On May 23rd, 2019, the House of Representatives passed H.R 1994 with close to unanimous support (417 – 3). One major provision of the legislation is the creation of Pooled Plan Providers to service Open Multiple Employer Plans (MEPs).

Previous regulation required MEPs to allow only employers with a pre-existing commonality or industry connection to adopt the MEP. H.R. 1994 would allow the formation of a single trust, with adopting employers, without the requirement of commonality.

Prior to the DOL Advisory Opinion on May 25, 2012, several 401(k) service providers interpreted DOL regulation as permitting Open MEPs based on the presumption that a bone fide group is created by the pursuit of an employer sponsored plan. These service providers experienced large demand for the Open MEP due to the simplification of plan design and the reduced fiduciary status of the employer. It is a safe assumption that MEPs created with the Pooled Plan Provider would also experience this demand.

Stay tuned for the senate action. We expect it will be hotlined due to the overwhelming support in the house.