Fees will be one of the largest incentives to open MEPs, she said. “If the fee is somewhat alleviated or mitigated for small plan sponsor, that will be a huge draw for some businesses,” Stokes said.
Limiting business owners’ fiduciary liability by removing the “bad apple” rule will also make open MEPS more attractive.
Still, she said, both business owners and financial advisors need to look carefully at plans. “When you take a closer look, you see you can never fully offload all fiduciary responsibility,” Stokes said.
While smaller businesses that offer an open MEPs “won’t have the responsibility for choosing underlying investments, they would still be responsible for choosing the MEPs and have an ongoing responsibility for evaluating the provider,” she said.
Total fees will also need to be considered when selecting an open MEPs plan. “It may not always be less expensive when compared with other offerings,” Stokes said.
“You do ideally hope that the smaller plan sponsor will be able to achieve the benefit of an economy of scale that larger plans with more assets currently enjoy,” she said.
Open MEPs are most likely to succeed if they offer a variety of plan and fund options, along with lower costs than small businesses are paying now, the Empower study found.
The way MEPs are designed with regard to investment control and plan features will also be major factor in whether or not the plans will take off, according to Stokes.
“Some plan sponsors may want to have more control over their underlying investments and relinquishing that may not be the most appealing when they see what their options are with an open MEP,” Stokes said. “Level of call center service support, portal interface, printed educational materials and financial wellness tools—all of those things are the next level of service that some employers may want and not be able to access with a MEP."
Passing a senate counterpart to the Secure Act “remains a top priority,” said Senate Finance Committee Chairman Chuck Grassley, R-Iowa.