Open vs. Closed: What 401k MEP Plan Is Right for Your Business?

As a cannabis operator, giving your team reliable and satisfactory employee benefits can be one of the features that sets your business apart from the competition. If your staff feels appreciated and protected, you’ll be able to establish and maintain a stellar reputation in the industry. Then you can expect job applications from top-performing candidates, enhanced productivity, better employee retention, and, ultimately, higher earnings.

Picking a solid retirement plan is one major aspect of taking care of your staff’s needs. While this task comes with its fair share of administrative difficulties, dependable payroll and administration service providers can greatly facilitate it. 

The multi-employer 401k plan is one of the most popular options used in the cannabis industry. Small businesses, including those in the cannabis supply chain, benefit from such an arrangement because they are able to come together and share the associated administrative challenges. Read on to learn more about this retirement plan and its types, and you’ll feel more confident about seeking a multi-employer 401k provider and marijuana HR consulting services.

What is the difference between the open and closed MEP?

All MEP plans have certain things in common, namely the fact that they’re defined-contribution, tax-advantaged retirement savings plans adopted by several otherwise unrelated employers and run by MEP sponsors. However, there are also differences between their particular types.

Closed MEP plan

This type of plan consists of at least two otherwise unrelated employers and the sponsor. The sponsor is a bona fide organization, association, or group, which has employees. This entity accepts full fiduciary liability and responsibility, including auditing, data collection, fines, and other associated risks and duties. The member employers of this entity need to share something apart from the retirement plan itself. Only they are allowed to take part in the plan. They have to be able to make decisions about the plan.

Association retirement plan

This is a subtype of the closed MEP, in which employers from different industries can participate in a single plan. Because the members are not required to have another shared interest, the plan can include self-employed company owners too. The only requirement is for them to operate in the same region or state. Alternatively, they can be entities from different areas, but belonging to the same industry.

Open MEP

The members in this kind of plan aren’t connected to each other in any way apart from their shared interest in this retirement benefit. Their participation in the plan is the only thing that ties the member employers together. Unlike with other types, this one doesn’t involve a formal group, association, or organization with employees. While members were once required to have their own individual plans and report about them separately, under the SECURE Act of 2020, all members can now have the same plan, also known as PEP.

Who do I turn to for reliable marijuana HR consulting & 401k MEP services?

Thanks to our novel service that merges multi-employer 401k administration and payroll services, Green Leaf Business Solutions gives cannabis operators an opportunity to offer employees excellent benefits. You can get easy access to ongoing expert support in all administrative aspects, including plan establishment, tracking, enrollment, and more. We’ll fine-tune your workflow and ensure full compliance with local, state, and federal laws.

We offer a handy Open Plan, which integrates various essential features, bringing you a dependable solution for payroll processing, data collection, and other administrative difficulties. It gives your employees a stable set of employer-supported retirement benefits. Reach out to us now to access this integrated tool!