
The Paychex Pooled Employer Plan (PEP)
The PEP allows employers of any size to pool assets into a 401(k) plan professionally administered by Paychex. The benefits? Simplified administration and enrollment, reduced liability, and the potential for savings.
5 Advantages of a PEP
Paychex Makes It Simple

As the Pooled Plan Provider (P3), Paychex oversees plan set-up, implementation, monitoring, enrollment, and other duties. Some employers may prefer more hands-on involvement, but for those who want a plan that comes with its own administrator, the Paychex PEP is ideal.
Employers Have Less Fiduciary Risk

Because Paychex handles significant fiduciary responsibilities, participating employers are not subject to the same level of liability. As the nation’s number one 401(k) recordkeeper1, we maintain the highest professional standards in administering the plan.
Tax Credits and Potential Savings

By pooling assets into a single large plan, employers can streamline administrative costs and take advantage of economies of scale. Plus, if you are starting a new plan, your business may be able to get SECURE Act2 tax credits, which can add up to $16,500 over 3 years (depending on eligibility and adding auto-enrollment). While this can apply to any new 401(k) plan, it is particularly powerful when applied to the already economical PEP.
Attract and Retain Employees

Studies show that retirement benefits have a major influence on whether employees decide to join a new company or stay with their current one. But just as important is showing employees that you care about their future. You can help give them peace of mind by making a high-quality retirement plan, like the popular 401(k) plan, more accessible to them.
Support for You and Your Employees

Paychex has an array of apps and tools to check plan information in just a few clicks. We can provide you with online enrollment tools, an account management portal, and mobile apps where employees can check their progress. We also have a team of highly trained retirement specialists on call to help if you need it.
Which Fits Your Business Better?
Compare the highlights and features of a PEP vs. a traditional 401(k) plan. Both are excellent options for you and your employees to save for retirement and save on taxes. A traditional 401(k) with your choice of additional services gives you more control, but it can be costlier and entail more work on your part. In a PEP, the Pooled Plan Provider (P3) is the plan administrator, so you have less control but also reduced cost and liability.
PEP or Traditional 401(k)
Pooled Employer Plan
Less Work and Lower Cost
Traditional 401(k)
More Control
Reduced administrative costs.
Economies of scale.
Potentially higher administration costs than a PEP.
The Pooled Plan Provider (P3) significantly reduces plan set-up responsibilities, including contracting with vendors and the investment manager.
As plan sponsor, the employer is involved in set-up such as plan design, choosing investments, and coordinating with vendors.
The P3 is the Plan Sponsor and relieves the employer of significant fiduciary liability.
The employer has more control but also more fiduciary risk.
The P3 assumes responsibility for audits, potentially saving employers $10,000-$20,000.
The employer of a large plan must oversee and pay for costly audits.
May be eligible for up to $15,000 in tax credits over 3 years for new plans.
May be eligible for up to $15,000 in tax credits over 3 years for new plans.
Which Plan Meets Your Needs?
A Paychex representative can help you determine which 401(k) plan is the best fit for your business. Let’s discuss your level of comfort with fiduciary responsibilities, how much administration you want to take on, and how a PEP can potentially save your business money on administrative costs.
Frequently Asked Questions
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Is the Pooled Employer Plan (PEP) a good retirement plan for my business?
Is the Pooled Employer Plan (PEP) a good retirement plan for my business?
The PEP can be a great solution for small to mid-sized businesses that don’t currently offer a retirement plan. It’s a professionally administered retirement plan that includes reduced fiduciary liability, simplified plan administration for employers, and potential savings due to the pooling of resources. For those currently offering a retirement plan, this is a great solution that significantly reduces an employer’s involvement with plan administration.
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I’ve wanted to start a retirement plan for my business and employees, but it seems too complicated. How will the PEP be different?
I’ve wanted to start a retirement plan for my business and employees, but it seems too complicated. How will the PEP be different?
Owners are busy running their business, so they may find it hard to devote time and energy to the complexities of 401(k) compliance and plan administration. The Paychex PEP significantly relieves businesses of this burden by providing a professionally administered and cost-effective retirement plan. As the formal plan administrator, we bear the bulk of the fiduciary liability for administering the plan.
By integrating payroll with your retirement plan, Paychex helps employers achieve an even higher level of efficiency. Our integrated payroll and retirement solution simplifies administration, helps to reduce costs, and can increase reporting accuracy.
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Will my business be eligible for tax credits for adopting the PEP?
Will my business be eligible for tax credits for adopting the PEP?
Per the SECURE Act, employers may be eligible for tax credits, which can add up to $16,500 over 3 years (depending on eligibility and adding auto-enrollment).
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As the Pooled Plan Provider (P3), what will Paychex do for me compared to other retirement plans?
As the Pooled Plan Provider (P3), what will Paychex do for me compared to other retirement plans?
The PEP more fully approaches a “do-it-for-me” solution, relieving participating employers of many of the administrative tasks that are associated with most retirement plans. We will handle the hiring and monitoring of the 3(38) investment manager, complete the plan’s independent financial audit, file the Form 5500, collect and store participant beneficiary information, deliver required participant notices, handle the loan, hardship, and QDRO (qualified domestic relations order) requests, and much more. Taking these tasks off your plate will help you focus more on your business and less on administering this valuable employee benefit.
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If I want to adopt the PEP as a participating employer, how long will it take?
If I want to adopt the PEP as a participating employer, how long will it take?
The onboarding process takes approximately 35 days to complete, depending on timing of information exchanges and payroll process.
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If my business doesn’t utilize Paychex for its payroll processing, can we still adopt the Paychex PEP?
If my business doesn’t utilize Paychex for its payroll processing, can we still adopt the Paychex PEP?
If a customer does not have Paychex payroll, they cannot participate in the PEP at this time, however, in the near future, there may be a solution for non-payroll customers. As plan administer on the PEP, Paychex has more fiduciary liability and risk that is dependent on accurate employee and payroll data, which is achieved by integrating your payroll with our Paychex Flex solution. Contact a Paychex representative if you are interested in learning more about our payroll services.
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Is the Paychex PEP customizable for my business and employees’ specific needs?
Is the Paychex PEP customizable for my business and employees’ specific needs?
Yes, the Paychex PEP has the flexibility to meet our customers’ unique needs by providing options for plan design features such as eligibility and vesting alternatives, optional matching contributions, safe harbor provision, Roth and pretax contributions for participants, auto-enrollment and auto increase, and profit-sharing options.
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How do I get more information on the Paychex PEP?
How do I get more information on the Paychex PEP?