The Department of Labor (DOL) announced on July 28, 2025 that its Employee Benefits Security Administration intends to help smaller employers that want to offer retirement benefits choose a high-quality, low-cost option known as a pooled employer plan. The guidance and request for information, titled “Pooled Employer Plans: Big Plans for Small Businesses,” emphasizes the potential reduced burdens and costs with joining a PEP compared to sponsoring their own separate retirement plan.

The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) defined and authorized pooled employer arrangements, which can allow most of the administrative and fiduciary responsibilities of sponsoring a retirement plan to be transferred to a pooled plan provider. PEPs allow unrelated employers to be a part of the same plan. There does not need to be a connection between the employers. Note: this type of plan is different from Taft-Hartley collectively bargained multiemployer plans.

Many PEPs appeared to be delivering on Congressional intent of the SECURE Act by offering diversified investment lineups at a lower cost than small plans could likely negotiate on their own behalf, according to DOL analysis of Form 5500 filings from 2023 (summarized in Section III of the guidance).

PEPs Are Administered by Pooled Plan Providers (PPPs)

A pooled plan provider means a person that is designated by the terms of the plan as a named fiduciary under ERISA, as the plan administrator and as the person responsible to perform all administrative duties (including conducting proper testing with respect to the plan and the employees of each employer in the plan) that are reasonably necessary to ensure that the plan meets ERISA and Internal Revenue Code requirements.

Not All PEPs Operate the Same Way

Although PEPs all have certain things in common, they do not all operate the same way. For example, some PEPs are straightforward and offer uniform features to all participating employers and their employees. Other PEPs may offer flexibility and customization. The best fit depends on the needs and goals of the business and its employees. After deciding on the best operation method, consider several similar PEPs before selecting one, DOL recommended.

Fiduciary Tips for Small Employers Selecting a PEP

Pending additional guidance, DOL has prepared tips to assist small business owners in picking a PEP.

Here’s a sampling of relevant example questions from the tips for small employers selecting a PEP.

“Understanding the experience and qualifications of the pooled plan provider is one of the most important—if not the single most important—aspects of joining a PEP,” the DOL guidance says.

PPP Experience and Qualifications

• What is the pooled plan provider’s experience with employee benefit plans?
• What data is available on the quality of their services and customer satisfaction?
• What is the PPP’s experience with prior litigation or prior government enforcement matters?
• Is the PPP registered with the DOL, as is required by law?
• How many employers and participants are in the plan, and what is the total amount of its assets? (Use this to evaluate whether the PEP will offer economies of scale.)

Fees

• What are all the fees and expenses that will be charged by the PEP?
• How would fees be allocated among participating employers and their employees’ accounts?
• What is the breakdown by service of all the fees and expenses associated with joining the PEP?
• What is the breakdown by service of how much the PPP (and any affiliate) gets paid, and who approves these fees and expenses?
• Does the PPP receive any compensation from third parties in connection with the PEP?
• Does the PEP use data from participant accounts for cross-selling activities?

Investment Options

• How many fund options are available?
• Are target date funds (TDFs) available?
• What fees are associated with the investments?
• Are investment options diversified?
• How do investment options perform relative to their benchmarks?
• Do the investment options have materially different risk and return characteristics?
• Who selects the funds on the menu, and how often are their choices and process reevaluated?
• What is the default investment for employees who do not direct the investment of their account assets?

Exposure to Fiduciary Liability

• Does the PPP hire an investment professional to act as a fiduciary with respect to investment selection?
• Ask the PPP to name the fiduciary that is responsible for selecting the PEP’s investment options and the person responsible for selecting this fiduciary.
• Is the PEP structured to assume all plan administration, management and operation functions?
• Do the PEP’s governing documents put fiduciary duties on the employer?

Implications of Exiting the PEP

• What would happen if the employer, or any of its employees who separate from service, were to cease participation in the PEP and seek to transfer assets to another retirement solution?
• Does the PEP impose any restrictions (including fees, timing, penalties, etc.) on the ability of a participating employer or its separated employees to cease participating in the PEP? If yes, what are the restrictions, and why do they exist?
• Does the PEP or any of its investments contain a market value adjustment that would be triggered when the employer or employee ceases participation, receives distributions or otherwise transfers assets out of the PEP?
• What would happen to the unvested portion of your employees’ account balances under the plan’s forfeiture provisions if the employee ceases participation upon separation of service?

Tips for Monitoring the PEP

Monitor the operations and performance of the PEP to make sure it is operating the way you expected it to. Things to monitor and review include:

• Performance of the investments
• Resolution of complaints about the PEP from your employees
• Fees charged. Make sure they are as agreed upon, and if not, actively seek out an explanation.

Implications of Exiting the PEP

If the employer ceases participating in the PEP and terminates its company’s involvement with the PEP altogether, would the accounts of your current and former employees remain in the PEP?

Next Steps

DOL requested comments on market practices associated with PEPs, which are due September 29, 2025. The feedback will be considered as a basis for a regulatory safe harbor that will further encourage pooled plan providers to offer and employers to join well-designed PEPs. We will be watching for additional guidance or rulemaking.

Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.

View the SECURE Act 2.0 Toolkit.