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Aaron Schumm, CEO of portfolio company Vestwell, explains that multi-employer plans are a good solution for some SMEs, but lack the customization needed by many and often suffer from their complexity.
Another consideration is plan design. For one company, this became an issue when it wanted to facilitate profit-sharing and, in doing so, add a more flexible eligibility investing schedule than its MEP supported. Hidden fees is another issue we've seen. We spoke with an employer de-adopting its MEP who was not told up front that it would cost an additional 25 basis points to add in revenue sharing. Small companies can learn a lot by asking the right questions and thinking about their short- and long-term vision for their 401(k) plans. After all, the goal is to best support employees not just today, but for their future as well.
