Retirement Plan Insights · June 2026
A PEP lets multiple employers share a single, professionally managed retirement plan offloading the fiduciary risk, administration, and cost that keep many owners from offering one at all.
Offering a retirement plan is one of the most effective ways a business can attract and keep good people. Yet for many owners, the responsibilities that come with sponsoring a 401(k), like fiduciary liability, ongoing administration, the annual audit, and costs are enough to stall the decision indefinitely. A Pooled Employer Plan is built to remove most of that friction while preserving the benefit your employees actually want.
WHAT IS A PEP?
A Pooled Employer Plan (PEP) is a single retirement plan that multiple, unrelated employers can join. Created by the SECURE Act and available to employers since 2021, a PEP is operated by a Pooled Plan Provider (PPP) that takes on the heavy lifting such as fiduciary oversight, day-to-day administration, recordkeeping, and compliance on behalf of every business in the plan.
Instead of each company standing up and maintaining its own standalone 401(k), participating employers adopt into one professionally managed plan and share its infrastructure. The result is a meaningful retirement benefit with a fraction of the burden that typically falls on the business owner.
HOW A PEP WORKS
Under a traditional single-employer 401(k), the business carries most of the fiduciary and administrative weight. In a PEP, those responsibilities are reassigned to specialists, leaving the employer to focus on running the business rather than running the plan.
By accepting the Named Fiduciary role under ERISA 402(a) and serving as the 3(38) Investment Manager, the PEP takes on the maximum fiduciary responsibility permitted by law for plan oversight and the investment lineup. A 3(16) Plan Administrator then handles the operational work — data monitoring, notice delivery, compliance, and distributions — so day-to-day plan management is effectively offloaded from your team.
FOUR REASONS SOME EMPLOYERS ARE MAKING THE SWITCH
Fiduciary ProtectionThe PPP serves as Named Fiduciary (402(a)) and 3(38) Investment Manager, taking on the maximum fiduciary responsibility permitted by law and shielding your business from much of that exposure. | Administrative Relief3(16) administration covers data monitoring, notice delivery, compliance, and distributions. The day-to-day management of the plan is fully offloaded from your team. |
Shared Cost SavingsEmployers with 100 or more participants avoid a separate individual plan audit. One pooled audit spreads the expense across all adopting employers, generating meaningful savings. | Plan Design FlexibilityPlan design is still tailored to your company’s specific compensation objectives — you keep the customization while benefiting from economies of scale within the pooled structure. |
WHO SHOULD CONSIDER A PEP?
A PEP isn’t the right fit for every organization, but it tends to be a strong option for employers who want to offer a competitive plan without absorbing the full operational and fiduciary load:
- Small businesses that lack the time or internal resources to administer a plan.
- Mid-sized firms looking to reduce their fiduciary risk.
- Employers subject to state retirement mandates who need a compliant documented plan in place.
- Startups seeking the economies of scale that come with a pooled structure.
Is a PEP Right for Your Business?
The right retirement plan depends on your headcount, your goals, and the role you want to play in administering it. Our Retirement Plan Consulting team can walk you through how a PEP would compare to your current setup — and whether it’s the better fit.
This material is provided for informational purposes only and does not constitute investment, tax, or legal advice. Plan features, fiduciary arrangements, and audit requirements vary by provider and by plan; please consult with a qualified advisor regarding your specific situation. Bartholomew & Company, Inc.