PEO and open MEP?

[cdavis25]

We have a new prospect that was part of a big PEO's Plan. The PEO is a public company. The PEO files one 5500 for everyone or at least they did in 2012. It appears to us that anyone that is part of the PEO can be in the Plan. There is no link such as control group, ASG, affliated employer, union, etc... Since the DOL said open MEPs need to file a 5500 for each employer, we are wondering how they get away with it? Is there something that a PEO is using to link the companies??

[Guest Fitbit]

DOL Reg 2510.3-37© provides that the plan must be establisted for a substantial business purpose. I think if the PEO satisfies the definition of an MEP in ERISA 3(37), it is able to file just one Form 5500.

If it does not satisfy these things, then it isn't getting around anything... it's simply ignoring the Regs.

[ESOP Guy]

isn't part of the difference between a PEO and a MEP is that everyone works for the PEO and in a MEP everyone works for the companies?

Or put another way there is only one employer with employees in a PEO but there are as many employers with employees in a MEP as there are employers.

[Guest Fitbit]

isn't part of the difference between a PEO and a MEP is that everyone works for the PEO and in a MEP everyone works for the companies?

Or put another way there is only one employer with employees in a PEO but there are as many employers with employees in a MEP as there are employers.

Right, I think the PEO situation would be the common law employer requiring 1 form and an open MEP situation would need multiple Forms and audits. I cant see a way around it without ignoring the regs.

[GBurns]

That the PEO is large or is a public company is irrelevant and distracts your thinking.

I do not think that there has ever been a case where the PEO is the common law employer.

What benefit is being provided through this MEP? While the IRS has issued guidance regarding 401(k) s and MEP, I do not recall that health benefits could be allowed through a MEP but had to be through a MEWA.

[Guest MTurner]

I too would like to know more about this. We're trying to find out whether a client acquired from a PEO does or doesn't have to file a 5500 while with the PEO. I was told it depends on how the company is set up within the PEO and whether it's a single plan or a combination of separate plans and has it's own trust document. If the latter than a separate 5500 is required, the former, a single 5500 with separate schedule T for each participating employer, showing each employer's complaince with the 410 coverage test. Not sure if this information is correct or not?