These plans were created pursuant to the Taft-Hartley Act and offer benefits to millions of workers including: health, retirement, life insurance, training, legal services, etc. These plans are often referred to as Taft-Hartley Plans. Employers are obligated to fund benefits in accordance with their collective bargaining agreements. !A !A! 0` L aA**b @M* ApHh(EH@L A B@Ds!Ds."#4MSM5OB."4!A!L! Home Insights Articles What is a Multiemployer Pension Plan? The PEO ensures that participation in the MEP is limited to current and former employees of the PEO and of client employers as well as their beneficiaries. Each employer member must have a commonality of interest, either by participating in the same trade and industry, or being headquartered in the same geographic area (including the same metropolitan area which may span more than one state). The Final Rule provides five criteria that an employer group or association must satisfy in order to offer a MEP to its employer members. Copyright 2019by Ballard Spahr LLP. @z}:T#h[5~N~5o>w}gUciu8m8dxU}.vkvk{i+aUa._fim0_|Wk|~kxaV>+~=j;z-id#.B?VD}?$ap0p%+ hb```b``fe`a`cc@ >H 'Z3 URh Ftt!A(f`Pf-L3 ]e/.rA030Xe ; Pension benefits are calculated based on different criteria such as: In conclusion, a multiemployer pension plan offers a retirement benefit for workers whose employers are required to contribute to a collectively bargained plan. The activities of the group must be controlled by its employer members, and the employers that participate in the MEP must control the MEP in form and in substance. /Obj3 3 0 R >> 0 xref startxref The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have. Vesting decisions and timetables also play a large role in the pension plan process. In the event of a plan failure, PBGC financial support may be available which is subject to the PBGC guaranteed benefit levels. Defined benefit pension plan participants do not make investment decisions whereas defined contribution plan participants often do. Life of Bankruptcy The Final Rule provides that a bona fide PEO is capable of establishing a MEP if it meets the following requirements: Continuing Responsibility of the Bona Fide PEO or Employer Association. >> A substantial business purpose is deemed to exist if the association would be a viable entity absent the MEP coverage. To continue browsing our site, please click accept. [M^*zi!B0`ghCB 8f @46DDDc&gTE-o6|#IdDW;OMsvLvl\l;mQ.=zK6B ;WtltD=21&jh?_3fy3~#s44:e<3wm&hmh4y?3I9. The association must have a formal organizational structure with a governing body and have by-laws or other similar indications of formality.. MEP coverage must not be made available to workers outside the group of participating employer members. uuDKQGFt]GeL/GD_|AF44"" Ct]E&B,!_Tz_wJ T"?c=Y?Tv! { tyM2:$"R(3$e@DtlRvPfL hAEu$;ft#E< vA - kWy1}2>%XM44 Pzi}Zkc{zizoI^_qz}/q8?FWv(ymR%"iDzya_U]tR G (No claim to original U.S. government material.). 0000001236 00000 n trailer ?^W+ ^Xp]v*S1 ZvA!%=ANbd /XObject << Withum is among the few firms in the nation that specializes in multiemployer benefit plan audit and advisory services. The PEO has substantial control over the functions and activities of the MEP, as the plan sponsor, the plan administrator, and a named fiduciary. Like other benefit plans, multiemployer plans are required to follow the provisions of the Employee Retirement Income Security Act (ERISA). United States District Court of the District of Columbia, Employee Benefits and Executive Compensation. Read our cookie policy for more information on the cookies we use and how to delete or block them. =Gm"UgHfjSL ! However, vesting requirements may vary by plan. |4#5 # /Parent 2 0 R /ProcSet [/PDF /ImageC /ImageB /ImageI] The group or association must not be a bank or trust company, insurance issuer, broker-dealer or other similar financial service firm, or owned or controlled by such an entity. Even if the associations primary purpose in the future becomes offering MEP coverage, this requirement may still be met so long as the associations previous operations suggest that it could be viable without offering MEP coverage, assuming the organization continues its pre-MEP activities. The working owners status under the Final Rule must be periodically confirmed and monitored by the MEP. MktoForms2.loadForm("//info.withum.com", "424-KBK-582", 2154); Join Withums Multiemployer Benefits team as they take a deep dive into cyber and fraud issues surrounding benefit plans. 0000006016 00000 n It should not be construed as legal advice or legal opinion on any specific facts or circumstances. /CropBox [0 0 611 790] 0000000986 00000 n << /Type /XObject /Subtype /Image /Name /Obj3 /Width 1698 /Height 2197 /ColorSpace /DeviceGray /BitsPerComponent 1 /Length 5 0 R /Filter /CCITTFaxDecode /DecodeParms << /K -1 /Columns 1698 >> >> stream

Outsourced Accounting Systems and Services (OASyS). The PEO ensures that each client-employer that adopts the MEP acts directly as an employer of at least one employee who is a participant covered under the MEP.

Sole proprietors and other self-employed individuals may act as both employers and employees of their businesses for purposes of participating in a bona fide employer group MEP. First, lets define a multiemployer plan. 0000002718 00000 n According to the Internal Revenue Service, a PEO is an entity that enters into an agreement with a client to perform some or all of the federal employment tax withholding, reporting, and payment functions related to workers performing services for the client. These arrangements usually require the PEO to assume employment responsibilities that the employer would otherwise fulfill on its own; such as human resource tasks, employee benefit plan administration, and workers compensation claim administration. 0000012770 00000 n Working owners must work at least 20 hours per week (80 hours per month) or have certain levels of income attributable to self-employment activities. PEOs Specifically, the Final Rule expands the definition of employer under Section 3(5) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), to allow bona fide employer groups and professional employer organizations (PEOs) to act as an employer for purposes of sponsoring a MEP. 0000000909 00000 n Each employer member of the association must act directly as an employer of at least one employee who is a participant in the MEP. Our experience includes multiemployer benefit plans of all sizes, including: Multiemployer [], Get news and event information from Withum. 0000000696 00000 n Copyright 2022 Withum Smith+Brown, PC. The Democratic tax and spending priorities from last year continue to evolve. Our team members work to cultivate a unique corporate culture rooted in inclusion, strength, and togetherness. 3 0 obj Opportunity Zones. :c&QY }{GpT pd These obligations will continue until the participants are no longer covered by the MEP, or all assets are paid to the participants and beneficiaries. << The PEO must perform substantial employment functions on behalf of the client employers. Most multiemployer plans are administered and governed by a board of trustees with labor and management equally represented. Ballard Spahrs Employee Benefits and Executive Compensationattorneys can assist employers, employer organizations and PEOs navigate the complex regulatory scheme in regard to MEPs to ensure compliance. The MEP structure is intended to broaden the availability of employer-sponsored retirement plans, especially among small employers, by reducing the cost and regulatory complexity of plan administration. 0000008932 00000 n

0000001629 00000 n endstream endobj 9 0 obj <> endobj 10 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text]>>/Rotate 0/Type/Page>> endobj 11 0 obj <> endobj 12 0 obj <> endobj 13 0 obj <> endobj 14 0 obj <> endobj 15 0 obj <> endobj 16 0 obj <>stream The Final Rule recognizes that PEOs traditionally act indirectly in the interest of [their client] employers when they perform these employment functions on behalf of their employer clients. 0000013014 00000 n 0000005692 00000 n 0000000016 00000 n Financial Services Resources The PEO assumes responsibility for and has substantial control over the functions and activities of any employee benefits which the service contract may require the PEO to provide. Author: Fabricia Edwards, CPA | [emailprotected]. G/R\pyt%YthfxN2o6:}Qa|N3-8pJY y"6. Consequently, the MEP sponsor, and not the individual employers, would serve as the MEPs plan administrator and named fiduciary, subject to all of ERISAs provisions, including the fiduciary, reporting and disclosure requirements, and the prohibited transaction provisions. Vesting is defined by the duration of participants years of covered service working for a specific employer. 0000002147 00000 n 8 0 obj <> endobj Defined benefit retirement plans must pay annual premiums to the Pension Benefit Guaranty Corporation (PBGC). <]/Prev 20348>> PBGC coverage requirements are determined by ERISA. The Department described several factors that are important in determining whether the requisite control exists, including whether the employers regularly nominate and remove officials who preside over the associations governing bodies, and whether the employers wield approval and veto power over decisions related to the formation and design of the MEP. When a participating employer terminates its relationship with a bona fide employer group or PEO, the termination does not remove the fiduciary obligations that the group or PEO owes to the participants as the plan administrator and named fiduciary. /Type /Page The DOL employs a general facts and circumstances test for this requirement. Forensics, Investigations and White-Collar Criminal Defense, Insolvency, Bankruptcy and Receivership Accounting, International Financial Reporting and Multinational Organizations, Business Relocation This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. The trustees are fiduciaries under ERISA and must act in the sole interest of the plan and its participants and beneficiaries, regardless of who elects or appoints the trustee. x.ba58c|3J`O"0 !EQ/lferIs]OUH\Pcy>/|`=Ev_8Nhx;I8{^ {7|7jd:,"OzS*{^@0"\3%[P8)5x0?)alp(1LN2J-Ip_ "#-Uam FqzM"#UURUZ |!MrFRR'}U#D]?fgtvMkn+I%bKM=_@|oKg67jAa4""1&j2nM7*En,Gn&UD4D'FiFh73c7fb13^13xb1f4#h'DYQD#c7F3hc6o13yc1f3yb1fc1f3yc1f#]3b1c1F2^/"x/f$E2 a4iM5M;4i[Mm=4Mwa0eLx/f3o13h1FoGmFy^1Exc1v^/b// iip4M5N;M5M44NNM5M5MVT[PDDD!D N BA a0ApA0B'A%;@ NG @1@a TT A0B! [UMSMSM;L'ii.~WF3c1f"c1eaBiwkihFD\ BGAe A B LAaA! Coronavirus (COVID-19) `4.4bS6+Qb[/ Bq\DD0UB"""""". Withums Multiemployer Benefit Plans Group, The employees years of service at a specific company or organization. We use cookies to improve your experience and optimize user-friendliness. The PEO plays a definite and contractually specified role in recruiting, hiring, and firing workers of its client employers that adopt the MEP. However, the Department continues to promote this test in the MEP Final Rule.