Exploring Group Retirement Arrangements: MEPs, PEPs, and DCGs

KLB Benefits Law Group

Group plans involve multiple employers combining resources to hire an administrator to run the plan, which reduces fiduciary exposure and costs compared to single-employer plans. In a group, employers share expenses and enjoy reduced fiduciary liability, making it a more cost-effective option. Unlike single-employer plans, where participating employers must be related, group plans allow unrelated employers to join and benefit from reduced costs.

The main advantage of sponsoring retirement benefits via a MEP or DCG is the reduction in expenses. By sharing costs with multiple employers, expenses like 5500 reporting and investment advisory fees become more manageable. However, a significant downside is the lack of flexibility, as employers must adhere to a fixed set of service providers and plan benefits, reducing customization options. Additionally, transitioning from a single-employer plan to a group plan can require effort and expense.

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