Small Plan Master Trust

[Guest LoloV]

Is anyone successfully implementing a standardized master trust product that combines employers with less than 50 participants? The theory is to save costs by combining small plans into one account on our recordkeeping system and our trust system.

From a processing standpoint, this seems like it would be very confusing and time consuming regarding allocation reports, posting transactions, year end testing, etc.

I would appreciate any input, pro or con.

Thanks!

[four01kman]

I tried to implement a program similar to what you are asking about. I contacted about 25 banks, and could never put together a pricing scheme that was competitive in that marketplace.

[Ron Snyder]

Administering a 401(k) plan for a PEO (employee leasing company) under the current rules amounts to the same thing: a multiple-employer plan for a lot of companies with fewer than 50 employees. We currently administer such 401(k) plans for several PEO firms.

[GBurns]

But are you using "a standardized master trust product " and is it less "confusing and time consuming regarding allocation reports, posting transactions, year end testing, etc." as asked by the original poster?

[Ron Snyder]

Non-standardized and yes, but not much. The options for adopting employers are limited.

[GBurns]

How much more costly is it to set up and to maintain using a Non-Standardized vs a Standardized? Any pointers on where to look?

[Medusa]

FWIW we are using a master trust for small employers. Technically it is not a master trust since the employers are not related. WE are able to save on trustee fees but still have to perform separate recordkeeping for each plan.

[Kirk Maldonado]

Anybody contemplating any such arrangement needs to be sure that they have retained counsel that understands both ERISA and securities laws, because there are some nasty issues implicated in these situations.