Retirement planning can be extremely complicated and stressful. With all of the options available, it’s hard to decide between an IRA, a 401k, or one of the other types of plans. If you are looking for a retirement plan that eliminates the hassle inherent in creating a retirement fund for your business, you should strongly consider a Pooled Employer Plan (PEP).
What is a Pooled Employer Plan?
A PEP enables multiple small businesses to join forces and create a more compelling retirement plan for their employees. PEPs are plans that are managed by a third-party PPP (Pooled Plan Provider), leaving business owners free from the stresses of managing the plans while also granting employees access to much better retirement options than would typically be available with a standalone 401k.
What is the Difference Between a Standalone 401k and PEP?
There are many distinctions that can be made between a standalone 401k and a PEP across a number of categories:
- Fiduciary Responsibilities: Standalone 401k plans require the employer to act as the fiduciary for the plan, whereas PEPs appoint the Pooled Plan Provider to serve as the fiduciary.
- Form Filing Requirements: Annual forms that must be filled out and submitted are the responsibility of the employer in a standalone 401k plan. With a PEP, the PPP handles this administrative duty.
- Customizability: PEPs enable companies little wiggle room when it comes to plan customization. Standalone 401ks, on the other hand, allow for plans to be customized in whatever ways most benefit the company and its employees.
- Time Commitments: PEPs tend to save businesses time due to the fact that the majority of the details involved with government compliance, audits, and general plan maintenance are left to the PPP and not the employer.
- Pricing: With the combined resources of multiple businesses all being funneled into the PEP, prices and eventual retirement outcomes tend to be better when compared to standalone 401k.
- Benefit to Employees: Employees tend to appreciate an enticing retirement plan. PEPs offer much better incentives to enrollees as compared to standalone 401ks simply due to the element of combined funds of multiple businesses within the plan.
How Do I Sign Up for a PEP?
If you are interested in implementing a PEP for your business, the best place to start is to contact a plan provider. These professionals are experts in the field and can help guide you toward a plan that will most benefit you and your employees.
Bottom Line: Should I Start a PEP for My Business?
No one knows your business better than you. It’s important that you take the time to fully analyze the benefits and downsides of each type of retirement plan to ensure that you are setting your company up for success. If you are finding this process to be overwhelming, contact a plan provider today. They will help you make sense of all of the retirement options so that you make the best decision for your company.