Pooled Employer Plan (PEP)
A Simple, Comprehensive 401(k) Solution
A PEP is a simplified retirement solution for businesses that allow multiple employers to “pool” their resources together into one retirement plan to achieve benefits that used to be only available to larger companies. This solution minimizes the time sponsors and advisors spend managing a 401(k) plan.
How Can Employers Offer Retirement Plans With Limited Risk?
Hear what Jeff Atwell, SVP of Fiduciary Services, has to say about how PEPs allows employees to offer a retirement plan option with limited fiduciary risk.
What Are The Benefits?
“The pooled employer plan structure is really important for the employer or the plan sponsor. They’re the ones that are having relief in terms of that ongoing due diligence of all the providers that’s now being taken away. They get the relief in terms of not having to do the audits of the plan, not having to fill out the 5500 anymore. So all those benefits offer a higher level of protection and a higher level of support and service on the participant side. This is really still their retirement plan, but what they get in the pooled employer plan that they may not get from other 401(k) plan structures is they have professionals running the plan and taking responsibility.”
Reduced Fiduciary Risk & Responsibility
A properly designed PEP will significantly reduce the adopting employer’s fiduciary risk and responsibility. The PEP removes as much of the fiduciary liability of operating a retirement plan as is allowed by law away from the adopting employer.
Reduced Administrative Responsibility
Adopting employers are relieved of the day-to-day burden of administering the retirement plan. That job becomes the responsibility of the sponsoring organization.
Large Plan Features Available to Smaller Plans
Pooling resources into a common PEP allows multiple smaller employers to experience the administrative and design features sometimes only available to larger retirement plans.
Annual Audit Expense Eliminated
If the plan is large enough to require an audit, the PEP removes the annual independent audit requirement and cost for the plan sponsor. The PPP handles much of the administrative work associated with the audit.
Potential Cost Savings
Economies of scale resulting from more employers joining the PEP can often lead to administrative cost savings.
What’s Included?
| Pooled Employer Plan | Traditional 401(k) | |
|---|---|---|
| Comprehensive Retirement Plan Governance | ✔ | ✖ |
| Remove Responsibility to Sign and File 5500 | ✔ | ✖ |
| Eliminate Plan Document Maintenance | ✔ | ✖ |
| Customized Plan Design | ✔ | ✖ |
| Considerably Reduce Employer Responsibility | ✔ | ✖ |
| Approve and Process Loans/Distributions/QDROs | ✔ | ✖ |
| Remove Liability for Fraudulent Transactions | ✔ | ✖ |
| Perform Annual Compliance Assessment and Fee Benchmarking | ✔ | ✖ |
| Eliminate Individual Plan Audit (if applicable) | ✔ | ✔ |
| Integrate Payroll | ✔ | ✔ |
Want To Offer a Retirement Plan to Your Employees?
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