July 30, 2019, Washington, D.C. —On Monday, July 29, the US Department of Labor issued the final rule regarding Association Retirement Plans (ARP) – to help small businesses.
“The purpose of this rule and the reason we wrote this rule is because there are a lot of smaller employers in particular that would like to set up a 401(k) plan for their workers, but they don’t for a number of reasons. One is expense; probably an even larger problem of concern to a smaller employer is the administrative [duties], the paperwork and the IRS filings that go along with offering a 401(k)," said Preston Rutledge, assistant secretary for Labor’s Employee Benefits Security Administration.
The final rule states that as an “employer,” a group or association, as well as a PEO, can sponsor a defined contribution retirement plan for its members (collectively referred to as “multiple employer plans” or “MEPs” unless otherwise specified).
Approximately 38 million employees of smaller and midsized employers are not covered by a 401(k) at work. This (ARP) is “the most powerful method we have used to help people save for retirement,” Rutledge continues.
The effective date for the final rule issued yesterday is Sept. 30. Check out the Department of Labor's fact sheet on ARPs.