Multiple Employer Pension Plan – The Rules Have Changed September 25, 2019

DOL Changes Who Can Participate in a Multiple Employer Pension Plan

38 million US employees do not have pension plans. President Trump hoped to reduce those numbers with an August 31, 2018 executive order which directed the Department of Labor (DOL) to “expand the circumstances under which United States employers, especially small and mid-sized businesses, may sponsor or adopt a multiple employer plan (MEP) as a workplace retirement option for their employees…”

Tax update - Multiple Employer Plan - CPE for CPAs

A multiple employer plan is a plan maintained by two or more unrelated employers who are not members of a controlled group. The MEP requires some form of commonality among the firms, such as being in a similar industry. 

A new Department of Labor rule, issued July 29 and effective September 30, 2019, expands the parameters for participating in a MEP to include membership in the same association. The DOL expansion also provides that a professional employer organization (PEO) may sponsor a MEP.

For example, the San Jose Chamber of Commerce may sponsor a MEP for its members.


The DOL expansion does not create an “open MEP” under which multiple employers have no common characteristic, affiliation, or purpose. An “open MEP” would permit financial institutions or other persons to maintain a single defined contribution retirement plan on behalf of multiple unrelated employers. The proposed SECURE Act would authorize “open MEPs.”


The MEP is maintained by multiple employers for the purpose of pooling plan assets to reduce administrative costs and for advantageous investing. Plans with $10 million in assets are charged almost four times as much in investment fees as those charged to plans with $1 billion in assets.


Our small business clients will be hearing from their associations that there have been changes to pension plan rules that reduce employer costs. This basic information on MEPs provides a few answers for client questions.

Sharon Kreider, CPA, has helped more than 15,000 California tax preparers annually get ready for tax season. She also presents regularly for the AICPA, the California Society of Enrolled Agents, CCH Audio, and Western CPE. You’ll benefit from the detailed, hands-on tax knowledge Sharon will share with you—knowledge she gained through her extremely busy, high-income tax practice in Silicon Valley. With her dynamic presentation style, Sharon will demystify complex individual and business tax legislation. She’s a national lecturer for business and professional groups and consistently receives outstanding evaluations. In 2014, she was awarded the prestigious AICPA 2014 Sidney Kess Award for Excellence in Continuing Education.

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