What is The Open MEP Multiple Employer Plan (“The Open MEP”)?


The Open MEP offers large plan solutions to small and mid-sized businesses

The Open MEP is a fee-based, qualified 401(k) retirement plan established under 413(c) of the Internal Revenue Code that permits unaffiliated employers to adopt into a retirement plan sponsored by an outside entity that bears responsibility for administering the plan.

The Open MEP is a fully-integrated yet fully customizable, turn-key retirement plan designed to reduce employer and personal fiduciary liability. Based on the unique structure of this plan, fiduciary liability is transferred to Summit Trust Company as Plan Sponsor and Trustee and further to Advisor (an ERISA §3 (38) fiduciary) via a contract executed between Summit Trust Company (the plan sponsor and trustee) and Advisor.

The 401(k) world is riddled with high-priced annuity products. This solution is not an annuity. All fees and expenses are fully disclosed and extremely competitive.

The Open MEP is designed with the different needs of each individual adopting agency and affiliated partners. The plan offers these agencies and partners to:

  • Combine resources to achieve economies of scale, lowering expenses and better positioning your employees for a successful retirement outcome.
  • ‘Open Architecture’ investment platform, free of any potential conflicts-of-interest.
  • Significantly reduce fiduciary liability for Adopting Employer. Summit trust company carries the overall fiduciary burden as plan sponsor and trustee.
  • Current advisor or broker may be retained to deliver continued service and support.

The plan will utilize an “open architecture” investment platform, allowing access to the most appropriate funding vehicles with no proprietary requirements. Traditional mutual funds, along with collective investment funds and ETFs may be utilized in both managed fund-of-fund and core style-box strategies. This structure allows the Plan to make investment decisions based on quantitative and qualitative analysis rather than on advertising dollars.

How does the Open MEP Operate?


When established, The Open MEP allows a Adopting Employer to provide its employees with a 401(k) platform that they can adopt as a plan to replace their current plan.

At the participant level, the plan will feel very much the same as any 401(k) plan available in the marketplace. Participants will have access to their plan online, they can choose to receive statements electronically or on paper, they will be provided with education about the plan and its investment options and they can take loans and hardship withdrawals, and will continue to be able to save for retirement in an employer sponsored plan.

While a Adopting Employer retains all of the flexibility in design that they would have in most other plans, they will no longer incur the expense of filing an IRS Form 5500, they will not have to incur a costly annual plan audit, they are removed as the plan sponsor and trustee for their retirement plan and most importantly employer fiduciary liability is reduced as the The Open MEP transfers personal liability to an independent fiduciary.

What are the major differences between the traditional 401(k) and
The Open MEP with regards to employer features, responsibilities and liabilities?


    Traditional 401k Plan

  • Employer serves as Plan Sponsor and named fiduciary
  • Employer may serve as Trustee of Plan
  • Employer designs Plan Document and maintain qualified status
  • Employer produces and maintains an Investment Policy Statement (IPS)
  • Employer complies with ERISA Section 404(c) provisions for participant communication, including but not limited to:
    • Notice to participants of intention to comply with 404(c)
    • A description of investment alternatives available in the Plan
    • Description of transaction fees and expenses which affect the participant account balance
  • Employer provides prospectus delivery to participants on investment alternatives
  • Employer maintains copies on file for prospectuses, financial statements and reports provided to Plan
  • Employer oversees and manages process, in conjunction with TPA, for annual filing of Form 5500
  • Employer provides for annual audit of the Plan
  • Employer conducts periodic investment committee meetings
  • Employer administers participant loans in compliance with statutory requirements of non-discrimination, tracking of loan payments including interest charges
  • Employer administers hardship withdrawals in compliance with the Hardship Rules defined in the Pension Protection Act of 2006
  • Employer distributes enrollment materials to all eligible employees including Summary Plan Description, 404(c) Compliance information,Qualified Default investment Alternative (QDIA), and explanation of fees & expenses
  • Employer reviews and validate compliance testing
  • Employer submits Year-End census data to TPA
  • Employer distributes required annual notices to participants (e.g. Safe Harbor)
  • Employer coordinates enrollment and employee education meetings
  • Employer administers Distribution and Rollover requests for terminated employees
  • Employer pays for annual audit

    The Open MEP

    Eliminate the burdens associated with a traditional 401(k) by Signing up for the Open MEP 401(k) plan.

  • Serve as adopting employer to the Plan
  • Provide initial Year-to-Date employee census file
  • Submit timely and accurate payroll data each pay period
  • Provide requested annual information for year-end testing