Open MEP

[pjb1835]

Does anyone have any experience with Open MEPs?  Employer was spun from a Open MEP mid way through 2017.   Through 2016, the Employer filed their audited 5500 every year.   Instructions do not seem to allow for the separate filing per participating employer.  The only thing we can come up with is the AICPA guideline below.  Does anyone know why they would advise separate 5500's per employer with separate audits?  Secondly, if assets were physically under the MEP the first part of the year wouldn't there be a need for a final "short" year of assets under the MEP and short start up plan year for the stand alone plan?  Would it matter if the start up document was effective 1/1/17?  CPA is confused as to how to audit 2017 when the assets were under the MEP.

If the common interest criteria is not met (as is usually the case with open MEPs and many MEWAs), each adopting employer is considered to be maintaining a separate plan for the benefit of its own employees. Consequently, each adopting employer would have a Form 5500 filing requirement and potentially an audit requirement (depending on the number of plan participants). However, there is a special exception for a MEWA that qualifies as a group insurance arrangement (GIA). A GIA exists if the MEWA’s welfare benefits are fully insured, the insurance contracts are held by a trust or other entity, and a trust is used as the conduit for payment of the premiums to the insurance company. If a MEWA that meets these requirements files one Form 5500 with audited financial statements as a GIA, then the adopting employers do not need to file Form 5500.

https://www.aicpa.org/content/dam/aicpa/interestareas/employeebenefitplanauditquality/resources/ebpaqcprimers/downloadabledocuments/ebpaqc-multiple-employer-plans-primer.pdf

 

[John Feldt ERPA CPC QPA]

My understanding is that an open MEP is actually a string of single employer plans. In 2012 Adam Pozek posed several optional names, such as “faux MEP”, “Not a MEP” and so forth.

If the employers do not share enough common economic interests, other than combining their plans, then it is not a MEP.

 

Read through the DOL’s response to Robert J. Toth, Jr. in 2012 regarding the TAG Resources 401(k) Advantage “Plan” under Advisoty Opinion 2012-04A. 

https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/advisory-opinions/2012-04a

I don’t see where that same exception for a MEWA would apply to a retirement plan, unless perhaps if the “MEP” is a fully insured plan?