US. Association Retirement Plans – An Idea Whose Time Has Come
Recent press accounts have noted that two educational institution associations recently established group retirement plans for their employer members. Such association retirement plans offer potential cost savings and administrative ease to participating employers, and we expect to see more of them in the future.
An Association Retirement Plan – What Is It?
An association retirement plan is a single retirement plan – either a 403(b) plan (for 501(c)(3) organizations) or a 401(k) plan (for other types of organizations) – that is available to employer members of “bona fide associations.” It would typically have the following characteristics:
- A single plan document, with each participating employer executing a participation agreement. Within parameters established by the association, the participation agreement would permit a participating employer to choose from among eligibility, contribution, vesting, and distribution alternatives for its employees. (This differs from the standard IRS pre-approved plan approach, under which each plan sponsor is deemed to have separately adopted its own pre-approved plan.)
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