Your premier HR partner
Let us take on your HR functions so you can strive for greatness.
Contact us.
Looking for a SECURE Retirement Plan Option for Your Small Business?
The Setting Every Community Up for Retirement Enhancement (SECURE) Act, enacted in 2019, transformed the retirement landscape by broadening access to qualified retirement plans. One of its most impactful changes was eliminating the requirement that multiple employer retirement plans be connected by industry or association, paving the way for a new model: the Pooled Employer Plan (PEP).
Introduced in 2021, PEPs pool resources from small, unrelated businesses, enabling them to source retirement plans with the same purchasing power as larger companies. A Pooled Plan Provider (PPP) oversees the administration of the plan. This role can be filled by a registered investment advisor, a third-party administrator, or a professional employer organization (PEO) such as Syndeo.
When you join a PEP, the complex administrative responsibilities—such as setting up plan options and coordinating with vendors and investment managers—are handled by the PPP. Unlike a traditional 401(k), where the employer bears significant fiduciary risk, the PPP acts as the plan sponsor and assumes this responsibility. The PPP also assists in designing a plan tailored to your needs and serves as an advocate for participating clients. Additionally, the PPP manages year-end tax audits and discrimination testing, which can potentially save employers tens of thousands of dollars.
By allowing PEPs to join resources of unaffiliated organizations and offer high-quality, cost-effective retirement benefits to their employees, this innovative approach makes it easier and more affordable for small businesses to provide competitive retirement plans, leveling the playing field with larger employers.
More recently, the SECURE 2.0 Act makes pooled employer plans more accessible, attractive, and easier to administer for a broader range of employers.
These new changes bring many new benefits to the PEP model, as its popularity with small businesses continues to grow:
Now, let’s discuss how pooled employer plans benefit small businesses and how easy it is to compare your options with Syndeo as your premier HR partner.
PEPs make retirement planning easier for business owners and employees.
Small businesses often lack the resources and man-power to administer a robust traditional retirement plan without exposing themselves to a high amount of risk. The PEP is a solution that disperses the expense, spreads the risk, and alleviates the administrative burden while still offering flexible plans and guidance from experts and professionals. By joining a Pooled Employer Plan, you can offer the best of both worlds—robust plan options for less cost.
Reduced fiduciary responsibility leaves more time for business growth.
Reducing your fiduciary responsibility is another advantage to small businesses considering a PEP. The plan administrator is responsible for acting in the best interests of the plan's participants and beneficiaries, as mandated by the Employee Retirement Income Security Act (ERISA). This shift significantly helps employers and business owners who have limited knowledge of the intricacies of retirement plans. By delegating control of the plan’s management to the administrator, you reclaim your time and resources to focus on business growth and expansion. Finding a trustworthy PPP is crucial to ensuring that your retirement plans meet your expectations.
Strong buying power with lower fees.
Buying power is the name of the game in retirement plans, which is why larger companies can offer a wider variety of plans at lower costs. Small business owners are at a clear disadvantage due to the high fees for small holdings, which make most plans unaffordable. The genius of the PEP is that it allows small businesses to join forces, creating a collective pool of resources that results in stronger buying power while maintaining affordably priced plans. Thus, it enables small business owners to customize retirement plans for their employees, just like larger corporations.
Flexibility to set the rules increases employees participation.
Within a PEP, each employer can set the parameters of the plan for their participants, including the participant requirements, matching requirements, and the vesting schedule. This flexibility allows the plan to work for them, resulting in a high employee participation rate. Even though you may be a small business, through a pooled employer plan, you can still offer plans that your employees want.
PEPs can be a key component of competitive benefits.
Attracting and retaining top talent requires offering competitive benefits, including affordable retirement plans that meet the needs of employees. Joining a PEP makes this crucial piece available to small businesses.
The Syndeo model includes expert investment guidance and comprehensive retirement planning services. Our PEP offers access to all major fund families, so you aren’t restricted to a selection of proprietary products. You have the flexibility to choose from a broad range of top-performing investments and funds, and employees can personalize their investment portfolios with support from our financial advisory firm.
Compare the cost of your current plan with a Pooled Employer Plan.
Even if you currently provide a retirement plan for your employees, it’s worthwhile to compare the expenses of a traditional single-employer 401(k) with those of a PEP. You might find significant savings that you can reinvest in your company, or at least you have the peace of mind that you are offering the best options for your employees. For example, after performing a cost analysis of our PEP against their existing company-sponsored plan, we helped one Syndeo client save nearly $25,000 per year.
Pooled Employer Plans have made it possible for small businesses to offer tailored retirement plans that employees truly value. A PEP could be the ideal solution if you’re a small business owner aiming to attract top talent or simplify retirement plan administration. Syndeo is a reliable Pooled Plan Provider and your trusted HR partner. To learn more about how a PEP can benefit both your business and your employees—and to take the next step toward offering a retirement plan that fits your objectives—reach out to Syndeo today.
What questions do you have about pooled employer plans? We’d love to hear from you. Email Syndeo to get all your questions answered.
Don’t forget to subscribe to our newsletter for more thought-provoking HR content from Syndeo.
If you want to learn more about how outsourced HR services can get you back to business, contact Syndeo today.
Let us take on your HR functions so you can strive for greatness.
Contact us.
