Pooled and multiple employer plans can be great options for small businesses and nonprofits looking for the right retirement solutions. As your clients navigate the process, we hope you’ll use this guide to discover which group retirement plans are currently available, the advantages and disadvantages of each plan type, and how you can manage them all in one place.

Discover the power of Vestwell to help clients access flexible, affordable retirement solutions, all from a modern platform that delivers better retirement savings experiences.

Power pooled and multiple employer plans with Vestwell.

Thanks to SECURE Act 2.0, there are significant opportunities to extend retirement plan access to greater numbers of employers and employees. Discover the key benefits of Multiple Employer Plans (MEPs), Groups of Plans (GoPs), and Pooled Employer Plans (PEPs) for small businesses, and service solutions available to support long term retirement savings goals.

A truly modern platform to support MEPs, PEPs, and GoPs.

Your clients understand that the right employee benefits package can help attract and maintain the best and brightest employees. Vestwell has flexible solutions that make it easier for small businesses to offer these benefits. With a structured, aggregated approach, Vestwell provides unparalleled technology and retirement industry expertise to serve the pooled plan marketplace.

Now, more employers can achieve the benefits they seek:

• Fiduciary oversight
• Risk mitigation
• Retirement outcomes
• Administrative ease

Explore the potential of new multiple employer retirement plan types. MEPs, PEPs, GoPs: What are the key differences?

Multiple employer plans (MEP) have existed for years, but many employers haven’t been able to benefit due to compliance rules that govern these types of plans. Recent legal amendments from SECURE Act 1.0 and SECURE Act 2.0 have clarified the rules and made them easier to understand and implement. SECURE Act 1.0 established a plan type called a Group of Plans (GoP), in which employers, whether unrelated or related, can file a single IRS Form 5500 for multiple defined contribution plans without aggregated testing.

Pooled Employer Plans (PEP) at a glance.

PEPs allow unrelated employers that meet certain requirements to join together to participate in a single retirement plan, sponsored by a Pooled Plan Provider (PPP).

A PPP can be an entity that registers as such with the Department of Labor (DOL) and the Internal Revenue Service (IRS). Recordkeepers, third-party administrators, payroll providers, and registered investment advisors 
 are the parties most likely to sponsor a PEP.

The PPP must be designated in the PEP plan document as the named fiduciary. The PPP may engage other parties for various fiduciary duties, such as 3(38) or 3(16), but retains oversight of these duties. The PPP is responsible for ensuring that the PEP meets ERISA and tax code requirements, including providing participant disclosures and performing nondiscrimination tests.

Plan sponsors interested in joining a PEP should fully understand the costs and restrictions associated with the plan, and the responsibilities of all parties involved.

PEP Key Benefits for Employers:

• Collective purchasing power can allow pools of participating employers to obtain better investment pricing and leverage economies of scale.
• Employers that are not currently sponsoring retirement plans are strong candidates. Plans subject to an Independent Qualified Plan Audit (IQPA) are also strong candidates as they may have the potential to save on those costs.
• PEP design is streamlined and optimized to make joining easy for plan sponsors. Instead of drafting a document for a single employer, you adopt the existing document, yet can customize plan design to your company s needs.
• Sharing expenses for plan documents, general plan administration, and 
 a single Form 5500 fee allows access to more comprehensive services.
• The ability to delegate fiduciary responsibilities to a third party, reducing administrative burden.

Multiple Employer Plans (MEP) at a glance.

Closed MEPs allow related businesses to join together to participate in a single retirement plan, often structured as a 401(k) plan.

Closed MEPs are administered by a plan organizer that makes the plan available to multiple employers. The organizer serves as the fiduciary and typically assumes administrative and investment management responsibilities for all plan participants.

Closed MEPs are subject to commonality rules. In order to 
 be viewed as a single plan by the Department of Labor, the participating employers must be part of the same trade or association, or located in the same geographical area to file 
 a single Form 5500.

Open MEPs are available to adopting employers that lack a common relationship with each other.

MEP Key Benefits for Employers:

• Potential tax credits.
• Simplifies retirement plan administration.
• Reduced administrative responsibility and savings on administrative costs.
• Outsourced fiduciary responsibilities, often to an industry association or professional employer organization (PEO).
• With Open MEPs, unrelated employers and a sponsoring entity can come together for the sole purpose of offering a single retirement plan without any other association or relationship.

Groups of Plans (GoP), also referred to as Defined Contribution Groups (DCGs), at a glance.

GoPs allow several employers, each with their own defined contribution plan, to file a single Form 5500 if they have the same trustee, named fiduciary, administrator, plan year, and investment options. SECURE Act 2.0 uses the terms GOP and DCG interchangeably.

GoPs offer an interesting hybrid approach to the world of pooled plan structures. They feel like individual plans to each sponsor. They are not tested in a group, meaning that the challenge of tracking eligibility and vesting across adopters in pooled plans does not exist. This also expands flexibility around plan design.

Notably, with guidance in February 2023 from the IRS, GoP sponsors are not subject to Independent qualified Plan Audit requirements (IQPA) on a group level. Instead, each plan that would have needed an audit on its own will need an audit in a GoP.

The good news is a small adopter that has a long time before potentially needing a plan audit, such as a plan with five employees, will not need one in a GoP.

This distinction makes a GoP an excellent choice for small employers that will not be a large plan by the number of eligible employees anytime soon, as they are only paying for services they actually need.

GoP Key Benefits for Employers:

• Investments are pooled like a MEP, giving pricing leverage for small plans.
• Flexible plan designs.
• Reduced fees associated with Form 5500.
• Great choice for small employers looking to pay only for services they actually need.
• In a MEP, all plans share the audit costs, even if their particular plan does not require an audit. In a GoP, only plans that need an audit must undergo one. This can bring savings to a group of smaller headcount companies what would not otherwise need a plan audit.

Explore Vestwell products for multiple employer retirement plans.

Interest in MEPs is increasing as more small business employers now have access.