If you run a small business, you have probably given thought to the retirement plan options that you offer to your employees. While there are many considerations, you’ve likely wondered if there are plans that:
- Allow for impressive contribution limits;
- Are easy to set-up and manage;
- Require little time, effort and cost from you.
If you are looking for a plan that checks all of the above boxes, you’ll want to strongly consider the PEP or Pooled Employer Plan.
How Does a Pooled Employer Plan Work?
PEPs are retirement plans that combine funds from small businesses that are completely unrelated into one group. By doing so, each company involved in the PEP has access to much more enticing retirement options than are typically available with a standalone 401k plan.
These plans appoint a PPP or a Pooled Plan Provider who takes care of all of the administrative duties, paper work, and investing for each of the companies within the PEP. This alleviates the stress and hassle for business owners and allows them to focus on the more important aspects of their company while also enabling their employees to enjoy incredible retirement benefits.
What are the Benefits of a PEP?
If you are the owner of a small business and want to encourage employee retention and satisfaction while also effortlessly maintaining your company’s retirement plan, enrolling in a PEP is the perfect way to do so:
- PEPs are Easy to Manage: Compared to a standalone 401k, you as the employer have very few responsibilities with a PEP. The PPP manages nearly all aspects of the plan, leaving you free to focus on and improve other portions of your business.
- PEPs are Low Risk: You are relieved of your fiduciary responsibilities when you enroll in a PEP. The PPP is the responsible fiduciary with the PEP and you need not worry about maintaining compliance with government regulations, as this is already done for you.
- PEPs Allow for Excellent Contributions: Because there is a large pool of investments involved with a PEP, plan options and contributions are much better than they typically would be with a standalone 401k plan.
- PEPs Empower Employees: Your employees have access to educational resources pertaining to retirement when your company is enrolled in a PEP. Additionally, your employees will be able to manage their retirement goals, speak with financial advisors, and enjoy lower cost options than are generally available with a standalone 401k plan.
Should I Sign Up for a PEP?
While the decision to enroll in a PEP for your company may seem like an excellent decision, it is always wise to discuss your options with a qualified financial professional. The easiest way to do this is to contact a plan provider. They will be able to walk you through the process so that you can get a better idea of whether or not a PEP makes the most sense for your business at this time. However you structure your retirement plan, ensure that you keep your own needs as well as those of your employees at the front of your mind.
