Power of More Group 401k

What is a Pooled Employer Plan (PEP)?

  • Designed to benefit employees of two or more adopting employers, PEPs are qualified retirement plans that can be sponsored and offered only by a Pooled Plan Provider (PPP). Employers that adopt a PEP need not share a business nexus to form this group 401(k) Plan; thus PEPs are sometimes referred to as “open MEPs” and, as they increase in number, will likely be more readily available than MEPs


What are the Key Characteristics of a PEP?

  • Defined by ERISA Section 3(43)
  • PPPs must meet the requirements outlined in ERISA Section 3(43), as well as other requirements outlined by the US Treasury Department
  • In addition to the PPP, there is a centralized 3(21) Investment Advisor and/or 3(38) Investment Fiduciary, as well as a 3(16) Plan Administrator
  • A PPP must register with the US Secretary of Labor 30 days before beginning operations, using EBSA Form PR (Pooled Plan Provider Registration). Filing this form also satisfies the SECURE Act requirement that the PPP must register with the Treasury Department. Registration requirements may evolve as PEPs gain more traction in the marketplace.
  • Auditable only if the PEP falls outside the audit exemption rules of no more than 1,000 eligible participants or no single adopting employer with more than 100 employees.
  • Employers adopting a PEP plan for their 401(k) may have challenges combining the 401(k) with a DefinedBenefit or Cash Balance Plan, depending upon the flexibilities the PEP will permit.
  • One Form 5500 is filed for the entire plan

What are the Benefits of PEPs Compared to Single-Employer Plans?

  • Significantly fewer administrative duties

  • Lower costs through greater plan asset totals

  • Mitigation of fiduciary responsibilities and liabilities

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