07.03.19

Treasury Proposes Curtailing "One Bad Apple" Rule for MEPs

by: Greg Iacurci

The Treasury Department has issued a proposed regulation to water down the "one bad apple" rule that critics claim has prevented broader uptake of multiple employer plans (MEPs). The proposed rule would offer MEPs an exception to the one bad apple rule if certain criteria were met. For example, the employer responsible for the mistake would have to be unable or unwilling to correct it. The proposed rule also requires certain actions, such as a spin-off of plan assets and participant account balances attributable to the one bad apple employer to a separate plan and a termination of that plan. The SECURE Act now under consideration in Congress would create "open" MEPs, which would further expand the types of employers that could share a common retirement plan. The legislation has stalled in the Senate after overwhelmingly passing in the House on May 23.

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