3765 / What is a multiple employer plan (MEP)? Why might the MEP structure be attractive to small and mid-sized business owners?

A multiple employer plan (MEP), also known as an association retirement plan, is essentially a defined contribution plan that is open to employees of multiple employers.

The DOL expanded the rules to allow more employers to participate in MEPs, which is especially valuable for small business owners who can now join with other entities to share in the costs and administrative burdens of providing a qualified retirement plan option for employees. The MEP structure can also encourage small business owners to offer a retirement savings option by limiting the fiduciary liability that can attach to the employer itself. While these benefits can be significant, see Q for a discussion of the “one bad apple rule” that small business owners should understand before adopting the MEP.

Under previous law, the MEP structure was limited to small business owners with a strong connection, such as a common industry.