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Are PEPs a Solution in a Changing Marketplace?

When Pooled Employer Plans were introduced at the beginning of 2020, the retirement plan industry viewed them as a solution for small business owners.

Now, HR departments of all sizes are seeing the appeal. Sponsoring a retirement plan takes specialized knowledge and adds administrative and fiduciary obligations to an employer’s workload. This can be daunting for employers still dealing with COVID-19 policies and return to work, Affordable Care Act challenges and ongoing worker shortages.

A PEP can help your clients meet these challenges, stay focused on their business and lessen fiduciary risk by delegating tasks to retirement plan professionals.

Background on Pooled Employer Plans

The Setting Every Community Up for Retirement Enhancement Act, or SECURE Act, which was signed into law in 2019, modified ERISA and the Internal Revenue Code to create PEPs. The provisions allowed for a single employer plan for unrelated employers. The SECURE Act also removed the commonality requirement and the “one-bad-apple” disqualification rule from Multiple Employer Plans. This made PEPs even more attractive.

Commonality RequirementOne-Bad-Apple Rule
To participate in a MEP, employers had to share some nexus or interest unrelated to the retirement plan. For example, they had to be in the same industry or geographic location, or members of an established trade association.If one employer violated any U.S. Department of Labor or IRS code provision — such as a late deposit of salary deferrals — this could make the entire plan noncompliant and create liability for an adopting employer.

In December 2022, the SECURE 2.0 Act added new provisions that permit certain 403(b) plans to be operated as a PEP. It also directed the U.S. Department of the Treasury to issue regulations providing relief from the one-bad-apple rule for 403(b) plans.

To better understand if PEPs may be the right solution for your clients, we’ve prepared a flyer that provides:

  • Background
  • SECURE Act and SECURE 2.0 Act provisions
  • Benefits and challenges
  • Information about PEPs
  • Possible PEP structures
  • Employer candidates and considerations


Take a look at Retirement Solutions Pooled Employer Plans (PEPs) and reach out to your local sales representative if you have questions.



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