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How do the IRS and DOL determine whether a closed MEP exists?


“What criteria do the Internal Revenue Service (IRS) and Department of Labor (DOL) consider when determining whether a single multiple employer plan (MEP) exists for an association of employers?”

ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans.  We bring Case of the Week to you to highlight the most relevant topics affecting your business. A recent call with an advisor in Oregon is representative of a common inquiry involving multiple employer plans.

Highlights of discussion

  1. How members are solicited;
  2. Who is entitled to participate and who actually participates in the association;
  3. The process by which the association was formed,
  4. The purposes for which it was formed, and what, if any, were the preexisting relationships of its members;
  5. The powers, rights, and privileges of employer members that exist by reason of their status as employers; and
  6. Who actually controls and directs the activities and operations of the benefit program.
  1. Well-established associations whose members are very similar (e.g., members of a particular trade possibly within a specific geographic region);
  2. Employers related by common ownership (but where ownership does not reach the level to require aggregation under the controlled group rules);
  3. Employers who regularly and closely cooperate in serving a particular group of clients (but do not aggregate under the affiliated service group rules); and
  4. Certain Professional Employer Organizations (PEOs).


Under the current regulatory framework, whether several independent employers represent a bona fide employer group or association that is eligible to maintain a closed MEP depends on the facts and circumstances of the particular situation, taking into consideration a number of factors as identified by the DOL in several of its advisory opinions on the topic.