It’s Time to Rethink Your Old 401(k)


Chances are, you signed up for your 401(k) program and haven’t looked at it in a while. Possibly a long while. If this sounds like you, it’s time to rethink your old 401(k) because there are new and better options available.

Smaller business owners often take advantage of what is called a “pooled plan” or Multiple Employer Plan (MEP) for retirement savings, where several unrelated companies participate in one retirement fund that is administered by an overseeing party or trustee known as the sponsor, who has fiduciary responsibility for that plan.

Related: Multiple Employer Plan Definition


The “Bad Apple” Rule


In 2021 the rules become more favorable to pooled plan sponsors. One is called the “bad apple rule.” In the past, the sponsor of the MEP had to be careful to make sure that all participants in the plan, sponsors and co-sponsoring companies acted appropriately. If one participant failed, it could spoil the whole pool for all participants, like a bad apple in a barrel.

An example of a failure could be that one of the participants did not make their contributions on time. If the plan stated that an employee was eligible for benefits after a 60-day trial period, and at 90 days that employee realized they weren’t told that they could participate in the plan, that entire plan could be tainted, and all participating companies in the MEP could suffer the consequences. The sponsor had to keep on top of each participant to ensure that all aspects of the plan were constantly met. This took time and effort, and things could potentially slip through the cracks.

With the new rules, starting January 1, 2021, the sponsor has the ability to remove a company from the pool if conditions are not met, thus avoiding tainting the entire pool.


Why a MEP 401(k) Plan is Good for Small or Medium-Sized Businesses


Pooled Resources Gives Better Options:

When it’s time to rethink your old 401(k) plan, consider enrolling in a MEP. By combining the assets of a group of companies, you get the same benefits and leverage as if you were a larger company with millions of dollars to assign.


Shared Administrative Burden:

Several companies can join together to offer their employees a tax-advantaged retirement savings plan.


Easy Enrollment:

You can enroll at any time, and don’t have to wait until year-end to make your decision.


Low, Low Yearly Fees:

For just $890 a year, you can participate in a MEP that is managed by us here at Benefit Providers/ECCA Payroll Services. We’ve been in business for decades providing outstanding benefits to business owners just like yourself, and know how to find the best plan for your needs.


Trust Your 401(k) Administration to Benefit Providers

As outside specialists in 401(k) planning, you have the benefit of more than 30 years of experience and reduced potential personal liability, along with faster, easier and less expensive administration with Benefit Providers. It’s worth taking a look at how a pooled plan, or MEP, can benefit your small to medium-sized business. We offer a free, no-obligation consultation.


Contact Benefit Providers/ECCA Payroll Specialists today at 703-370-2226 or to find out how you can benefit.

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