IRS Issues Proposed Regulations for Multiple Employer Plans

Today’s edition of the Federal Register contains the official version of new IRS proposed regulations on multiple employer plans (MEPs). Under such arrangements several employers elect to participate in a common plan. Objectives of these arrangements can include sharing of administrative burden and cost, and centralizing certain plan operation functions.

The new proposed guidance would revise 1979 IRS final regulations on MEPs. One key revision being proposed would address the so-called “bad apple” rule, under which an entire MEP could fail to meet qualification requirements because of a compliance failure by one employer. This is known as the “unified plan rule.” These regulations propose an exception to the unified plan rule, and—if certain requirements are met—compliance failures by individual participating employers need not jeopardize the entire MEP.

Public comments may be submitted for a 90-day period that will end October 1, 2019.