Small businesses have new opportunity to establish 401(k) plans

In a business Q&A with The Oklahoman, employee benefits attorney Brandon Long discussed a recently issued proposed regulation by the U.S. Department of Labor that is intended to make it easier for small businesses to jointly sponsor 401(k) retirement plans under a “multiple employer plan” (MEP).

“Many small businesses do not offer a retirement plan because it is expensive to do so and because they are worried about litigation risks,” said Long.  “For those small employers that do offer a retirement plan, their employees often pay higher fees than employees of larger employers simply because smaller employers do not have the same purchasing power. This new proposed rule is intended to level the playing field by permitting small businesses to have access to options often reserved for larger employers.”

Long explained that by pooling their resources under a MEP, small employers can gain access to the same low-cost options as larger employers and potentially reduce their legal risks as well.  The regulatory process is underway now, and he said he expects the new regulation to be finalized and in place next year.