How Does a Pooled Employer Plan Help My Small Business?



The demands of running a business can seem never-ending. For example, business owners have to think about both big picture items and small pictures details in order to ensure that their companies stay afloat during these very tumultuous times.

For this reason, a pooled employer plan (PEP) is a tempting option for many employers, as it takes the stress related to retirement plans away from the business owner.

Pooled Employer Plan 

Essentially, a PEP is a retirement option for businesses that creates a group retirement fund between multiple different companies. By doing so, small business can “pool” their resources and provide more compelling options for employees.

Better yet, these plans are managed by an entity known as a Pooled Plan Provider (PPP). The PPP takes on the burden of being the fiduciary for the plan and takes care of all of the small details that can stress and irritate business owners to no end.

What About Stand-alone 401k Plans? 

If you’ve been researching the different options afforded to businesses with regard to retirement planning, you may have come across the stand-alone 401k. The stand-alone 401k is a good option for some, but it doesn’t solve the issue of extra administrative duties and fiduciary responsibility on the part of the business owner.

One of the major differences between stand-alone 401k plans and PEPs is that stand-alone 401k plans are more customizable, while PEPs are aimed at appealing to as many people as possible.

Therefore, companies whose employees want to have more control over their retirement options may reject the idea of a PEP. They may say that they want to be able to structure their plan in a very specific way and manage it exactly how they want.

But this is not the norm. Most employees are happy to have a retirement plan within a PEP that provides them with some assurance in the future and don’t mind giving up a little bit of flexibility in order to have said plan. Furthermore, business owners love the decreased stress and responsibility that come with a PEP. It is truly a win-win!

What are the Other Benefits of a PEP?

Besides some of the major benefits described in the previous section, a PEP provides employers and employees alike with countless positives.

As far as employers are concerned, they appreciate the lower pricing options that come with a PEP, as well as the tax credits inherent in the plan.

For employees, the educational opportunities provided with a PEP are second to none. There are tons of ways to learn about their retirement options, all while maintaining a healthy retirement account backed by the funding of multiple other businesses within the pooled plan.

Are You Ready to Start Your PEP?

If you’re interested in starting a PEP for your company, don’t wait! It’s easy to switch from a “traditional” 401k to a PEP, but you should start the process as soon as possible. Call a plan provider today to start the process!