Pooled Employer Plans

A pooled employer plan (PEP) is a simple, comprehensive 401(k) solution that allows unrelated businesses to participate in one plan managed by a pooled plan provider (PPP).

This retirement solution, ideal for businesses of any size, allows multiple employers to “pool” their resources together into one retirement plan to achieve benefits that are often only available to larger companies.    

PEPs offer several benefits

Reduced fiduciary risk and responsibility

The PPP not only sponsors the plan but is also required to be named fiduciary of the PEP and has discretion over plan administration and oversees the PEP’s 3(38) investment manager. A properly designed PEP will significantly reduce the 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

Employers are relieved of the day-to-day burden of administering the retirement plan. That job becomes the responsibility of the PPP.  

Annual audit expense eliminated or substantially reduced

If the plan is large enough to require an independent 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.

Large plan features available

Pooling resources into a common PEP allows multiple employers to experience the administrative and design features sometimes only available to larger retirement plans. 

Potential cost savings

Economies of scale resulting from more employers joining the PEP can often lead to administrative cost savings.

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