EBSA Issues Proposed Definition of Employer for Association Retirement Plans and Other Multiple-Employer Plans (MEPs); Comments Due December 24

​​The Employee Benefits Security Administration (EBSA) released a proposed rule stating association retirement plans could be offered by associations of employers in a city, county, state, or a multi-state metropolitan area, or in a particular industry nationwide. Sole proprietors, as well as their families, would also be permitted to join such plans. In addition to association sponsors, the plans could also be sponsored through Professional Employer Organizations (PEO). A PEO is a human-resource company that contractually assumes certain employment responsibilities for its client employers. The proposed rule clarifies that employer groups or associations and PEOs can, when satisfying certain criteria, constitute “employers” within the meaning of section 3(5) of Employee Retirement Income Security Act (ERISA) for purposes of establishing or maintaining an individual account “employee pension benefit plan” within the meaning of ERISA section 3(2). 

The proposed rule would only apply to defined contribution (DC) plans.

Some highlights under the proposal include:
  • An employer generally would be required to execute a participation agreement or similar instrument that lays out the rights and obligations of the MEP sponsor and the participating employer before participating. But these employers would not be viewed as sponsoring their own separate, individual plans under ERISA. Rather, the MEP would constitute a single employee benefit plan for purposes of title I of ERISA. The MEP sponsor—and not the participating employers—would generally be responsible, as plan administrator, for compliance with the requirements of title I of ERISA, including reporting, disclosure, and fiduciary obligations. 
  • Contains seven criteria for determining whether a group or association of employers is a “bona fide” group or association of employers for purposes of ERISA section 3(5) and the regulation. With one exception, these criteria parallel those used in the association health plan (AHP) rule and are intended to have the same meaning and effect here, as they have there. 
  • Establishes four criteria that must be met for a PEO to qualify as a “bona fide” PEO that may act “indirectly in the interest of [its client] employers” and, consequently, as an “employer” under ERISA section 3(5) for purposes of sponsoring a MEP covering the employees of client employers. 


Corporate MEPs and open MEPs are outside the scope of this proposed rule. The Department of Labor (DOL) seeks comments on whether the department should address one or more of these other categories of MEPs, by regulation or otherwise.
  • “Corporate MEPs” are plans that cover employees of related employers which are not in the same controlled group or affiliated service group. While corporate MEPs are not directly addressed in this guidance, the DOL does not intend to convey that a corporate MEP could not be a single employee benefit plan under title I of ERISA. Rather, comments specifically are requested on whether any regulatory provisions or other guidance is needed to address the MEP status of plans maintained by such related employers.
  • “Open MEPs” are plans that cover employees of employers with no relationship other than their joint participation in the MEP. Many recent legislative proposals center on these arrangements, which are often referred to as “pooled employer plans.” Comments specifically are requested on whether, and under what circumstances, so-called “open MEPs” or “pooled employer plans,” as depicted in the various legislative proposals, could be operated as an employment-based arrangement, as contemplated by ERISA’s text. To the extent commenters believe that these arrangements should be addressed in this or a future rulemaking, the DOL asks that the comments include a discussion of why such an arrangement should be treated as one employee benefit plan within the meaning of title I of ERISA rather than as a collection of separate employer plans being serviced by a commercial enterprise that provides retirement plan products and services. 

Comments are due December 24, 2018.