Investment growth

Pooled Employer Plans (PEPs) – Retirement Plans For Small Businesses

On April 7 of this year, the House Ways and Means Committee unanimously approved sweeping legislation to increase retirement savings for Small Business Owners and their employees by using Pooled Employer Plans.

The recent Secure Act (The Securing a Strong Retirement Act of 2021) provides the opportunity for separate, smaller firm employers who sponsor 401(k) plans to band together and form a single Pooled Employer Plan, (PEP).


Within the pool employer plan an employer can:

  1.  Outsource its 401k plans, along with the fiduciary and administrative costs to the pooled plan provider who sponsors the PEP and assumes the related risks and liabilities.
  2. The firm can also outsource plan audit and forms 5500 filing responsibilities which would be accepted by the pooled plan provider serving as the administrator of the plan.
  3. The PEP would provide access to more tailored investment options with oversight from a fiduciary expert.
  4. The plan lowers administrative and record-keeping fees, based on the economies of scale associated with being part of the Pooled Employer Plan, (PEP).
  5. Each employer can also maintain their own 401(k) plan design.
  6. Employers can feel secure in knowing that any operational failure by another PEP firm member will not impact other PEP member firms.

The security that operational failures by another employer on the PDP will not affect other employers in the same program.

Private Equity Fund Benefits

Within a private equity fund likely sponsors of 401k plans can also benefit with the new PEP programs. Under the pep model the private equity fund would pull together each member firm’s 401-(k) plan into a PEP and all the above benefits would apply to each member small business firm. and the member portfolio companies could transfer many of the fiduciary and administrative burdens that come with running a firm’s 401(k) plan,

Medical science has improved the longevity of both employees and employers. It is now necessary to focus more attention to providing for much longer periods of retirement. Please give us a call at (419) 726-9000 if you would like more information on how your firm, or a firm you know, can benefit with a review of the Pooled Employer Plan and our investment process.

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