The Department of Labor issued a final rule expanding the availability of some multiple employer retirement plans.
The DOL issued the regulation under the Employee Retirement Income Security Act. The rule is aimed at expanding access to retirement saving options by clarifying the circumstances under which an employer group or association or professional employment organization may sponsor a multiple employer workplace retirement plan.
The multiple employer plan rule is aimed at helping the millions of employees who do not have access to a workplace retirement savings plan. The U.S. Bureau of Labor Statistics estimates that about 38 million private-sector workers – about 23% of the private-sector workforce - do not have access to a retirement plan through their employers.
In addition, small businesses are less likely to offer retirement benefits. In 2018, approximately 85% of workers at private-sector establishments with 100 or more workers were offered a retirement plan, the Bureau of Labor Statistics reported. In contrast, only 53% of workers at private-sector establishments with fewer than 100 workers had access to such plans.
The final regulation clarifies that employer groups or associations or PEOs can – depending on certain criteria – constitute “employers” under ERISA and can establish or maintain an individual employee retirement benefit plan.
These employer groups can sponsor a defined contribution benefit plan for their members. As a result, different businesses may join a multiple employer plan, either through a group, an association or a PEO.
The final regulation also permits certain business owners without employees to participate in a multiple employer plan sponsored by an employer group or association.
In announcing the final regulation, the DOL said the rule primarily affects groups or associations of employers, PEOs, plan participants and plan beneficiaries. It does not affect whether groups, associations, or PEOs assume joint-employment relationships with member employers or client employers.
But it may affect banks, insurance companies, securities broker-dealers, record keepers and other commercial enterprises that provide retirement plan products and services to ERISA plans and plan sponsors.
The rule will be published in the Federal Register on Wednesday and will take effect in 60 days.
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.
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