News Archive

"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 >>

"According to the DOL, per-participant costs in the three largest PEPs ranged from 0.23% to 0.42% in 2023, compared with Morningstar's data showing the median cost in small stand-alone plans at 0.84%.... PEP adoption by small businesses has yet to become widespread.... Employers seeking flexibility in match formulas, auto-features, or financial wellness programs may find many PEPs too rigid."  MORE >>

"[The author opposes] creating a regulatory safe harbor that favors PEPs. Instead, [he urges] EBSA to create a safe harbor for small employers that adopt a cost-efficient single-employer 401(k) plan with an all-index fund core menu, no hidden fees, and flat per participant pricing. The RFI frames a potential safe harbor to encourage employer to join PEPs; [these] comments propose a better path for small businesses."  MORE >>

"The following questions from DOL give us a feel for the sort of safe harbor(s) it is considering: [1] Is an employer safe harbor necessary? ... [2] How should the employer safe harbor be framed? ... [3] Should the safe harbor specify investments (e.g., require a TDF)? [4] Should it specify a permitted range of fees?"  MORE >>

"[1] Consider what a PEP has to offer you and your employees.... [2] Make sure you understand the type of PEP under consideration.... [3] Make sure you consider the experience and qualifications of the PPP.... [4] Make sure you ask questions about the PEP's fees.... [5] Make sure you understand the investment options.... [7] Ask questions about your exposure to fiduciary liability should you join the PEP.... [8] Don't forget to monitor your PEP on an ongoing basis.... [9] Make sure you fully inquire about the implications of exiting the PEP."  MORE >>

"On July 24, 2025, the [DOL] released a document with respect to pooled employer plans (PEPs) that included a general description of PEPs and how they work, 'limited interpretive guidance,' a set of 'Fiduciary Tips for Small Employers Selecting a PEP,' and a request for information (RFI)  ... In this article, after a review of some PEP 'basics,' [the authors] focus on DOL's review of and guidance with respect to employer and provider fiduciary obligations with respect to a PEP."  MORE >>

"Although PEPs are available to all sizes of employers, the New Guidance is specifically intended to help small employers evaluate and select 'high- quality' and 'low-cost' PEPs. The New Guidance also includes general questions intended to solicit information that may be used to help keep Congress informed about the PEP industry, and to help the DOL develop regulatory safe harbors to encourage the proliferation of these plans"  MORE >>

"Because PEPs are still a relatively new retirement plan arrangement, many smaller employers may not yet be aware of them, let alone understand how ERISA applies to them or how to review and select a potential PEP provider.... [T]he DOL stated it was issuing the RFI with the goal of addressing these challenges 'which may impede small employers from taking advantage of PEPs.' "  MORE >>

"Private equity (PE)-owned businesses face unique challenges, particularly in managing their retirement plans. These organizations must balance the often-competing priorities of their PE owners, employees, and internal strategic objectives. As decision-making structures evolve and companies scale, PE-owned firms require retirement solutions that not only provide consistency for employees but also retain the flexibility to adapt to shifting business goals and objectives."  MORE >>

"Questions included in the RFI range from general questions regarding market practices related to PEPs to those aimed at understanding potential conflicts of interest arising with respect to PEP investment options and developing a potential regulatory safe harbor ... In addition to the interpretive guidance relating to fiduciary duties, the guidance also includes [specific] tips to encourage and assist small employers in picking a PEP."  MORE >>

"[The RFI] reminds employers that while they can mitigate their risk of ERISA fiduciary liability by having a PEP's pooled plan provider assume full responsibility for selecting and retaining investment managers, the employer still must prudently select and monitor the pooled plan provider. The RFI also solicits information about prevailing market practices in order to determine the need for a potential safe harbor to promote greater utilization of these plans[.]"  MORE >>

"DOL issued guidance ... and a request for information with respect to PEPs.... Its limited, although important, guidance on minimizing potential fiduciary liability for plan sponsors was intended to help small employers select high-quality, low-cost PEPs."  MORE >>

"In the guidance and request for information, EBSA says it is concerned that because PEPs are 'relatively new,' having been made possible with the enactment of the [SECURE Act] of 2019 (SECURE Act), small employers might not be aware of them, nor how ERISA applies to them. It hopes that the information it gathers will help them to address challenges that may impede small employers' adoption of PEPs."  MORE >>

"The DOL explained ... that if the pooled plan provider delegates plan investment and management to an investment manager, the investment manager (rather than the employer participating in the PEP) is responsible for prudently selecting investments and managing the plan. The pooled plan provider would be responsible for selecting and monitoring the investment manager.... The guidance also included fiduciary tips to help small employers who are considering participating in a PEP."  MORE >>

"[EBSA's] interpretive guidance addresses the limits of a participating employer's responsibility in selecting and managing a PEP, including how it can be further alleviated, and offers some commonsense suggestions for how that responsibility might ultimately be satisfied. In addition, [EBSA is] asking the public to submit comments on market practices associated with PEPs, which [they] intend to consider as a basis for a regulatory safe harbor that will further encourage market participants to offer and employers to join well designed PEPs."  MORE >>

23 pages. "This document contains limited interpretive guidance to help small employers select high-quality, low-cost 'pooled employer plans' or 'PEPs.' This document also solicits information about prevailing pooled employer plan market practices. The Department will consider the responses as part of a process aimed at developing a potential regulatory safe harbor or safe harbors that comprehensively encourage market participants to offer and employers to join such plans."  MORE >>