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Home > Resources > Retirement Plans > Pooled Employer Plans – Coming Soon

Pooled Employer Plans – Coming Soon

July 27, 2020 by Jim Paul

Last December before panic set in, Congress passed the SECURE Act.  Beginning in 2021, banks, insurance companies, and other financial institutions may begin offering Pooled Employer Plans (PEPs). A PEP is a 401(k) or profit-sharing plan with multiple, unrelated employers. Assets are held by one institutional trustee and the plan has one fiduciary administrator. The noble idea behind PEPs is to expand retirement plan coverage by making it easier for small and mid-size employers to adopt 401(k) plans and providing some measure of fiduciary support and protection. Now is a good time to start thinking about whether a PEP is a good idea for your company. When all the details and requirements are considered, will a PEP meet your company’s retirement plan needs?

PEPs offer more limited options for plan design with fiduciary administration and a single Form 5500 filing for all participating employers. They may provide access to institutional-grade investments for smaller plans. For investment providers, PEPs may be an opportunity to roll up assets of many smaller retirement plans into one big investment pool. Plan sponsors still retain some fiduciary responsibility for retirement plans under the PEP model. It remains to be seen whether PEPs will offer the same level of customer service provided by a TPA and what fees will be charged to join a PEP. 

Companies considering PEPs need to do their due diligence. PEPs may be a good fit for some companies, but there are many issues to consider ranging from the services provided and fees to investment options, oversight, and co-fiduciary responsibility. In upcoming articles, we will walk through the details and issues to give you the information you need to evaluate whether it makes sense for your company to join a PEP.   

Filed Under: Retirement Plans

About Jim Paul

Jim has done almost everything in the employee benefits arena, from 401(k) plan compliance and corrections to executive compensation, due diligence and counseling employers on benefits issues in mergers and acquisitions. The problems that he has not solved are few and far between. His clients rely on him for practical, efficient, effective guidance.
Learn More About Jim

EDITOR’S NOTE: We did the best we could to make sure the information and advice in this article were current as of the date of posting to the web site. Because the laws and the government’s rules are changing all the time, you should check with us if you are unsure whether this material is still current. Of course, none of our articles are meant to serve as specific legal advice to you. If you would like that, please call us at (916) 357-5660.

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