Of late, we’ve been getting a lot of questions about legislation that would create open multiple employer plans (MEPs). Here’s the update.
Ever since the Department of Labor issued an explicit ruling in 2012 that an open MEP is not a single employee benefit pension plan but a group of single employer plans under the Employee Retirement Income Security Act (ERISA), there has been significant bipartisan interest on Capitol Hill to change both ERISA and the tax code to allow for open MEPs.
There were a number of bills in prior Congresses that would create open MEPs. These bills include the Retirement Enhancement and Savings Act (RESA) (H.R 5282; S. 2526 – 115th Congress) which passed the Senate Finance Committee in September 2016 with a 26-0 vote, and the Family Savings Act (H.R. 6757 – 115th Congress) which passed the House of Representatives in September 2018. The effort to get this done was a serious one and legislation blessing open MEPs came very close to being included in an end-of-session legislative package in December 2018. But unfortunately the agreement was blown up by an unrelated political fight over immigration policy.
So what now? Well each new Congress is exactly that, new. There are 89 new members of Congress with two open seats pending. The legislative effort will have to start anew – while not exactly starting from scratch – and the new members of Congress will need to be educated about the importance of the issue. The good news is that new groundwork has already started to be laid.
Both the House Ways & Means Committee and the Senate Special Committee on Aging held hearings in early February where this topic was at the forefront. In fact, Reps. Mike Kelly (R-PA, 16th) and Ron Kind (D-WI, 3rd) reintroduced RESA in the House of Representatives and the Senate is expected to also reintroduce the legislation in the coming weeks. The Retirement Security Act, a bill reintroduced in the Senate by Sen. Susan Collins (R-ME,) also features open MEPs.
But these are only the first steps in a long legislative process. The next steps in the process would be a markup of these or other retirement tax bills at the committee level. So I would not expect congressional action to enact legislation green-lighting open MEPs until fall 2019 at the earliest.
Andrew Remo is the American Retirement Association’s Director of Legislative Affairs.