AGC recently submitted official comments on a Department of Labor (DOL) proposed rulemaking intended to make it easier for smaller businesses to band together and offer retirement plans to employees. As outlined in the response, AGC appreciates the DOL’s efforts to increase retirement coverage through expanding access to Multiple Employer Plans (MEPs) for small businesses (which describes the vast majority of firms in the construction industry) and recommends that the Department further reduce barriers and liabilities of participating in a MEP, such as the joint liability for the qualification failures of every other employer in the MEP (known as the “one bad apple rule”). Additionally, AGC urges the DOL to be mindful of Chapter provided retirement plans, especially those that currently exist today, and take the necessary steps to ensure that the proposed modifications to current law do not arbitrarily disrupt the quality retirement options that these arrangements consistently provide.
Specifically, the DOL proposal would allow unrelated businesses to offer Association Retirement Plans (ARPs) by relaxing the requirement that small business have a common interest to form a MEP. ARPs would now 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). The idea is similar to association health plans (AHPs), which received a regulatory boost when, in June, the Department of Labor finalized a rule to make it easier for small businesses to join groups or associations to offer insured health coverage in the large group market at potentially more favorable pricing with less restrictive requirements.