A multiple employer plan is a plan sponsored by two or more employers where at least two of the sponsoring employers are not part of a controlled group or affiliated service group. Multiple employer plans are most commonly used by PEOs (professional employer organizations), which are organizations used for the outsourcing of payroll, workers' compensation, human resources and employee benefits administration. These organizations will almost always offer retirement plan benefits to its clients by allowing them to become employer sponsors of their multiple employer plan. This type of plan will usually take the form of some type of defined contribution 401(k) plan.
Any group of unrelated businesses can co-sponsor a multiple employer plan. A big advantage to a multiple employer plan is the cost savings that it can provide to the individual businesses participating in the plan versus each business setting up their own individual plan.
A multiple employer plan can also provide investment professionals and other service providers with a low cost retirement plan solution to present to prospective clients. If you are interested in setting up a multiple employer plan please contact the DBC office.