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When a participating employer terminates its relationship with a bona fide employer group or PEO, the termination does not remove the fiduciary obligations that the group or PEO owes to the participants as the plan administrator and named fiduciary.

endobj %%EOF Pension benefits are calculated based on different criteria such as: In conclusion, a multiemployer pension plan offers a retirement benefit for workers whose employers are required to contribute to a collectively bargained plan.

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?^W+ ^Xp]v*S1 ZvA!%=ANbd All rights reserved. poster festival summer sfjazz member non 0000001236 00000 n /XObject <<

It should not be construed as legal advice or legal opinion on any specific facts or circumstances.

Consequently, the MEP sponsor, and not the individual employers, would serve as the MEPs plan administrator and named fiduciary, subject to all of ERISAs provisions, including the fiduciary, reporting and disclosure requirements, and the prohibited transaction provisions.

These obligations will continue until the participants are no longer covered by the MEP, or all assets are paid to the participants and beneficiaries. /Rotate 0 /Resources << mystarjob

0000000909 00000 n 0000002468 00000 n This week, the U.S. Department of Labor (DOL) published its highly anticipated Final Rule, which allows working owners with no employees and companies in unrelated industries to band together to create a single defined contribution retirement plan for their employees, known as a multiple employer plan (MEP). endstream endobj 9 0 obj <> endobj 10 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text]>>/Rotate 0/Type/Page>> endobj 11 0 obj <> endobj 12 0 obj <> endobj 13 0 obj <> endobj 14 0 obj <> endobj 15 0 obj <> endobj 16 0 obj <>stream A multiemployer plan may be a defined benefit, defined contribution or hybrid plan. /MediaBox [0 0 611 790] @46DDDc&gTE-o6|#IdDW;OMsvLvl\l;mQ.=zK6B ;WtltD=21&jh?_3fy3~#s44:e<3wm&hmh4y?3I9. The trustees are fiduciaries under ERISA and must act in the sole interest of the plan and its participants and beneficiaries, regardless of who elects or appoints the trustee. 0000009018 00000 n Multiemployer pension plans are a significant component of the retirement system for unionized workers.

8 20

0000005727 00000 n The assets of a defined benefit pension plan are maintained in a qualified trust, and plan trustees hire investment professionals to assist with the management of the investment portfolio and investment policy of the plan. PVShPDDDDDDDDG`h;NPAtd 9FO/jwwPoZ"-_uz_}]X"Gu";N&98wB"u]/2NeOi;~J i]"'a? For a multiemployer pension plan, contributions made by employers on behalf of specific employees are used to provide pension benefits to all plan participants; now and in the future.

"""""$8#B1e"""*"7ndJ7^k,f!vZA8@,/2 2+YfB20SCMHB! However, the Final Rule contains a safe harbor test whereby the PEO will be considered to perform substantial employment functions when: The PEO assumes responsibility for and pays wages to employees of its client-employers that adopt the MEP.

0000002224 00000 n _x_Y' [~%r'`wso61I&pl_L}aYoc7Esm\jiQC$iDy[o: The Department described several factors that are important in determining whether the requisite control exists, including whether the employers regularly nominate and remove officials who preside over the associations governing bodies, and whether the employers wield approval and veto power over decisions related to the formation and design of the MEP.

The PEO assumes responsibility to pay and perform reporting and withholding for all applicable federal employment taxes for its client employers that adopt the MEP. 0000008932 00000 n

The PEO assumes responsibility for and has substantial control over the functions and activities of any employee benefits which the service contract may require the PEO to provide. The group or association must not be a bank or trust company, insurance issuer, broker-dealer or other similar financial service firm, or owned or controlled by such an entity. lIvH;6Uzh*,$hrm6nkV_#Tn tnCt6zn;/oVcIA6znnU#dP{tauu[+[oOWzOUc}$qVTuL."}zqU}}"?{pE"^w}$vO {/=?GCxP+ke0}#Y}w a.vp^m_!W?6K/C]WK~WOc8|cNTkFg/uos]Tow?Ov%kkzkjmvzm#5$=v}z{W^Nxi}mvJ`?^G6(gJJa znMT1]!

MktoForms2.loadForm("//", "424-KBK-582", 2154); Join Withums Multiemployer Benefits team as they take a deep dive into cyber and fraud issues surrounding benefit plans. The DOL employs a general facts and circumstances test for this requirement.

0000000016 00000 n Vesting is defined by the duration of participants years of covered service working for a specific employer. Working owners must work at least 20 hours per week (80 hours per month) or have certain levels of income attributable to self-employment activities.

Sole proprietors and other self-employed individuals may act as both employers and employees of their businesses for purposes of participating in a bona fide employer group MEP. 27 0 obj <>stream

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher. O}dqk^tzkH7H&nEuONzo{O^uNzkK5_uWy0^r7$#(W_[PUp_`Q-k]zzmo[^Y

We use cookies to improve your experience and optimize user-friendliness. /CropBox [0 0 611 790] 0000012770 00000 n Vesting decisions and timetables also play a large role in the pension plan process. The MEP structure is intended to broaden the availability of employer-sponsored retirement plans, especially among small employers, by reducing the cost and regulatory complexity of plan administration. PBGC coverage requirements are determined by ERISA. Withum is among the few firms in the nation that specializes in multiemployer benefit plan audit and advisory services. The PEO must perform substantial employment functions on behalf of the client employers. A substantial business purpose is deemed to exist if the association would be a viable entity absent the MEP coverage.

0000005412 00000 n Working Owners

Defined benefit pension plan participants do not make investment decisions whereas defined contribution plan participants often do.

0000005543 00000 n The PEO ensures that participation in the MEP is limited to current and former employees of the PEO and of client employers as well as their beneficiaries.

To continue browsing our site, please click accept. A multiemployer plan is a collectively bargained plan maintained by more than one employer, usually within the same industry, and a labor union.

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The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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Each employer member of the association must act directly as an employer of at least one employee who is a participant in the MEP. The Final Rule provides five criteria that an employer group or association must satisfy in order to offer a MEP to its employer members.


United States District Court of the District of Columbia, Employee Benefits and Executive Compensation. 0

First, lets define a multiemployer plan. Home Insights Articles What is a Multiemployer Pension Plan? @a0%C@+ uuDKQGFt]GeL/GD_|AF44"" Ct]E&B,!_Tz_wJ T"?c=Y?Tv! { tyM2:$"R(3$e@DtlRvPfL

0000013014 00000 n

The working owners status under the Final Rule must be periodically confirmed and monitored by the MEP.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. Get the latest significant legal alerts, news, webinars, and insights that affect your industry. However, the Department continues to promote this test in the MEP Final Rule. /Contents [ 4 0 R ]

However, vesting requirements may vary by plan. 0000002147 00000 n Stay apprised of the latest developments with our National Tax Policy Resource Center.

Even if the associations primary purpose in the future becomes offering MEP coverage, this requirement may still be met so long as the associations previous operations suggest that it could be viable without offering MEP coverage, assuming the organization continues its pre-MEP activities. We are an independent member of HLB The Global Advisory and Accounting Network, For more information on this topic, contact a member of. The DOL contemplates that this provision will help ensure that the employer association will act solely in the interest of the employer members, instead of being motivated by commercial interests.

Like other benefit plans, multiemployer plans are required to follow the provisions of the Employee Retirement Income Security Act (ERISA).

These plans are often referred to as Taft-Hartley Plans. Employers are obligated to fund benefits in accordance with their collective bargaining agreements.

The Final Rule recognizes that PEOs traditionally act indirectly in the interest of [their client] employers when they perform these employment functions on behalf of their employer clients.

!A !A! 0` L aA**b @M* ApHh(EH@L A B@Ds!Ds."#4MSM5OB."4!A!L! Most multiemployer plans are administered and governed by a board of trustees with labor and management equally represented.

>.4CFAGzCv]8vH}7k[Ao^z 7Onn"uVrND -wDtGG56Pd<0]&HKC3A} 0 }a5B}tX^A8#5!A4.&w}'XHzD{F>?Km6kq[>C However, these are often much lower than the underlying benefits payable from a troubled plan.

In a multiemployer plan, contributions are collectively bargained and workers often decline some direct compensation in exchange for contributions to the benefit plans. Read our cookie policy for more information on the cookies we use and how to delete or block them. Withums Multiemployer Benefit Plans Group, The employees years of service at a specific company or organization.

These plans were created pursuant to the Taft-Hartley Act and offer benefits to millions of workers including: health, retirement, life insurance, training, legal services, etc. 0000002718 00000 n %PDF-1.3 % 1 0 obj The activities of the group must be controlled by its employer members, and the employers that participate in the MEP must control the MEP in form and in substance. [tdc_zone type=tdc_content][vc_row][vc_column][td_block_trending_now limit=3][/vc_column][/vc_row][vc_row tdc_css=eyJhbGwiOnsiYm9yZGVyLXRvcC13aWR0aCI6IjEiLCJib3JkZXItY29sb3IiOiIjZTZlNmU2In19][vc_column width=2/3][td_block_slide sort=featured limit=3][td_block_2 border_top=no_border_top category_id= limit=6 td_ajax_filter_type=td_category_ids_filter ajax_pagination=next_prev sort=random_posts custom_title=SEA MOSS RECIPES][td_block_1 border_top=no_border_top category_id= sort=random_posts custom_title=SEA MOSS BEAUTY][td_block_ad_box spot_id=custom_ad_1][td_block_15 category_id= limit=8 sort=random_posts custom_title=SEA MOSS HEALTH BENEFITS][/vc_column][vc_column width=1/3][td_block_social_counter custom_title=STAY CONNECTED facebook=tagDiv twitter=tagdivofficial youtube=tagdiv border_top=no_border_top][td_block_9 custom_title=LIFESTYLE border_top=no_border_top category_id= ajax_pagination=next_prev sort=random_posts][td_block_ad_box spot_id=sidebar][td_block_2 sort=random_posts limit=3 category_id= custom_title=SEA MOSS BUSINESS][td_block_title][td_block_10 limit=3 custom_title= border_top=no_border_top tdc_css=eyJhbGwiOnsibWFyZ2luLXRvcCI6Ii0yMCJ9fQ==][/vc_column][/vc_row][/tdc_zone], Designed by Elegant Themes | Powered by WordPress.

Life of Bankruptcy Opportunity Zones.

MEP coverage must not be made available to workers outside the group of participating employer members.

3 0 obj Tune in monthly to hear the latest updates.

(No claim to original U.S. government material.).

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The association must have a formal organizational structure with a governing body and have by-laws or other similar indications of formality.. 0000006016 00000 n Ballard Spahrs Employee Benefits and Executive Compensationattorneys can assist employers, employer organizations and PEOs navigate the complex regulatory scheme in regard to MEPs to ensure compliance.

hAEu$;ft#E< vA - kWy1}2>%XM44 Pzi}Zkc{zizoI^_qz}/q8?FWv(ymR%"iDzya_U]tR G Author: Fabricia Edwards, CPA | [emailprotected]. The geography test was one of the provisions specifically cited by the United States District Court of the District of Columbia as running afoul of the purpose of ERISA when it invalidated the Association Health Plan rule earlier this spring.

Gb7[}~h_4? 0000006240 00000 n Our experience includes multiemployer benefit plans of all sizes, including: Multiemployer [], Get news and event information from Withum. In the event of a plan failure, PBGC financial support may be available which is subject to the PBGC guaranteed benefit levels. Each employer member must have a commonality of interest, either by participating in the same trade and industry, or being headquartered in the same geographic area (including the same metropolitan area which may span more than one state). hb```b``fe`a`cc@ >H 'Z3 URh Ftt!A(f`Pf-L3 ]e/.rA030Xe ;

Outsourced Accounting Systems and Services (OASyS). The Democratic tax and spending priorities from last year continue to evolve. << >>

0000005692 00000 n

G/R\pyt%YthfxN2o6:}Qa|N3-8pJY y"6. 0000001629 00000 n

These criteria are aligned with the Departments recently invalidated Association Health Plan rule: The association must have at least one substantial business purpose unrelated to providing MEP coverage to its employer members, even if the groups primary purpose is to offer such coverage. National Tax Policy /Parent 2 0 R The PEO ensures that each client-employer that adopts the MEP acts directly as an employer of at least one employee who is a participant covered under the MEP. 0000000986 00000 n

Our team members work to cultivate a unique corporate culture rooted in inclusion, strength, and togetherness. |4#5 # Copyright 2019by Ballard Spahr LLP. Once a participant is vested, the participant has earned a pension benefit that is expected to be paid at retirement.

@z}:T#h[5~N~5o>w}gUciu8m8dxU}.vkvk{i+aUa._fim0_|Wk|~kxaV>+~=j;z-id#.B?VD}?$ap0p%+ ;4yol>)&dS9(1U S6(s}p*ave;U7

>> 0000000696 00000 n =Gm"UgHfjSL ! %PDF-1.4 % "#-Uam FqzM"#UURUZ |!MrFRR'}U#D]?fgtvMkn+I%bKM=_@|oKg67jAa4""1&j2nM7*En,Gn&UD4D'FiFh73c7fb13^13xb1f4#h'DYQD#c7F3hc6o13yc1f3yb1fc1f3yc1f#]3b1c1F2^/"x/f$E2 a4iM5M;4i[Mm=4Mwa0eLx/f3o13h1FoGmFy^1Exc1v^/b// iip4M5N;M5M44NNM5M5MVT[PDDD!D N BA a0ApA0B'A%;@ NG @1@a TT A0B! [UMSMSM;L'ii.~WF3c1f"c1eaBiwkihFD\ BGAe A B LAaA! trailer Defined benefit retirement plans must pay annual premiums to the Pension Benefit Guaranty Corporation (PBGC). Specifically, the Final Rule expands the definition of employer under Section 3(5) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), to allow bona fide employer groups and professional employer organizations (PEOs) to act as an employer for purposes of sponsoring a MEP. x.ba58c|3J`O"0 !EQ/lferIs]OUH\Pcy>/|`=Ev_8Nhx;I8{^ {7|7jd:,"OzS*{^@0"\3%[P8)5x0?)alp(1LN2J-Ip_

Copyright 2022 Withum Smith+Brown, PC. /ProcSet [/PDF /ImageC /ImageB /ImageI] HWy],n$9N"RC`X4X&TJ+\==9q-f/=v1K(5U,/,IY-ETlwbO'>n Z8RMwG8WYi[Zl_? The PEO plays a definite and contractually specified role in recruiting, hiring, and firing workers of its client employers that adopt the MEP. Each episode will touch on best practices, stories, and guidance to help you remain compliant.

The Final Rule provides that a bona fide PEO is capable of establishing a MEP if it meets the following requirements: Continuing Responsibility of the Bona Fide PEO or Employer Association. Although the Final Rule excludes arrangements known as Open MEPs, which are defined contribution plans that cover employees with no relationship other than their participation in the MEP, the DOL requests comments on Open MEPs. /Type /Page

[M^*zi!B0`ghCB 8f The PEO has substantial control over the functions and activities of the MEP, as the plan sponsor, the plan administrator, and a named fiduciary. According to the Internal Revenue Service, a PEO is an entity that enters into an agreement with a client to perform some or all of the federal employment tax withholding, reporting, and payment functions related to workers performing services for the client. These arrangements usually require the PEO to assume employment responsibilities that the employer would otherwise fulfill on its own; such as human resource tasks, employee benefit plan administration, and workers compensation claim administration.

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