Pooled Employer Plans (PEP) Are an Easier Way To Offer 401(k)

Managing a 401(k) plan can be challenging for business owners due to the complexities of compliance and administration. A Pooled Employer Plan (PEP) simplifies this process by offering a professionally managed, cost-effective solution. With the Paychex PEP, we take on the majority of fiduciary liability and administrative responsibilities as the formal plan administrator, reducing your workload and stress.

Additionally, Paychex integrates payroll with your retirement plan to enhance efficiency. This integrated solution streamlines administration, helps lower costs, and improves reporting accuracy, making it easier than ever to offer a retirement plan to your employees.

As the Pooled Plan Provider, Paychex offers a comprehensive "do-it-for-me" solution, reducing the administrative burden for participating employers. We manage key responsibilities, including hiring and monitoring the 3(38) investment manager, completing the plan's independent financial audit, filing Form 5500, and collecting and storing participant beneficiary information. Additionally, we handle tasks like delivering required participant notices, processing loans, hardships, distributions, QDRO (qualified domestic relations order) requests, and more. By taking these responsibilities off your plate, Paychex allows you to focus on running your business while still offering a valuable retirement benefit to your employees.

The onboarding process for a Pooled Employer Plan (PEP) typically takes about 35 days. The exact timeline may vary based on the timing of information exchanges and your payroll process.

Participating in a Pooled Employer Plan (PEP) is a cost-effective way to offer a retirement plan to your employees. If you're starting a new plan, your business may qualify for SECURE Act small business tax credits, which can cover 100% of your startup costs—up to $16,500 over three years. Additionally, you may be eligible for an extra $1,000 credit per employee annually with employer contributions.

With a Paychex PEP, the process is designed to be as straightforward as possible. While some initial actions are required to meet legal requirements and enable plan administration, our trained retirement specialists are here to assist you every step of the way—from plan setup and onboarding to ongoing maintenance.

While both MEPs and PEPs allow multiple businesses to participate in a shared retirement plan, there are key differences. A Multiple Employer Plan (MEP) requires participating businesses to be related by industry or professional association. Additionally, non-compliance by one employer in a MEP can disqualify the entire plan, putting all participating employers at risk. This is not a risk for PEP plans.

In contrast, a Pooled Employer Plan (PEP) allows unrelated businesses to join, making it more accessible for smaller businesses across various industries. The Pooled Plan Provider also assumes most fiduciary responsibilities, reducing risk and administrative burden for individual employers.

Businesses of any size may be eligible to join a Pooled Employer 401(k) Plan. However, eligibility criteria can vary depending on the provider, so it's important to review the specific requirements of the plan you’re considering.

Yes, the Paychex PEP offers flexibility to accommodate your business and employees' unique needs. Customizable plan design features include eligibility and vesting options, optional matching contributions, safe harbor provisions, Roth and pretax contribution options, auto-enrollment, auto-increase, and profit-sharing. These features allow you to tailor the plan to align with your goals and provide valuable benefits to your employees.

A Pooled Employer Plan (PEP) simplifies offering retirement benefits by reducing administrative tasks, lowering costs, and minimizing fiduciary liability. Small businesses can save with SECURE Act tax credits (up to $16,500 over three years) and attract top talent with 401(k) options. Paychex handles plan setup, compliance, and ongoing support, making it an efficient, cost-effective solution for businesses of any size.

A PEP from Paychex is an excellent choice for businesses of any size looking for a cost-effective, low-maintenance retirement plan. It simplifies administration, reduces fiduciary risk, and helps attract and retain employees, making it especially beneficial for small to mid-sized businesses.

To enroll in a Paychex PEP, simply fill out the online form or contact a Paychex retirement specialist. Our experts will guide you through the process, from initial setup to plan implementation.