Frequently Asked Questions

The SECURE ACT has passed and has paved the way for Pooled Employer Plans (PEPs). PEPs are a subtype of Multiple Employer Plans (MEP) that have been in existence for decades. A PEP allows separate, unrelated, employers to pool together their retirement plans into one single plan. These plans create multiple benefits including but not limited to the following:

  • REMOVAL OF AUDIT AND FORM 5500 FILINGS – The PEP removes your audit responsibility typically a cost of $5k - $15k annually and the headache of filing an annual Form 5500 tax filing.

  • ECONOMIES OF SCALE PRICING – Because of the combined purchasing power of group plan administrative and investment costs are able to be reduced significantly.

  • FIDUCIARY OUTSOURCING– Eliminates the majority of your fiduciary responsibility that you have under ERISA.

 

A Multiple Employer Plan is a retirement benefit plan that is offered at the group level among a set of employers. The group shares a common plan sponsor, but each adopting employer can choose their own benefit offerings.  Typically, Multiple Employer Plans are sponsored by Associations, PEO’s, Trade Associations, Payroll Companies, etc. Multiple Employer Plans have been deployed successfully for years. Multiple employer plans enable small businesses to participate in a single, professionally administered plan that affords them economies of scale and little to no fiduciary responsibility.

Multiple Employer Plans significantly ease the administrative burden for smaller employers wishing to band together to offer better retirement plan options for employees.

 

Multiple Employer Plans significant help business with their retirement plan offerings. They allow businesses to compete with the offerings of larger corporate companies. MEP’s offer a plethora of value including but not limited to the following:

  • Reduce costs and administrative burdens - Centralized plan administration and management, along with economies of scale, reduce both administrative burdens and costs—costs that often are borne by the plan’s participants and beneficiaries and serve to reduce retirement savings.
  • Reduce fiduciary responsibilities for small employers sponsoring retirement plans - Fiduciary and administrative responsibilities will be discharged by plan and investment professionals, thereby enhancing the fiduciary and other protections afforded to employees.
  • Provide better retirement outcomes for employees - A properly designed MEP will promote saving by employees through the use of automatic enrollment and automatic escalation of their contributions. MEPs may further encourage appropriate investment behavior by providing a choice of investment options selected by investment professionals, better ensuring that plan participants will be able to tailor their portfolios to their investment goals and tolerance for risk. They also will provide enhanced opportunities for cost-effective participant education programs through pooling of resources with other employers. Finally, they will drive positive outcomes by providing participants with access to lifetime income solutions within their plans. Because the ultimate goal of a retirement plan is to allow participants to generate the income they need once they have retired, lifetime income solutions are a critical component of plan design.
  • Help small businesses compete with larger companies for talent - By giving small businesses a way to help their employees save and invest for retirement in a tax- advantaged plan, small employers will be better equipped to compete with larger employers for talent. Surveys consistently show that workers consider retirement savings plans a valued employee benefit.