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Relatively new to MEPs


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We're looking to takeover a 401(k), currently the employer is in a MEP with Tri-Net; and set up a cash balance defined benefit for the same employer.

Does the employer "terminate" participation in the MEP?  Would Tri-Net consider this a plan termination (should probably ask them) and the prospect install a 401(k) SHNE as well as the cash balance plan for 2020 minus any deferrals made in 2020 and using full year's W-2 with the Employer as the Sponsor.

Apparently this is an employee-only plan.

Any help is appreciated.

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You have a MEP when two or more unrelated employers adopt the same plan. If one of the adopting employers wishes to leave the MEP, all that is needed is for the plan sponsor and the employer in question to execute an agreement terminating that employer's participation in the MEP. This is not a plan termination, only a termination of participation. You didn't ask, but this generally does not constitute a distributable event since it is not a plan termination. Therefore the participants wouldn't be able to roll over their balances into the new plan.

I never heard of Tri-Net so I looked them up. It looks like they are a firm that handles HR functions for other companies who want to outsource those functions. I also looked them up on EFAST. I found a Tri-Net 401(k) and a Tri-Net Profit Sharing Plan but both of them are filed as single employer plans.

My guess is what they have is not a true MEP - it is probably separate plans, each with their own plan documents and 5500s, but maybe the assets are pooled together to get better pricing. See if you can get a copy of their latest SAR, it might help answer some questions.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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TriNet advertises their services in a way suggesting that they do sponsor an open MEP. Under the pre-2021 rules for such pans, I don't see how you can move prior benefits to another provider without an actual spinoff of assets into a new plan (requiring a separate 5500). My guess is that TriNet has a process to arrange that easily enough. I don't think they want to be administering remnant accounts of a former client.

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  • 7 months later...
On 6/3/2020 at 1:44 PM, Alonzo Church said:

Under the pre-2021 rules for such pans, I don't see how you can move prior benefits to another provider without an actual spinoff of assets into a new plan

Alonzo Church, would you agree that the post-2020 rules still require this? I don't think the SECURE Act made any changes in this area.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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5 hours ago, Alonzo Church said:

Luke -- I believe the SECURE Act mandated the agencies to provide guidance in this area. They have not done so.

OK. Thanks, Alonzo. Given the concern over retirement savings "leakage," I don't see them making it any easier than it currently is for an employer to pull out of a MEP, allow distributions, and then immediately start a new K plan for the same employees.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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