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At HR Ledger, we’re committed to keeping you informed about significant legislation that can affect your retirement savings. A perfect example of this is the Setting Every Community Up for Retirement Enhancement (SECURE) Act that largely became effective from Jan. 1, 2020. This pivotal law simplifies the process for Americans to save for retirement and introduces Pooled Employer Plans (PEPs) which took effect on Jan. 1, 2021.

So, what are PEPs?

PEPs are a novel type of Multiple Employer Plan (MEP) that allow unrelated employers to collaboratively offer a single 401(k) retirement plan, eliminating the “common nexus” requirement usually needed for MEPs. Traditionally, to establish a MEP, employers needed to share a common connection like being part of the same industry or geographical location. However, with the SECURE Act, unrelated employers can create a shared retirement plan.

How do PEPs benefit you as an employer?

Enhanced access to 401(k) plans

The SECURE Act is primarily designed to assist small employers, as many small businesses often don’t have retirement plans. The introduction of PEPs enables unrelated small employers to unite and provide 401(k) access to their employees. Furthermore, the SECURE Act provides tax credits to eligible small employers who adopt a new 401(k) plan.


Reduced 401(k) administration costs

A 2020 J.P. Morgan survey indicated that administrative costs were one of the primary reasons small businesses did not offer a 401(k) plan. Pooled Plan Providers (PPPs) are designed to alleviate this issue.

Under the SECURE Act, a PPP must establish a PEP and will assume most of the administrative and fiduciary responsibilities including Form 5500 filing, plan audits, annual 401(k) testing, participant notices, distributions and rollovers, and investment selection and monitoring.

This significantly reduces the time that employers spend managing their 401(k) plans and lowers their fiduciary risk and liability. Additionally, some administrative costs are divided among employers in the PEP, likely reducing each employer’s individual cost compared to running a standalone 401(k) plan.


Improved pricing and plan choices

By pooling their resources, small employers in a PEP can access competitive pricing and high-quality investment products typically only available to larger employer plans.

While PEPs offer numerous benefits, they may not be the right fit for every business. Employers should assess their 401(k) challenges and requirements before deciding if a PEP is the best solution for them.


HR Ledger and Human Interest: Get Started!

Looking for a retirement planning solution that truly supports your employees’ long-term financial dreams? Say no more! HR Ledger, in partnership with Human Interest, provides flexible and customized 401(k) plans that outshine CalSavers without the hefty fees or demanding requirements. This dynamic duo revolutionizes retirement planning with personalized, employee-centric solutions. They offer a variety of 401(k) plans with higher contribution limits and customizable matching and vesting options. Plus, the automatic enrollment and flexible contributions make it easy and adaptable for employees. The integration of HR Ledger with Human Interest simplifies tracking and managing employee contributions, freeing up your time and resources. With transparent pricing, lower costs, and more investment options, Human Interest’s 401(k) plan is a win-win solution for employers and employees alike.

Written by:

Scott Evers

Scott Evers

Vice President Sales and Marketing