MEP vs 401(k)

Why should I consider a MEP instead of a 401(k)?

When established, the MEP allows an Adopting Employer to provide its employees with a 40l(k) platform that they can easily adopt to replace their current plan.

At the participant level, the plan will feel very much the same as any 40l(k) plan available in the marketplace. In fact, employees may not even notice a difference at all!

Participants will still have access to their plan online.

They can still choose to receive statements electronically.

They will still be provided with education about the plan and its investment options.

They can still take loans and hardship withdrawals.

They will still be able to save for retirement in an employer-sponsored plan.

The benefits are just as compelling from the perspective of the Adopting Employer:

They retain all the flexibility in design that they would have in most other plans.

They will no longer be responsible for filing an IRS Form 5500.

They will have the opportunity to reduce their costly annual plan audit (required for plans that have over 100 eligible employees).

They are replaced as the plan administrator and trustee for their retirement plan.

And most importantly: employer fiduciary liability is reduced as The MEP transfers personal liability to an independent fiduciary.

When established, the MEP allows an Adopting Employer to provide its employees with a 40l(k) platform that they can easily adopt to replace their current plan.

At the participant level, the plan will feel very much the same as any 40l(k) plan available in the marketplace. In fact, employees may not even notice a difference at all!

Participants will still have access to their plan online.

They can still choose to receive statements electronically.

They will still be provided with education about the plan and its investment options.

They can still take loans and hardship withdrawals.

They will still be able to save for retirement in an employer-sponsored plan.

The benefits are just as compelling from the perspective of the Adopting Employer:

They retain all the flexibility in design that they would have in most other plans.

They will no longer be responsible for filing an IRS Form 5500.

They will have the opportunity to reduce their costly annual plan audit (required for plans that have over 100 eligible employees).

They are replaced as the plan administrator and trustee for their retirement plan.

And most importantly: employer fiduciary liability is reduced as The MEP transfers personal liability to an independent fiduciary.

When established, the MEP allows an Adopting Employer to provide its employees with a 40l(k) platform that they can easily adopt to replace their current plan.

At the participant level, the plan will feel very much the same as any 40l(k) plan available in the marketplace. In fact, employees may not even notice a difference at all!

Participants will still have access to their plan online.
They can still choose to receive statements electronically.
They will still be provided with education about the plan and its investment options.
They can still take loans and hardship withdrawals.
They will still be able to save for retirement in an employer-sponsored plan.

The benefits are just as compelling from the perspective of the Adopting Employer:

They retain all the flexibility in design that they would have in most other plans.
They will no longer be responsible for filing an IRS Form 5500.
They will have the opportunity to reduce their costly annual plan audit (required for plans that have over 100 eligible employees).
They are replaced as the plan administrator and trustee for their retirement plan.
And most importantly: employer fiduciary liability is reduced as The MEP transfers personal liability to an independent fiduciary.

Employer features, responsibilities, and liabilities in a traditional 401(k) vs a MEP:

Traditonal 401k Plan:

Employer serves as Plan Sponsor, named fiduciary, & Trustee of Plan.

Employer designs Plan Document and maintain qualified status; produces and maintains an Investment Policy Statement.

Employer complies with ERISA Section 404(c) provisions; provides prospectus delivery to participants on investment alternatives.

Employer oversees and manages the process, in conjunction with TPA, for annual filing of Form 5500; provides for an annual audit of the plan (if required).

Employer conducts periodic investment committee meetings; reviews and validate compliance testing; submits Year-End census data to TPA; distributes required annual notices to participants (e.g. Safe Harbor).

Employer coordinates enrollment and employee education meetings; administers Distribution and Rollover requests for terminated employees.

MEP:

Eliminates the burdens associated with a traditional 40l(k) by reducing the above list to four items. The employer only needs to:

Serve as Adopting Employer to the Plan.
Provide initial Year-to-Date employee census file.

Submit timely and accurate payroll data each pay period.
Provide requested annual information for year-end testing.

Employer features, responsibilities, and liabilities in a traditional 401(k) vs a MEP:

Traditonal 401k Plan:

Employer serves as Plan Sponsor, named fiduciary, & Trustee of Plan.

Employer designs Plan Document and maintain qualified status; produces and maintains an Investment Policy Statement.

Employer complies with ERISA Section 404(c) provisions; provides prospectus delivery to participants on investment alternatives.

Employer oversees and manages the process, in conjunction with TPA, for annual filing of Form 5500; provides for an annual audit of the plan (if required).

Employer conducts periodic investment committee meetings; reviews and validate compliance testing; submits Year-End census data to TPA; distributes required annual notices to participants (e.g. Safe Harbor).

Employer coordinates enrollment and employee education meetings; administers Distribution and Rollover requests for terminated employees.

MEP:

Eliminates the burdens associated with a traditional 40l(k) by reducing the above list to four items. The employer only needs to:

Serve as Adopting Employer to the Plan.
Provide initial Year-to-Date employee census file.

Submit timely and accurate payroll data each pay period.
Provide requested annual information for year-end testing.

Employer features, responsibilities, and liabilities in a traditional 401(k) vs a MEP:

Traditonal 401k Plan:

Employer serves as Plan Sponsor, named fiduciary, & Trustee of Plan.

Employer designs Plan Document and maintain qualified status; produces and maintains an Investment Policy Statement.

Employer complies with ERISA Section 404(c) provisions; provides prospectus delivery to participants on investment alternatives.

Employer oversees and manages the process, in conjunction with TPA, for annual filing of Form 5500; provides for an annual audit of the plan (if required).

Employer conducts periodic investment committee meetings; reviews and validate compliance testing; submits Year-End census data to TPA; distributes required annual notices to participants (e.g. Safe Harbor).

Employer coordinates enrollment and employee education meetings; administers Distribution and Rollover requests for terminated employees.

MEP:

Eliminates the burdens associated with a traditional 40l(k) by reducing the above list to four items. The employer only needs to:

Serve as Adopting Employer to the Plan.
Provide initial Year-to-Date employee census file.

Submit timely and accurate payroll data each pay period.
Provide requested annual information for year-end testing.

Download a copy of our complimentary "Collaborative Retirement Trust" brochure!

Download your complimentary guide!

Download a copy of our complimentary "Collaborative Retirement Trust" brochure!

Download your complimentary guide!

Download a copy of our complimentary "Collaborative Retirement Trust" brochure!

Download your complimentary guide!

Terry E. DuPont, CRPS, CPhD, CWPP

President & Chief Success Officer

DuPont Wealth Management

800.234.4452

Terry@DuPontWealthManagement.com

Fee-based financial planning and investment advisory services are offered by DuPont Wealth Management a Registered Investment Advisor in the State of Indiana. Insurance products and services are offered through DuPont & Associates, Inc. DuPont Wealth Management and DuPont & Associates, Inc. are affiliated companies. The presence of this web site shall in no way be construed or interpreted as a solicitation to sell or offer to sell investment advisory services to any residents of any State other than the State of Indiana or where otherwise legally permitted.

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