How Does a PEP or Pooled Employer Plan Help My Business?
Businesses are seen offering various retirement benefits to retain employees and attract new talent. Companies are often on the lookout for less complicated retirement plans that they can simply set up and forget about. PEP or Pooled Employer Plan is one such retirement savings plan for businesses seeking a hands-off option.
What is a Pooled Employer Plan?
PEP or a Pooled Employer Plan is a retirement option where unrelated businesses can join a single plan established and managed by a PPP or a Pooled Plan Provider. PEP is usually designed to have the same contribution limits and offers the same benefits as a typical 401(k) plan. The added bonus of selecting a PEP is that you have reduced administrative and fiduciary responsibilities as an employer.
Difference Between PEP and Stand-alone 401(k) Plans
Both PEP and stand-alone 401(k) plans have their distinctive advantages. It is recommended to evaluate your options and consider your business goals before deciding which plan is the best fit for you.
PEP plans are usually one-size-fits-most package that can be useful for businesses who want to have a plan set up and running in no time and skip the hassle around administrative tasks. PEP is a cost-effective way in which businesses can help employees save for retirement without the complexities or liabilities that come with retirement plans. The trade-off in selecting a Pooled Plan Provider is that the convenience offered by this plan takes away the flexibility that businesses can have in designing a retirement plan. Businesses are required to abide by the investment options, eligibility, and vesting schedules that the PEP provider offers. Also, PEP provides limited flexibility to match schedules.
Stand-alone 401(k) plans, on the other hand, provide more tailored retirement solutions. Employers have complete freedom to customize investments, vesting schedules, eligibility, and better flexibility to match schedules. In lieu of these benefits, the employer is responsible for the day-to-day administrative tasks such as filing annual government forms, obtaining bond coverage, and managing annual plan audits.
Hiring a Plan Provider
Running a business can be complex. But adopting a retirement plan for your employees is simple. Businesses can seek help from expert plan providers who can assist in designing and managing the plans. Several plan providers are always willing to help you and your business better understand each plan’s options and benefits.
Plan providers can offer retirement solutions that are compliant with the IRS requirements. An excellent plan provider will streamline the administrative tasks and help you perform your daily plan operations while preparing government filings and maintaining your documents. Plan providers can also assist in overseeing plan investments and act as your plan’s fiduciary. They can take up the responsibility of ensuring that the plan is always compliant and can even automatically enroll all eligible employees. If you want to set up a retirement plan for your business, consult a plan provider who can evaluate your business goals and help you start a plan that is fit for your business.