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PEPs and Your Business: Is It The Right Move For You?


For most people, one of the marks of a good, sustainable job is a robust retirement plan that they receive from their employer. After all, there’s always a day that we all stop working, and it’s incredibly important that we are set up for success after our last day of work. However, small businesses each year simply find it too costly to offer retirement plans for a litany of reasons.

To address this recurring issue, a new type of retirement plan option called a pooled employer plan (PEP) was introduced on January 1st of this year. PEPs were introduced as part of the SECURE Act to bolster small business owners and employees in the midst of the pandemic-induced economic downturn.

In this short blog, we’ll briefly discuss the basics of PEPs, what sets them apart from more established retirement plans, and what you should consider as a business owner or employee.

What Exactly Are PEPs?

Pooled employer plans, in basic terms, allow groups of employers to pool assets into one 401(k) plan. This is similar to normal multiple-employer plans (MEPs) on the surface, but PEPs offer even greater flexibility to remove potential barriers for employers. With less than 60% of adult Americans participating in a retirement plan of some sort, state and federal governments have been looking for ways to ensure more Americans are truly ready for retirement when the time comes. This new retirement plan option is designed to address this need.

PEPs have a number of advantages over normal MEPs or 401(k)s, including the following:

  • Employers do not need to be related by industry or region

  • A plan cannot be disqualified if one employer is non-compliant

  • Lower overall costs and administrative burden

  • Potential tax credits

PEPs are available to employers of any size or industry that is looking to start a new retirement plan or switch their current one. If you switch to a PEP, a Pooled Plan Provider (P3) will be the approved fiduciary for the retirement account. Your P3 handles a number of tasks to set up and maintain the account, like constantly checking for compliance with federal regulations and setting rules for PEP governance, among many others. This means there is less risk and responsibility on the part of the employer when compared to other retirement plan structures.

Employees & PEPs

For employees, what can they expect if their employer switches from a traditional 401(k) arrangement to a PEP? Well, employees will likely not notice much of a change after the initial flurry of paperwork. This is because the core benefits of a 401(k) and PEP are largely the same: employees contribute a percentage of their salary for saving, employers can match contributions, and many investment options are available.

Since P3s handle administrative and management duties for the account, most information about the plan will come from that entity and not the employer itself. Besides that, employees can expect PEPs to be very similar to traditional retirement accounts they have interacted with in the past.

Contact TrinityPoint Wealth To Explore PEPs!

Looking for more information regarding PEPs and how they can benefit your business and staff? Our financial professionals here at TrinityPoint would love to help you better understand this plan and walk you through your next steps. Contact us today via phone or email to get started!


This material prepared by TrinityPoint Wealth is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Opinions expressed by TrinityPoint Wealth are based on economic or market conditions at the time this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. TrinityPoint Wealth, however, cannot guarantee the accuracy or completeness of such information, and certain information may have been condensed or summarized from its original source. Materials herein were prepared by AGI Marketing. TrinityPoint Wealth and AGI Marketing are not affiliated.

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