DOL Paves the Way for Combined Small Business Retirement Plans

The DOL recently released a final rule intended to provide small businesses with greater access to quality and affordable retirement plans.  The new rule, effective September 30, 2019, clarifies that a small employer group (association) -- such as employers in the same locale or particular industry/trade -- can band together and offer a defined contribution retirement plan to their employees through an Association Retirement Plan (“ARP”).  This significantly relaxes the “commonality” standard previously required for separate employers to offer a combined retirement plan.  Further, working owners without employees, including sole proprietors, can also participate in ARPs.  Although various restrictions apply, it is expected that ARPs will allow employer groups to achieve economies of scale when negotiating with providers as well as lower administrative fees.  The end result is expected to provide a means for small employers to offer more competitive benefit packages to their employees.

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