Pooled employer plans allow small businesses to offer a workplace retirement savings option with reduced burdens and costs.
The “Setting Every Community Up for Retirement Enhancement” Act (SECURE Act) was signed into law in 2019 to make saving for retirement more affordable and accessible to the ordinary American worker. To this aim, the SECURE Act established a new type of multiple employer plan (MEP) called a “pooled employer plan” (PEP).
What are PEPs?
Pooled employer plans (PEPs) allow unrelated employers that do not share a common industry or location to participate in a single, shared 401(k) plan so they can take advantage of their collective purchasing power to negotiate lower fees and better services.
Prior to the SECURE Act, the idea for a PEP of unrelated employers was referred to an “open MEP.” A “closed MEP” described a plan limited to employers in the same industry or location.
Do PEPs need an administrator?
PEPs must be administered by “pooled plan providers.” A pooled plan provider, such as a financial or professional services firm, acts as the plan administrator and is a named plan fiduciary. Decisions about PEP investment options may be made by the pooled plan provider, participating employers or another designated third party, such as an investment advisory firm.
The SECURE Act allows pooled plan providers to start operating pooled employer plans beginning in January 2021, but requires pooled plan providers to register with the Secretary of Labor and the Secretary of the Treasury before they begin operations.
Currently, the Employee Benefits Security Administration (EBSA) is working on establishing straightforward requirements for pooled plan providers to register with the Department of Labor (DOL). EBSA’s mission is to assure the security of the retirement, health, and other workplace related benefits of America’s workers and their families.
To learn more
To learn more about multiple employer plans (MEPs) and pooped employer plans (PEP), please contact CMR & Associates at 212-447-4300.
CMR & Associates’ risk management consultants provide independent retirement advice by reviewing your current plans to improve coverage and reduce cost. Through CMR’s proprietary database – The CMR Database® (comprised of some 13,000 brokers and specialists globally) – we maximize access to the insurance and retirement industry for greater options that will translate to better coverage and lower cost.
Please email CMR Associates or call 877-447-4301 or 212-447-4300 for more information.