Everyone Knows About MEPs & PEPs, but What’s a GoP?
The SECURE Act is a bipartisan bill designed to improve U.S. workers’ ability to save for retirement that was signed into law by President Donald Trump on December 20, 2019.
The SECURE Act made a number of changes to retirement plans, most of which are very well documented and publicized by professionals in our industry.
For example, there were changes made to eligibility rules surrounding 401(k) plans and new tax credits offered to small companies who start a plan for their employees. There were also significant enhancements to Multiple Employer Plans (MEPs) and Pooled Employer Plans (PEPs).
If you search the internet, you’ll find plenty of details highlighting most of the changes introduced in the act, with one exception – The creation of the Group of Plans (GoPs). It almost seems as if our industry has missed that the SECURE Act also opened the door for a brand-new way to operate pooled plans; we now have MEPs, PEPs & GoPs!
What is a GoP?
A Group of Plans or GoPs are a new structure for plans established by the SECURE Act. GoPs look and feel a lot like an “Open MEP”, with some key differences. A GoP, can most simply be described as a collection of single-employer plans that files one common Form 5500.
Key Highlights of a GoP:
- Businesses do not need to have any commonality to be part of a GoP.
- A GoP is not considered a single plan, but rather a group of plans made up of individual adopting employers. That said, even though they are individual plans, they may file a single Form 5500 annually (for the entire group).
- GoPs require that all plans must:
- Be defined contribution plans.
- Have the same Trustee.
- Have the same Named Fiduciary (or named fiduciaries)
- Have the same Administrator.
- Use the same plan year.
- Offer the same investments.
Best of MEPs & PEPs?
A GoP’s selling points include, unlike a MEP, set-up time may be less complex, and they can be a good solution for employers setting up their first plan or looking to move from an individual plan to a GoP.
Unfortunately, there are a number of questions left unanswered by the SECURE Act about GoPs and how they will operate, most notably when audits will be required and how they will need to be carried out. We expect more guidance from the DOL and the Treasury in the coming months to clarify the finer points of GoPs.
CRS sees very significant possibilities from this new option and expects this will be seen, someday, as a major component of the SECURE Act.
GoPs offer the best of MEPs and PEPs and may very well be the future of pooled plan arrangements!
Want to learn more?
If you’d like to learn more about pooled plan arrangements, sign up to attend our upcoming Webinar, All things MEP, PEP, Exchange, GoP – Impact on 401(k) Business Going Forward.
Please join us as Brad Campbell (Faegre Drinker Biddle & Reath), Bryan Otis (Transamerica), Steve Silverman (American Century) and Michael Davis (CRS) discuss the future of multiple employer plans and what the retirement landscape will look like in the near future.
Date: Wednesday, February 24, 2021
Time: 6:30am PT / 8:30am CT / 9:30am ET.
Michael Davis has been in the retirement plan industry since 1994 and is our Vice President of Sales at CRS. Michael can be reached via email at email@example.com.