• / Free eNewsletters & Magazine
  • / My Account
Home>Practice Management>Fiduciary Focus>Multiple Employer Plans: The Platinum Standard

Related Content

  1. Videos
  2. Articles
  1. How to Make the Most of Your 401 (k )

    In this special presentation, get the answers to key questions about the quality of your plan, whether your savings are on track with your goals, how to allocate assets, and what to do with assets when you leave your job.

  2. Can 401 (k )s Get the Job Done?

    Roundtable Report: Christine Benz, John Rekenthaler, and David Blanchett weigh in on how this savings vehicle can be made better and used better by the increasing number of Americans who will depend on it.

  3. 7 Habits of Successful Investors

    Special presentation: Learn how 'cheaping out,' building in discipline, and other simple steps help successful investors get it done.

  4. Advantages and Disadvantages of Annuities in 401 (k ) Plans

    Downside market protection, more retirement spending certainty, and longevity protection are potential benefits of annuities in retirement plans, but they're not for everyone.

Multiple Employer Plans: The Platinum Standard

A MEP is the best way to create maximum efficiency in retirement plans.

W. Scott Simon, 08/06/2009

In my last four columns, I described how the sponsor of a qualified retirement plan such as a 401(k) plan--the "sponsor" actually being real flesh-and-blood people who serve as trustees and other named and functional fiduciaries of the plan--can insulate itself from virtually all day-to-day fiduciary investment risk as well as operational/administrative risk to which the sponsor would otherwise be subject as a result of sponsoring the plan.


The U.S. Department of Labor (DOL) provides, in its DOL Advisory Opinion 2002-06A (issued July 3, 2002), that a plan sponsor (typically through the board of directors of the sponsor/employer) has the power, pursuant to ERISA section 402(b), to delegate limited-scope duties to a specialized fiduciary responsible for administration of the plan (an ERISA section 3(16) Plan Administrator); one responsible for selecting, monitoring, and (if necessary) replacing the investment options offered in the plan (an ERISA section 3(38) Investment Manager); or one responsible for trustee duties defined in the plan (an ERISA section 403(a) Plan Trustee).


A plan sponsor also has the power, pursuant to ERISA section 402(b), to delegate limited-scope duties to a specialized ERISA section 3(21) fiduciary responsible for a narrowly defined issue where discretion can be exercised, such as the determination of whether or not it's prudent to hold the company stock of a plan sponsor as an investment option in the company's plan.


Alternatively, a plan sponsor can radically simplify things for itself. Instead of continuing to bear the inherent responsibilities associated with sponsoring a retirement plan, bearing the liability for parceling out some (or all) such duties to specialized fiduciaries on its own--which takes substantial time, investigation, due diligence, monitoring, etc.--the plan sponsor can simply off-load liability for such duties by delegating them all to a full-scope, professional, independent ERISA section 3(21) named fiduciary.


©2017 Morningstar Advisor. All right reserved.