings plan through their employers.

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.

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 claims the plans will reduce administrative costs through economies of scale and to strengthen small businesses’ hand when negotiating with financial institutions and other service providers. The final rule effective date is Sept. 30, 2019.

In August 2018, President Donald J. Trump issued Executive Order 13847, “Strengthening Retirement Security in America.” The Executive Order called for the Secretary of Labor to clarify and expand the circumstances under which U.S. employers, especially small- and mid-sized businesses, may sponsor or adopt an ARP or Multiple Employer Plan as a workplace retirement option for their employees. The Department used its delegated authority under the Employee Retirement Income Security Act of 1974 in developing the rule.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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