what is a pooled employer plan (PEP)?

What Is a Pooled Employer Plan (PEP)?

The Beginner’s Guide to Pooled Employer Plans

A Simpler Way to Run a 401(k) Plan?

If you’ve ever thought, “There has to be an easier way to manage our retirement plan,” you’re not alone—and you’re not wrong. In fact, that’s exactly why Pooled Employer Plans (PEPs) were created.

A Pooled Employer Plan (PEP) is a type of 401(k) that allows multiple unrelated employers to participate in one professionally managed plan.

  • No association required—employers don’t need to be part of the same industry or group.
  • Streamlined administration helps reduce the workload for internal teams.
  • Lower fiduciary risk by outsourcing key responsibilities to experienced professionals.
  • Improved pricing and services, giving small and mid-sized businesses access to economies of scale typically reserved for larger companies.

But before you jump in, it’s important to know what a PEP is, where it came from, and how it compares to what you might already have.

Where Did PEPs Come From?

PEPs were created as part of the SECURE Act of 2019—a major piece of retirement legislation designed to expand access to retirement plans for American workers.

Before PEPs, small businesses who wanted to share a retirement plan had to form what’s called a Multiple Employer Plan (MEP)—which had strict rules requiring a common interest or industry.

The SECURE Act removed that “nexus” requirement and introduced Pooled Employer Plans (PEPs)—opening the door for any unrelated employers to join a single 401(k) structure, regardless of industry or size.

How PEPs Differ from Traditional 401(k)s and MEPs

Here’s a quick comparison to help you see where PEPs fit in:

Plan TypeCan Include Unrelated Employers?Centralized Oversight?Plan Filing Responsibility
Traditional 401(k) (stand alone plan)No – one employer onlyEmployer is in chargeEmployer files its own Form 5500 & audit if required
MEP (Multiple Employer Plan)Yes – if related by industry or associationShared oversight, complex rulesMay still require multiple 5500s
PEP (Pooled Employer Plan)Yes – any employersManaged by a Pooled Plan Provider (PPP)Only one Form 5500 & one audit for the entire PEP

In a traditional 401(k), your HR team, CFO, or plan committee is responsible for plan design, investment oversight, audits, and filings.

In a PEP, a registered Pooled Plan Provider (PPP) takes on much of that work, centralizing the administration and simplifying what you have to manage.

Who Typically Sponsors a PEP?

A PEP is always run by a Pooled Plan Provider (PPP)—a financial institution, recordkeeper, TPA, or advisor registered with the Department of Labor to oversee pooled plans.

Employers that join a PEP are known as “adopting employers.” They usually:

  • Share a single plan document that governs the PEP
  • Use a common investment menu, selected and monitored by the Pooled Plan Provider (PPP)
  • Delegate most fiduciary responsibilities – such as plan oversight and compliance – to the PPP

This allows businesses (especially those without large HR teams) to offer a competitive 401(k) plan without handling all the complexity on their own.

Is a PEP Right for You?

PEPs can be a great option for:

  • Employers looking to reduce fiduciary liability
  • Small or mid-sized companies seeking lower costs through group pricing
  • Teams that want to outsource as much plan administration as possible
  • Companies with limited internal HR or finance resources
  • Businesses that want to avoid the cost and complexity of a plan audit (often required when a 401(k) has 100+ participants)

But a PEP isn’t right for every business. You give up some customization, control, and may not know how all the moving parts affect your employees’ experience unless you pick the right provider.

PEPs Simplify… But They’re Not One-Size-Fits-All

A PEP might sound like the answer to your plan frustrations—and in some cases, it absolutely is. But like any retirement plan option, the details matter. Understanding who handles what, how your team’s responsibilities shift, and what the long-term strategy looks like is key.

Curious if a PEP Could Simplify Your Plan?

You’re already doing the hard part—asking the right questions. 

If you’re considering a PEP, or just want to know whether it’s a better fit than your current setup, let’s walk through it together.

Explore your options with us →  

Expert insight to help you make the best decision for your team.

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