OMB Finishes Review of DOL Proposal to Establish Open MEPs
The text of the regulation is still forthcoming, but the Office of Management and Budget has completed its review; so far, we know the regulation is viewed as “major” and “economically significant.”
The Office of Management and Budget confirms it has finished its review of the Department of Labor (DOL)’s proposed regulation to expand access to open multiple employer plans (MEPs).
The DOL’s Employee Benefit Security Administration (EBSA) is driving the regulatory effort, which comes after President Donald Trump earlier this year signed an executive order directing several federal agencies to examine the prospects of making open MEPs more viable.
Some experts in the retirement planning industry think that, if DOL find success in promoting open multiple employer plans, this could result in many more small businesses offering MEPs—which will in turn open up new opportunities for advisers. Others go so far as to suggest open MEPs may, once the marketplace matures, start to attract mid-size and even larger plan sponsors.
It is still unclear at this stage exactly what language is contained in the proposed regulation OMB has now signed off on, and it should also be stated that the regulation will be subject to comment and revision. Assuming the DOL’s proposal closely follows the executive order’s instructions, it is likely to revise the “common nexus” and “one bad apple” rules that have held back open multiple employer plans. Less clear is whether the DOL regulation will speak to the president’s simultaneous order to the Treasury Department to consider how to update its rules establishing that individuals must begin making withdrawals from 401(k) accounts starting no later than six months after their 70th birthday.
Industry stakeholders have been calling loudly for greater use of open MEPs as one of the primary ways to address the retirement plan coverage gap. While there has been less discussion of the RMD issue, it is also a timely matter for today’s retirees. In fact, 68% of retirees are only taking the required minimum distributions (RMDs) from their retirement accounts.