On August 31, 2018, President Trump signed an Executive Order directing the Labor Department to consider issuing regulations and guidance that would make it easier for businesses to join together in Association Retirement Plans also known as open multiple employer plans (MEPs).  It is believed that the Labor Department will act to remove the commonality requirement of existing regulations which requires that all employers participating in the MEP must share some commonality such as being members in the same industry trade group.  So called “open” MEPs don’t meet the commonality rule and each employer is currently treated as adopting its own individual plan rather than one single MEP.  This means each employer’s plan has its own administration and must file its own Form 5500.  In addition, the current regulations contain a “one bad apple rule” that says under a MEP, if a single employer fails to meet qualification requirements, the entire MEP is subject to disqualification affecting all employers.

Of course, we will have to see what the Labor Department does in its new guidance, however, a relaxation of these restrictions would encourage more MEPs to be created and adopted, allowing smaller employers to pool together to enjoy economies of scale in the administration of plans like plans of larger employers enjoy.  This should encourage small businesses to provide retirement plans for their employees and help with the low rate of retirement savings.  In my opinion, this would be a better way to encourage small employers to offer retirement plans than state mandated payroll deduction IRAs which may be preempted by ERISA (see Suit Claims CalSavers is Preempted by ERISA).