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What is a Pooled Employer Plan?

A pooled employer plan (PEP) is a 401(k) retirement plan that allows unrelated businesses to participate in one plan managed by a pooled plan provider (PPP). The PPP is the fiduciary of the PEP and has discretion over plan administration and investments, which can reduce the administrative burden and risks for participating companies. Streamlining and delegating retirement plan administration to experts allows employers to focus on their core business and other strategic priorities.

The PPP is also responsible for selecting and monitoring third-party vendors hired to deliver services for the PEP, including trustees/custodians, recordkeepers, investment managers and external advisors such as plan auditors. PEPs have emerged as an attractive alternative to traditional 401(k)s – reducing the work and risk involved in sponsoring a plan and offering significant opportunities for economies of scale and improved retirements for American workers.