What Are The Benefits?
Reduced Fiduciary Risk & Responsibility
A properly designed PEP will significantly reduce the adopting employer’s fiduciary risk and responsibility. The PEP removes as much of the fiduciary liability of operating a retirement plan as is allowed by law away from the adopting employer.
Reduced Administrative Responsibility
Adopting employers are relieved of the day-to-day burden of administering the retirement plan. That job becomes the responsibility of the sponsoring organization.
Large Plan Features Available to Smaller Plans
Pooling resources into a common PEP allows multiple smaller employers to experience the administrative and design features sometimes only available to larger retirement plans.
Annual Audit Expense Eliminated
If the plan is large enough to require an audit, the PEP removes the annual independent audit requirement and cost for the plan sponsor. The PPP handles much of the administrative work associated with the audit.
Potential Cost Savings
Economies of scale resulting from more employers joining the PEP can often lead to administrative cost savings.
What’s Included?
| Pooled Employer Plan | Traditional 401(k) | |
|---|---|---|
| Comprehensive Retirement Plan Governance | ✔ | ✖ |
| Remove Responsibility to Sign and File 5500 | ✔ | ✖ |
| Eliminate Plan Document Maintenance | ✔ | ✖ |
| Customized Plan Design | ✔ | ✖ |
| Considerably Reduce Employer Responsibility | ✔ | ✖ |
| Approve and Process Loans/Distributions/QDROs | ✔ | ✖ |
| Remove Liability for Fraudulent Transactions | ✔ | ✖ |
| Perform Annual Compliance Assessment and Fee Benchmarking | ✔ | ✖ |
| Eliminate Individual Plan Audit (if applicable) | ✔ | ✔ |
| Integrate Payroll | ✔ | ✔ |