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.
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Why MEPs aren't right for all 401(k) plan sponsors
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.
