Understanding Pooled Employer Plans
PEPs were established under the SECURE Act to make retirement plans more accessible and manageable for U.S. employers. They allow unrelated organizations to join a single retirement plan managed by a pooled plan provider (PPP). This arrangement significantly reduces individual employer responsibilities, as PPPs handle fiduciary duties, compliance, and administration, ensuring regulatory adherence and mitigating risks for participating employers.
How Can Growing Organizations Use PEPs?
PEPs offer numerous advantages for organizations of all sizes and situations. They can provide a comprehensive solution outsourced to experts, including plan management, monitoring and compliance. This is especially beneficial during mergers, acquisitions and spin-offs, where maintaining focus on core business activities is crucial.
Economies of scale make PEPs cost-effective, enabling smaller organizations to access high-quality retirement plans and investment options typically reserved for larger companies. Additionally, PEPs help manage increasing fiduciary, compliance, and litigation risks associated with traditional 401(k) and 403(b) plans.