Department of Labor Issues Final Rule to Allow Associations and PEOs to Sponsor Retirement Plans

Final rule defines a PEO as an employer under ERISA and clarifies rules for PEOs to offer retirement benefits

On July 29, 2019, the Department of Labor (the “Department”) issued a final rule to facilitate and expand the availability of multiple employer defined contribution plans (“MEPs”). The final rule provides clarity regarding the types of “bona fide” groups or associations of employers as well as professional employer organizations (“PEOs”) that are permitted to sponsor retirement plans.NAPEO supports the rule, as it is another step in in formalizing the legal framework for PEOs to provide benefits for their client’s shared employees. This action, along with the passage of the Small Business Efficiency Act contained in the Tax Increase Prevention Act (H.R. 5771, Public Law 113‐295) which created the voluntary IRS PEO Certification Program, demonstrates the federal government’s recognition of the PEO industry and the important role it plays in supporting our nation’s small businesses.With respect to PEOs, the final rule does two things. First, it states that a “bona fide” PEO is capable of establishing a MEP. The rule then creates a safe harbor criteria for determining whether a PEO that sponsors a MEP is performing essential employment functions.
  • A copy of the final rule can be found here.
  • A summary of the final rule can be found here.
  • A detailed analysis on this issue from the Groom Law Group can be found here.
  • A recording of a NAPEO-sponsored webinar on this issue can be found here.
  • A copy of NAPEO’s comments on the proposed rule can be found here.
NAPEO Article can be found:

https://www.napeo.org/advocacy/what-we-advocate/federal-government-affairs/peos-retirement-regulation/dol-meps-finalrule

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The PEO Compass is a friendly convergence of professionals and friends in the PEO industry sharing insights, ideas and intelligence to make us all better.All writers specialize in Professional Employer Organization (PEO) business services such as Workers Compensation, Mergers & Acquisitions, Data Management, Employment Practices Liability (EPLI), Cyber Liability Insurance, Health Insurance, Occupational Accident Insurance, Business Insurance, Client Company, Casualty Insurance, Disability Insurance and more.To contact a PEO expert, please visit Libertate Insurance Services, LLC and RiskMD.  

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