COLLECTED WISDOM™ on Multiple Employer Plans (MEP), PEPs and GoPs

This page gathers relevant information related to DOL's proposed regulations on Multiple Employer Plans (MEP), PEPs and GoPs. Other items related to these plans may also be covered.

This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.

If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.

Revisiting Pooled Employer Plans: A Cost-Effective, Low-Risk Solution for Providing Retirement Plan Coverage (Part 2)

In the second part of this two-part podcast series, David Kirchner, Elliot Saavedra, and Jack Eckart from Ropes & Gray's benefits consulting group share their insights and experiences in collaborating with pooled employer plan providers. They discuss the process of bidding and vetting these providers on behalf of clients, while also delving into the crucial responsibilities that employers should consider when evaluating, monitoring, and selecting PEPs.

Source: Ropesgray.com, May 2024

Dispelling Cost Myths of MEPs, PEPs and GoPs

Ron Surz explains how pooled plans can cut down on costs and administrative burdens for small employers looking to sponsor a retirement plan.

Source: 401kspecialistmag.com, April 2024

In PEPs, Attaining Economy of Scale Is Critical, Sometimes Illusive

Retirement plans that include multiple employers have continued to grow in assets, but the growth of assets necessary to reach the critical size where economies of scale can be achieved may take years. The forecasted cost savings to plan sponsors of joining a pooled employer plan over using a single employer plan may not materialize, depending on the sponsor's pooled plan provider.

Source: Plansponsor.com, March 2024

A Primer on MEPs, PEPs and GoPs

The SECURE Act 1.0 enacted at the end of 2019 established new retirement plan types, including Pooled Employer Plans and Defined Contribution Group of Plans. It also ratified the existence of "open" Multiple Employer Plans, which had been used by many service providers without formalized reporting requirements. The goal of these changes was to expand retirement coverage to more workers across the U.S. This is a primer on these plan types.

Source: Newfront.com, March 2024

Can Multiple Employer Plans Help Close the Retirement Coverage Gap?

As only about half of U.S. private sector workers are covered by an employer-sponsored retirement plan at any given time, a lack of consistent coverage is a major threat to the nation's retirement income security. Advertised as a more cost-efficient and less burdensome way for small employers to offer a retirement plan, pooled solutions may not be the perfect solution to this coverage gap.

Source: Plansponsor.com, March 2024

Audit Rule Will Put Some PEPs Out to Pasture

It looked great on paper, Pooled Employer Plans needed an audit only if they hit 1,000 participants or if they had an adopting employer with 100 or more participants. The IRS and DOL clarified that PEPs with 100 participants or more are subject to audit, rather than the 1,000-participant threshold that we thought was the interpretation in the SECURE Act.

Source: Jdsupra.com, January 2024

How SECURE 2.0's Automatic Features Apply to MEPs, PEPs

Multiple employer plans and pooled employer plans are subject to the same automatic enrollment and escalation requirements as other defined contribution plans, as outlined by SECURE 2.0. Any such plan adopted after December 29, 2022, must automatically enroll participants between 3% and 10% unless the participant elects otherwise, starting in 2025. Plans adopted before December 29, 2022, are grandfathered in.

Source: Planadviser.com, January 2024

The Plan Sponsor's Guide to PEPs

This guide to PEPs is a resource for employers interested in providing 401k or 403b benefits using a pooled employer plan. Each section of the Guide takes 401k and 403b plan sponsors through the steps of how PEPs work and whether they are an appropriate approach for an employer; how to evaluate pooled plan providers; best practices for implementation and monitoring; and reviewing plan design and investment menus that can help meet the retirement needs of their participants.

Source: Pionline.com, January 2024

SECURE Act Adds "PEP" to the Retirement Plan Industry

Congress added some "PEP" to the retirement plan industry. Section 101 of the SECURE Act affects multiple employer plans and creates a new pooled employer plan (PEP) which expands the tools in a plan sponsor's toolbox of retirement plan options. Here is a review of the possible advantages of a PEP.

Source: Belfint.com, December 2023

Pooled Employer Plans (PEPs): The Basics

A PEP is a type of multiple-employer plan that allows unrelated employers to participate in a single, shared defined contribution plan, which is treated as a single plan for purposes of satisfying ERISA requirements. This is a nice overview of PEPs.

Source: Belfint.com, October 2023

When it Comes to Joining a PEP, Don't Be the Hot Potato

PEPs were established in section 101 of the SECURE Act of 2019. In the past, the "one bad apple" rule jeopardized a plan's tax-qualified status when one employer had an operational failure. With the SECURE Act, a PEP is not treated as failing the IRS qualification requirements solely because a single employer fails to satisfy those requirements. Noncompliant PEP members are a bad apple turned a hot potato. This article provides a good review of PEPs.

Source: Belfint.com, October 2023

PEP Growth Slows as Startups Fold

The growth of pooled employer plan registration has slowed in 2023 even as the industry gears up for more small and midsized businesses to introduce new retirement plans, according to an industry expert. An IRS clarification that expanded audits for PEPs may be a factor for some providers in leaving the market.

Source: Planadviser.com, July 2023

PEPs -- Hot or Not? The Pros and Cons of Pooled Employer Plans: Debate

After underperforming growth for years, value equities finally had their time in the sun in 2022. While both value and growth stocks declined last year, growth stocks fell much further than value thanks in large part to rising interest rates.

Source: Asppa.org, April 2023

How SECURE 2.0 Impacts 403b Plans, MEPs and ESOPs

The reach of SECURE 2.0 is extensive. Its general provisions affect all types of retirement plans, but SECURE 2.0 also has some provisions targeted at plans subject to their own set of statutory and regulatory requirements. Sponsors of 403b plans, ESOPs, and employers participating in or considering joining multiple employer plans should keep these changes on their radar.

Source: Cohenbuckmann.com, February 2023

Informal DOL Guidance Addresses PEP Bonding Requirements

An information letter recently released by the Department of Labor addresses the application of ERISA's bonding requirements to a pooled employer plan established under the SECURE Act.

Source: Napa-net.org, December 2022

DOL Clarifies Bonding Requirements for Pooled Employer Plans

A DOL information letter clarifies how ERISA's bond requirements apply to a pooled employer plan. A PEP is a type of multiple-employer plan created by the SECURE Act to make it easier for unrelated employers to participate in group retirement plans.

Source: Mercer.com, November 2022

PEPs Pique Small Businesses' Interest, But Hurdles Remain

A new survey finds that small employers are interested in learning more about pooled employer plans, although there is still some hesitancy on the road to implementation. More than half of smaller employers surveyed by the Secure Retirement Institute that are considering a DC plan are interested in learning more about PEPs, regardless of whether they have a retirement plan currently in place.

Source: Napa-net.org, May 2022

Putting a Little PEP in a 401k Retirement Plan

Set against the backdrop of the continuing wave of ERISA litigation that is being brought against employers who sponsor retirement plans, Pooled Employer Plans ("PEPs") are emerging in the marketplace as an alternative that may limit employers' risk of retirement plan-related litigation. There have been over 220 ERISA class action suits filed in connection with retirement plans since 2018, and the top ten ERISA settlements for 2021 alone totaled $840 million in the aggregate. Since ERISA litigation is a serious and relevant concern, many plan sponsors, including private equity sponsors and their portfolio companies, would benefit from evaluating whether a PEP is a viable retirement plan solution for them.

Source: Ropesgray.com, April 2022

IRS Issues Proposed MEP Rule

The IRS has released a new proposed rule providing for an exception, if certain requirements are met, to the application of the "unified plan rule" for multiple employer plans when there is a failure by one or more participating employers to take actions necessary to satisfy requirements of the Internal Revenue Code. The unified plan rule specifies that the failure by one participating employer to satisfy an applicable qualification requirement would result in the disqualification of the MEP for all employers maintaining the plan.

Source: Ascensus.com, March 2022

Is a PEP Right for You?

More employees need to be able to contribute to retirement plans, and many employers without plans would like to offer 401k plans to their employees. This article discusses a new option for outsourcing fiduciary responsibility and why more employers should consider PEPs.

Source: Rpaconvergence.com, January 2022

Pros and Cons of Pooled Employer Plans

The SECURE Act created a new type of defined contribution multiple employer plan, the pooled employer plan. Unlike previous versions of multiple employer plans, it need not be limited to employers sharing a nexus or interest or located in the same geographical area. Moreover, the plan as a whole is protected from disqualification due to the non-compliance of a participating employer, as long as the plan provides a mechanism for expelling a chronically non-compliant employer and holding such employer responsible for its noncompliance. As a result, pooled employer plans may be an attractive option for some employers.

Source: Venable.com, August 2021

PEPs Are Here. But How Successful Will They Be?

The case for pooled employer plans is compelling, especially to address the fact that there are 5 million to 6 million companies in the U.S. and just 650,000 DC plans. But as we wait for the DC market to adopt PEPs, the results so far have been muted. A few vendors have applied to be pooled plan providers, but not in the numbers many predicted.

Source: Investmentnews.com (registration may be required), July 2021

The SECURE Act Acronym Plans: PEPs, MEPs, and GoPs

The SECURE Act sought to broaden retirement plan coverage for American workers. With many of the provisions only now taking effect, the question turns to whether the newly established and expanded plan types -- pooled employer plans (PEPs), group of plans (GoPs), and multiple employer plans (MEPs) -- will live up to the hype.

Source: Captrust.com, May 2021

As MEPs Grow, ERISA Lawsuits Rise With Them

As companies seek efficiency, lower cost, and reduced fiduciary headaches by joining a multiple-employer plan, the MEP providers are encountering the same ERISA challenges to their 401k or 403b plans as those faced by single-employer sponsors. Allegations range from excessive investment fees to poorly performing investments to inadequate monitoring of administrative costs.

Source: Pionline.com, May 2021

Pooled Employer Plans: Employer Considerations

This article reviews some of the considerations employers may need to address when trying to decide whether to participate in a particular PEP. There will be many PEPs available in the market from which to choose; thus, employers will need to look to a PPP's and/or a PEP's marketing or other materials for more detailed information. But, there is some essential information employers seek and consider.

Source: Actuary.org, May 2021

What Is a Pooled Employer Plan?

A PEP is a new type of retirement plan that was created by the Setting Every Community Up for Retirement Enhancement Act (SECURE) Act. A PEP allows plan sponsors to pool their retirement resources with the resources of other employers, as well as delegate many plan operations and fiduciary responsibilities to a third party. Download a free FAQ.

Source: Multnomahgroup.com, April 2021

Multiple Employer Plans: Fiduciary Litigation Risk?

As MEP solutions begin to accumulate participants and assets, plaintiffs' lawyers will inevitably train their sights on MEPs as a fiduciary litigation target. Indeed, they have already begun to do so.

Source: Napa-net.org, April 2021

Pooled Employer Plans: The Benefits and Considerations for Employers

The SECURE Act introduced an entirely new retirement plan fiduciary structure called the Pooled Employer Plan. PEPs allow unrelated employers to pool resources to help achieve economies of scale and administrative efficiencies. As with any retirement plan strategy, PEPs come with benefits, limitations, and risks that should all factor into an employer's decision to join. This is a review of the benefits, limitations, and risks.

Source: Lockton.com, April 2021

Wave of PEPs Hits the Market

Pooled employer plans are coming to market at a clip, three months after the first ones were given the DOL's blessing. In the past week alone, at least three pooled employer plans, or PEPs, have been announced. Those include plans from American Trust, Access Retirement Solutions, and a new entity from venture capital firm Magis Capital Partners, Sallus Retirement.

Source: Investmentnews.com (registration may be required), April 2021

Yet Another MEP Targeted by Excessive Fee Suit

The law firm of Capozzi Adler, P.C. has found another 401k plan to sue, and this one a multiple employer plan. The plan -- more specifically the plan fiduciaries -- targeted are those of Nextep, Inc., a Professional Employer Organization, as well as the firm's board of directors, the investment committee, and members of that committee.

Source: Asppa.org, March 2021

Another MEP Targeted in Excessive Fee Suit

The platform may be different, but the excessive fee allegations directed toward a multiple employer plan are all too familiar. The plaintiff this time was employed by Heartland Coca-Cola Bottling Company an employer that participated in the Coca-Cola Bottlers' Association 401k Retirement Savings Plan, a multiple employer plan. The plan covers about 19,000 participants, and as of December 2019 had nearly $800 million in assets spread across 24 investment options, including a Coca-Cola Common Stock Fund.

Source: Napa-net.org, February 2021

DOL Proffers Final Regulations for Pooled Plan Providers

The DOL has issued final regulations on registration requirements for pooled plan providers administering pooled employer plans. The final regulations retain much of the same structure as the proposed rule issued last August, with some added clarification on registration requirements.

Source: Hallbenefitslaw.com, February 2021

IRS Signals Compatibility of Pre-Approved Plan Documents and PEPs

The IRS in its January 20, 2021 edition of Employee Plans News has revealed that pre-approved qualified retirement plan documents may be used to establish arrangements known as pooled employer plans, or PEPs.

Source: Ascensus.com, January 2021

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