Compliant and Cost-Effective Retirement Plans for Employers

A pooled employer plan (PEP) 401(k) is a type of defined contribution retirement plan that allows unrelated employers to participate in a single plan managed by a pooled plan provider (PPP). Established under the SECURE Act, the PEP structure is designed to reduce administrative responsibilities and fiduciary liability for business owners compared to a traditional 401(k) plan. The PPP handles plan document creation, plan management, recordkeeping and advisory services—consolidating these roles under one provider.

Unlike a multiple-employer plan (MEP), participating employers in a PEP do not need to share a common industry or business relationship. This makes it an efficient retirement savings solution for small businesses and startups that want access to professionally managed investment options, lower administrative costs and simplified compliance. Matching contributions, enrollment and distributions are still customized at the employer level.

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A pooled employer plan (PEP) offers cost and operational efficiencies for companies looking to provide a defined contribution plan without the administrative complexity of a single-employer plan. By joining a PEP, the plan sponsor shifts key responsibilities—such as compliance, fiduciary oversight and investment selection—to the PEP provider and its selected service providers, including the investment advisor, investment manager and third-party administrator (TPA).

Benefits include lower costs due to pooled plan assets, reduced fiduciary liability with a named fiduciary in place and access to experienced service providers who manage enrollment, distributions and reporting. For human resources teams, this simplifies retirement plan management while expanding retirement plan options available under the SECURE Act 2.0. Businesses can focus on supporting employees while the PEP provider handles ongoing plan operations.

While pooled employer plans (PEPs) reduce administrative responsibilities, they may limit flexibility in plan design compared to a traditional 401(k) or single-employer plan. Participating employers must follow the terms set by the pooled plan provider (PPP), including standardized eligibility rules, vesting schedules, investment options and distributions. This structure can make it difficult for some businesses to customize retirement benefits or align matching contributions with their compensation strategies.

Since the PEP provider and named fiduciary manage plan administration, recordkeeping and investment management, employers may have less direct control. Switching providers or making plan adjustments can be more complex than with single-employer plans. Business owners should also evaluate how fiduciary responsibilities are shared, confirm how service providers handle Form 5500 filings and assess whether the economies of scale truly reduce administrative costs for their organization. Understanding the ERISA implications and overall plan management structure is key to making an informed choice.

A traditional 401(k) plan is typically managed by a single employer who acts as the plan sponsor and holds full responsibility for plan administration, fiduciary duties and selection of investment options. This structure gives the employer full control but also creates more administrative burden, fiduciary risk and ongoing plan management responsibilities. Human resources teams must coordinate enrollment, plan document maintenance, compliance reporting and employee education.

A pooled employer plan (PEP), created under the SECURE Act, allows unrelated employers to join a single retirement plan managed by a pooled plan provider (PPP). The PPP assumes most of the fiduciary responsibilities and administrative tasks, including hiring the investment advisor, investment manager, third-party administrator (TPA) and recordkeepers. Participating employers benefit from reduced costs, simplified operations and shared fiduciary liability, but must agree to standardized plan features and rely on the PEP provider for ongoing management.