As a small business owner, you may feel overwhelmed by the financial aspects of managing 401(k) risks and responsibilities for your employees. One option that you may have heard of is a multiple employer plan (MEP). MEPs comprise a group of unrelated employers (two or more) who combine their 401(k) plans. What are the benefits of MEPs, then, and why should you consider a multiple employer plan for your own small business?
1. MEPs give more power to small employers and businesses than their alternatives. By allowing independent groups to band together, small employers can increase their purchasing power to attain lower costs usually available only to larger-plan counterparts.
2. Another advantage of participating in an MEP is the regulation of risk and fiduciary responsibility. 401k Specialist notes that the onerous regulations in place today make it daunting for small businesses to assume any risk or liability. Luckily, taking part in an MEP can help mitigate some of these risks and provide peace of mind for small business owners.
3. Additionally, joining an MEP can make it easier for small business owners to manage and operate a 401(k) plan. Eliminating some of these administrative duties is another advantage of MEPs. This way, time and resources can be saved and applied to other more important applications of running a business and managing employees.
Remember, a multiple employer plan should not be confused with a multiemployer plan. While these two terms are frequently confused, a multiemployer plan is a plan maintained by a labor union and more than one employer within related industries.
Understanding the basic terminology of these plans and 401(k) management can be all you need for your small business to succeed in providing its employees with a stable plan for retirement, and MEPs make operations even simpler!
