"[The recent SEC] staff statement on pooled employer plans (PEPs) ... announced that an ERISA-covered PEP would be allowed to rely on the 'single trust' exclusion to avoid registration as an investment company. Second, the staff confirmed that collective investment trusts (CITs) may use the existing Rule 180 exemption when issuing interests to qualifying PEPs that include self-employed individuals.... [T]he biggest takeaway ... may be what it didn't say about the multitude of other multiple employer plans (MEPs)." MORE >>
"[The SEC Staff Statement] acknowledges that PEPs were intended to fit within the framework that allows retirement plan trusts to avoid being treated as investment companies -- and says that while they don't fit neatly in the single trust exemption, the staff won't object if an otherwise compliant ERISA-covered PEP treats itself as a single trust.... The SEC essentially signals that while the exemption doesn't quite fit, they aren't looking for PEPs to start registering." MORE >>
"In response to a request for input on what regulatory projects should be in the IRS's 2026-2027 Priority Guidance Plan, the American Retirement Association (ARA) has submitted a detailed list it believes will help reduce regulatory burdens and improve the retirement system overall.... Anti-cutback relief for elimination of new SECURE 2.0 distribution types.... Long-term, part-time revisions and relief.... Electronic disclosures.... Guidance on MEPs and PEPs.... Excise taxes owed on late contributions." MORE >>
"Retirement plan advisors are no longer evaluating PEPs (pooled employer plans) as a new concept. They are working in a market where adoption is rising, assets continue to grow and employers have shifted the conversation from whether pooled plans work to which structure is right for their business." MORE >>
"The Statement removes uncertainty regarding PEP treatment under the '33 Act and '40 Act, providing confidence that a PEP may treat itself as a single employer plan for purposes of Section 3(c)(11) of the '40 Act. ... CIT sponsors may now issue interests to PEPs covering self-employed individuals without '33 Act registration ... Employers with self-employed individuals (such as partnerships and sole proprietorships with common-law employees) may now participate in PEPs without causing the plan to lose CIT access ... PEP Plan fiduciaries may now consider a broader array of CITs, often lower-cost alternatives to mutual funds, for PEP investment lineups, benefiting participants through reduced expenses." MORE >>
"On May 4, the Staff of the [SEC] Division of Investment Management issued a [Staff Statement] permitting a pooled employer plan (PEP) to be treated as a 'single employer' plan for purposes of certain registration exemptions under federal securities law. Most notably, the Statement removes a barrier to PEP investments in collective investment trusts (CITs) where self-employed individuals participate in the PEP. The Statement helps both PEPs and CITs by articulating a clear rule and imposing only modest compliance burdens." MORE >>
"New Securities Act Sections CFI 118.01 clarifies that, if a PEP meets the applicable requirements of (i) ERISA and (ii) the Internal Revenue Code, and otherwise meets the conditions of Section 3(a)(2) of the Securities Act of 1933, as amended (the 'Securities Act'), the Staff will not object if the PEP claims the Section 3(a)(2) exemption for any interest or participation in a 'single trust fund' even though multiple, unrelated employers participate in the PEP.... New Securities Act Forms CFI 126.45 provides that an employer participant in a PEP may register offers and sales of its own securities to employees on Form S-8." MORE >>
"[The SEC Staff Statement] acknowledges that PEPs were intended to fit within the framework that allows retirement plan trusts to avoid being treated as investment companies -- and says that while they don't fit neatly in the single trust exemption, the staff won't object if an otherwise compliant ERISA-covered PEP treats itself as a single trust.... The SEC essentially signals that while the exemption doesn't quite fit, they aren't looking for PEPs to start registering. In other words, the rule didn't change -- but the SEC just made it usable for PEPs." MORE >>
"[The SEC] issued informal guidance that effectively makes Pooled Employer Plans (PEPs) more scalable, cost-effective and competitive, strengthening their role as a major distribution and growth channel in the retirement plan market.... The guidance removes key structural barriers to PEP growth, enhances investment flexibility by providing access to Collective Investment Trusts (CITs), and expands the addressable market (especially small and self-employed employers)." MORE >>
"A growing number of financial advisors are considering pooled employer plans (PEPs), as more value streamlined administration strategies and reduced fiduciary risk.... [O]ver 80% of respondents listed fiduciary risk mitigation as a primary influencer shaping their views of PEPs, and another 80% believe that using the features 'significantly or moderately reduce administrative burden.' " MORE >>
"This survey gathered advisor perspectives on PEP usage, trends, and expectations to help shape the conversation around the evolving role of PEPs in retirement planning.... [T]he findings suggest that PEPs are evolving from an emerging alternative into a core component of modern retirement plan strategy, helping advisors and plan sponsors navigate risk, complexity, and accountability in an increasingly demanding environment." MORE >>
"By shifting many administrative and fiduciary duties to a pooled plan provider (PPP), employers can spend less time managing plan mechanics and more time focusing on their business and employees. That said, a PEP does not eliminate employer responsibility entirely ... [It] creates a clearer, more efficient division of responsibilities that often offers employers greater peace of mind." MORE >>
"Seventy-one percent of recordkeepers list PEPs as a major or moderate strategic priority and 63% believe the growth of PEPs will have a positive effect on their recordkeeping business.... 88% of recordkeepers say participant personalization is a major or moderate strategic priority, with 82% of recordkeepers planning to increase allocations of resources to participant analytics." MORE >>
"While not stated in the question, ... the DOL may have a concern about the use of investment advisers who are affiliated with the PPP and the ongoing duty of the PPP to monitor the 3(38). There is likely also be a concern where the 3(38) then selects proprietary investments for the PEP." MORE >>
"[It] would not be a burden if the DOL required that PEPs offer a lineup that satisfied the 404(c) condition of a broad range of investments that would permit participants to construct portfolios that reasonably reflected their risk and return profiles.... Most commentators responded that the DOL should not establish a 'range of total fees'. There are several difficulties with that." MORE >>
"While the ongoing evolution and adoption of PEPs is worth monitoring, the trade-offs in flexibility, governance, and investment access may in some cases outweigh the benefits of a more tailored and flexible structure. Employers, for example, can also ease fiduciary burdens and lower costs through options like hiring a 3(38) investment manager, adding a 3(16) plan administrator, or incorporating CITs into their lineup — without needing to join a PEP." MORE >>
"This article begins a series about the part of the guidance that was an RFI, where the DOL is soliciting information that would be helpful for future guidance." MORE >>
"[The section entitled Fiduciary Tips for Small Employers Selecting a PEP serves] as a valuable reminder that there ARE fiduciary considerations in making that choice -- something that purveyors of that option have been known to gloss over.... [T]hese admonitions could -- and should -- be broadly applied to pretty much any new plan option -- and not just for small employers. To that end, [here is] a fill-in-the-blank template, replacing the word PEP with, say -- alternative investments, cryptocurrency, retirement income, or a managed account." MORE >>
"[T]he top issue is the monitoring of the PPP. Does it have the knowledge, experience and skill to properly manage a PEP? Is the PPP doing a good job of managing the PEP? Are there problems? Are there complaints? Is the PPP a stable business organization that will be able to manage the plan many years into the future? Does the PPP have the financial wherewithal to stand behind any claims that may be filed against the PEP?" MORE >>
"[W]here the PPP appoints the investment manager, the PPP is the fiduciary responsible for the selection and monitoring of the 3(38) investment manager. However, the law says that adopting employers are responsible determining if the 'named fiduciaries' are prudent choices for its participating employees.... That raises the question of the scope of the fiduciary duty of adopting employers related to the investment manager -- since the adopting employers cannot remove and replace an investment manager selected by the PPP." MORE >>
"The [pooled plan provider (PPP)] is the primary, and ultimate, fiduciary for running the PEP.... [T]he PPP needs to be qualified and that takes years of industry experience. In addition, employers should consider doing a litigation search about the PPP. A history of lawsuits can be a bad sign and should be investigated. " MORE >>
"The PEP structure shifts many fiduciary and reporting obligations to the pooled plan provider (PPP). But it also shifts the visibility.... The PPP's auditor is looking at the pooled trust and aggregated processes, not at whether your payroll file missed an employee who should've been eligible six months ago. In other words, when you avoid your plan's audit, you may also be avoiding your plan's oversight." MORE >>
"We do not believe that the Department should, at this time, create new class exemptions that apply exclusively to PEPs.... We do not believe the Department should be creating safe harbors for PPPs and PEPs.... The disclosures provided to PEP participants should include all disclosures made in other ERISA plans." MORE >>
"ARA recommends that the Department: [1] Issue a model disclosure or rubric that an employer could use to compare diverse plan solutions. [2] Consider a [PTE] that would allow PPPs to hire closely affiliated partners and related 3(38) investment managers ... [3] Apply any safe harbor developed regarding the selection and monitoring of a service provider not just to PEPs, or the selection of a PPP, but to all retirement plan service providers. [4] Provide guidance to facilitate growth and innovation of PEP in the areas of sponsorship eligibility, the standard for selection of PEP service providers, liability for the correction of plan errors (including a potential safe harbor), responsibility and authority for unresponsive employers, and bonding of employers." MORE >>
"The DOL has issued guidance about PEPs -- pooled employer plans -- that ... includes some interesting information about the development of PEPs.... It is clear that PEPs are appealing to some employers. ... [T]he key will be whether a PEP has distribution and as a part of that, a clear understanding of the services and compensation of the advisors who recommend the PEPs." MORE >>
