Understanding Pooled Employer Plans: Compliance & Fiduciary Duties for Employers

Pooled employer plans (PEPs) continue to gain traction as businesses look for efficient ways to offer retirement benefits while reducing administrative burden. Introduced under the SECURE Act, PEPs allow unrelated employers to participate in a single defined contribution retirement plan, typically a 401(k), administered by a pooled plan provider (PPP). For many organizations, a PEP can simplify plan management—but it does not eliminate all employer responsibilities. Understanding plan compliance and fiduciary duties is essential before joining or maintaining participation in a PEP.

What is a Pooled Employer Plan?

A PEP is a retirement plan structure that brings multiple employers into one shared plan. The PPP serves as the plan sponsor, named fiduciary and plan administrator, taking on many of the day-to-day operational and compliance responsibilities traditionally managed by a single employer. This model can help smaller and midsized businesses access lower fees, more competitive investment lineups and streamlined administration.

Employer Fiduciary Responsibilities Still Matter

While a PPP assumes many fiduciary functions, participating employers are not fully relieved of responsibility. Under the Employee Retirement Income Security Act (ERISA), employers still have an obligation to act prudently and in the best interest of plan participants when selecting and monitoring the pooled plan provider.

That means employers should conduct due diligence before joining a PEP, including reviewing:

• • • Provider experience and qualifications
    • Fee transparency and overall plan costs
    • Investments oversight processes
    • Cybersecurity and data protection controls
    • Service model and participant support

Once enrolled, employers should continue periodic reviews to confirm the provider remains a prudent choice. Recent Department of Labor guidance reinforced that selecting and monitoring the PPP remains a core fiduciary duty for participating employers.

Key Compliance Considerations in a PEP

Even in a shared plan environment, employers retain certain compliance responsibilities tied to their own workforce and payroll data. Common areas include:

Timely Contribution Remittance

Employee salary deferrals must be deposited promptly according to applicable regulations and plan terms. Delays can create compliance issues and potential penalties.

Accurate Employee Eligibility

Employers must properly track hours worked, entry dates and eligibility requirements so employees are offered plan access when required.

Payroll and Census Data Accuracy

Accurate compensation, ownership and employee census information is necessary for plan administration, reporting and testing.

Participant Notices

Depending on plan design, employees may still need required notices related to enrollment, investments or safe harbor provisions.

Strong coordination between internal payroll, HR and the PPP can help reduce errors and keep the plan running smoothly.

Ready to Strengthen Your Retirement Plan Strategy With a PEP?

Joining a PEP can be a smart way to streamline retirement plan administration while gaining access to valuable resources and expertise. To maximize those benefits, employers should pair a PEP with strong internal governance practices, from documenting provider reviews to monitoring service performance and maintaining clear controls over payroll and employee data.

Boulay’s advisors can help you build a proactive governance process that supports compliance, reduces fiduciary risk and creates a better overall experience for plan participants. Contact our team today to learn how a PEP can support your organization’s retirement plan goals.