PEP's

Couple of questions on this, as we aren't a PPP.

We are TPA on a plan sponsored by a corporation, (a controlled group with one other corporation which signed on as a participating employer) where a financial advisor convinced them to move all the funds to a PEP. Fine. This happened a couple of months ago. (Calendar year plan.)

We have been asked to complete the plan administration for the 2022 plan year. Is it ok for the PPP to farm out the administration to a TPA like us? In addition, any thoughts as to why we might not WANT to do this admin, or is it just carry on as usual - We've never been involved with a PEP/PPP yet.  All thoughts appreciated!

If your departed client engages and pays you to test what happened before the single-employer plan was merged out and to compile a final Form 5500 report for that terminated plan (for its 2022 short year that ended when the merger-out was completed), that might be a reasonable task.

Before accepting an engagement, you might consider whether you would get useful information from the single-employer plan’s former recordkeeper and investment custodians.

For anything after the merger-out, it’s the pooled-employer plan’s administrator that decides which, if any, service providers it engages.

Peter, thanks for the response. One additional question - does moving to a PEP automatically terminate the plan, causing a short plan year, and start a new plan 002? Or does the existing plan simply move under the "umbrella" of the PEP, administered by a PPP, still as plan 001? Gracias!

While TPAs and others who know much more than I do could give you more information, I assume the transfer of assets and obligations from the single-employer plan into the multiple-employer pooled-employer plan results, if the single-employer plan’s assets and obligations became $0.00, in the single-employer plan’s termination.

The pooled-employer plan will have its own EIN and PIN, which are independent of a participating employer.

Good questions. The work that your client is asking you to perform is for the previously existing single employer plan for the 2022 short plan year. They (you) will need to file a "Final Form 5500" for that previous plan (with a final audit, if one is required) for 2022 and on that 5500 indicate that the plan was MERGED into the XYZ Pooled Employer Plan. It is almost certainly a plan MERGE, not a TERMINATION, btw. You may be able to reach out to the new TPA on the PEP for clarification. Happy to chat as well.

Terry Power

tpower@theplatinum401k.com

813.774.3366

I think what Terry Power describes is what I meant.

The merger-out might not be a termination such as to require immediate vesting for the transferred participants.

But if the merger-out resulted in the single-employer plan’s assets and obligations becoming zero, that ends the single-employer plan (and the Form 5500 reporting should show the merger-out and end).

Thanks all!!! Very helpful.