In the coming ascendency of 401k PEPs, here’s what might surprise you, and here’s what might disappoint you.
Tag "Terrance Power"
One of the biggest risks inherent in MEPs/PEPs is coordinating all of the many moving pieces. Hereâs why people might be wrong to think they know enough about assembling a 401k MEP/PEP and regulatory compliance only heightens the potential liability.
Do you know the answers to the most important MEP/PEP questions â or do you only think you know the answers to the most important MEP/PEP questions?
Itâs important to remember that the 401k MEP is just a vehicle. Whether they truly meet the objective of employees saving more for retirement and doing so effectively and efficiently comes down to execution.
It appears all but certain the floodgates will soon open wide, unleashing a torrent of trade association sponsored 401k MEPs. If youâre looking for the trigger that will open those floodgates, here’s what you should be paying attention to.
“401k Multiple Employer Plans (MEPs) are a solution for the small to mid-sized employer market that will lead to the expansion of retirement plan coverage for America’s workers.”
As we approach clarity with regards to Congressional action and/or implementation of the Trump Executive Order, we may find need to expand these MEP guidelines. Until then, though, companies in business associations where commonality exists may wish to use these ground rules when determining if a 401k MEP is the right course to take.
For all the talk and concern about Congress cutting the contribution caps for 401k plan, the real news appears to be just the opposite. Sometimes, itâs better to wait for the final result rather than get worked up about what you think may happen.
“There is no upside for an employer doing everything perfectly with their retirement plan. The downside risk, however, can be huge. Itâs a risk that just isnât worth the employer taking.”
Why Iâm Thankful for the 401k
Iâm old enough to remember a world before the 401k. So distant was this anomaly in the tax code, that I, like nearly everyone else, was unaware of its existence, let alone its significance when it was formulated in 1978. What makes this more ironic was that it was my Congressman, Barber Conable, that led the way.