President Trump’s Executive Order on Strengthening Retirement Security in America was signed in Charlotte, NC on August 31, 2018. The goal of the executive order is to expand access to retirement plans for American workers at small to mid-sized companies since “…approximately 89 percent of workers at private-sector establishments with 500 or more workers were offered a retirement plan compared to only 53 percent for workers at private-sector establishments with fewer than 100 workers.”
Multiple employer plans (MEP) allow employees from different private-sector employers to participate under the same retirement plan, which can reduce the administrative costs of offering a retirement plan. The executive order would “clarify and expand the circumstances under which United States employers, especially small and mid-sized businesses, may sponsor or adopt a MEP as a workplace retirement option for their employees….”
According to National Association of Plan Advisor’s (NAPA) article, Employers May Underestimate the Importance of 401(k)s, “Among employers that do not offer a 401(k) or similar plan, only 27% say that they are likely to begin sponsoring a plan in the next two years.” Concerns about cost was a top reason employers stated they do not envision sponsoring a plan in the next two years. However, 25% of employers that are not likely to offer a plan say they “would consider joining a multiple employer plan (MEP) offered by a reputable vendor who handles many of the fiduciary and administrative duties at a reasonable cost.”
In less than a month since the executive order was signed, the DOL already delivered the proposal to the Office of Management and Business (OMB). As noted in NAPA’s article, DOL Drops Off MEP Proposal at OMB, “While the particulars of the proposal are not yet known, the quick delivery to OMB might suggest that the review might also be quick. That said, the OMB must approve the proposal before it goes up for public comment, a process that could take days or weeks.”
