This series of articles examines the DOL’s July 29, 2025, release that includes interpretative guidance on PEPs, solicits information about PEP practices, includes tips for selecting PEPs, and discusses a possible fiduciary safe harbor for adopting PEPs. 2025-14281.pdf (SECURED).

The first two articles in this series,  Things I Worry About (20) and Things I Worry About (21), discussed some of the DOL’s findings when it reviewed the 2023 Forms 5500 filed by PEPs. The third and fourth articles, Things I Worry About (22) and Things I Worry About (23), started the review of issues identified by the DOL for deciding whether to join a PEP.

This is the third article about the questions that the DOL suggested employers ask when adopting PEPs. That section—entitled “Fiduciary Tips for Small Employers Selecting a PEP”—posed nine questions that employers should ask. This article covers the remaining DOL questions and comments, as well as my comments.

My last article left off with question 6. Let’s move on to 7, 8 and 9:

7. Ask questions about your exposure to fiduciary liability should you join the PEP. Sometimes, through a subscription agreement, a PEP may purport to disclaim ultimate fiduciary responsibility for the service providers it hires, the fees it pays to these service providers, and the fees it pays to itself or affiliates internally. Therefore, an example of a relevant question is whether the PEP is structured to assume all plan administration, management, and operation functions. Put differently, you may want to ask whether the PEP’s governing documents put any fiduciary duties on you.

Comment: One of the primary reasons for joining a PEP is to transfer fiduciary responsibility for the investments, services, and fees and costs to the PPP—the pooled plan provider. However, some PEP arrangements are structured to move some of those responsibilities back onto the employer. If that is not an employer’s intent, and the arrangement puts some of those responsibilities back on the employer—which can only be determined by reading the agreements, then the employer should reject that PEP and find another. To be fair, there may be PEP arrangements where the PPP or the investment manager need to have the employer make a fiduciary decision. That could occur where, for example, the PPP or the investment manager has a conflict of interest. In that case, an employer should clearly understand what its responsibilities are, determine if it has the knowledge to properly evaluate the associated conflict and the investment or service, and decide if it wants to take on that responsibility. A key is to know that there are a number of available PEPs and that they are different. An employer should pick a PEP that is appropriate for it and its employees.

8. Don’t forget to monitor your PEP on an ongoing basis. Federal law requires employers in the PEP to prudently monitor the pooled plan provider and any other persons specifically designated as a named fiduciary of the PEP. This does not mean that you are required to oversee the day-to-day activities of these individuals. However, at reasonable intervals you should review the operations and performance of the PEP, including performance of the investments, to make sure it is operating the way you expected it to. This would include, as applicable, a review of the resolution of complaints about the PEP from your employees. This would also include checking to see if the fees that were charged are the same as the ones you agreed to, and if not, actively seeking out an explanation.

Comment:  From my perspective, the 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?

Those are a few of the questions that should be asked initially and then as a part of a regular monitoring process.

9. Make sure you fully inquire about the implications of exiting the PEP. Your company’s business circumstances may change such that the PEP you have selected is no longer the best fit for you and your employees. For example, your company and the size of its workforce may grow, and you may decide to sponsor a single-employer plan, perhaps a defined benefit plan, or the company may downsize or even go out of business. Or you may conclude that the PEP simply is no longer the best PEP for your needs. Accordingly, when initially interviewing a PPP, examples of relevant questions include asking the pooled plan provider for an explanation of what would happen if you, as the employer, or any of your employees who separate from service, were to cease participation in the PEP and seek to transfer assets to another retirement solution. A good question to ask in this context can be whether the PEP imposes 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 the PEP does impose restrictions, an example of a relevant follow up question would include asking what they are and why do they exist? Another good question to consider asking is whether 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. You should also understand what happens to the unvested portion of your employees’ account balances under the plan’s forfeiture provisions if the employee ceases participation upon separation of service. You may want to also ask if, as the participating employer, you cease participating in the PEP and terminate your company’s involvement with the PEP altogether, whether the accounts of your current and former employees remain in the PEP.

Comment: These are excellent questions. If possible, employers should get answers in writing. While relationships start out with a positive view of the future, reality is that sometimes they sour. There should be an “escape plan” before it is needed, if ever.

I believe that the genesis of this DOL issue comes from rumors in the industry of PEPs that have made it hard for employers to leave the PEP. While I haven’t observed that myself, I have heard the rumors. As a result, employers should familiarize themselves with the exit procedures and the hurdles that need to be cleared to move their plans from a PEP to a new single employer plan or to another PEP.

Concluding Thoughts

These three articles, Things I Worry About (22), (23) and (24), can be used as an outline for the selection and monitoring of a pooled employer plan (PEP). While there can never a guarantee that any list includes everything needed for a prudent process, I believe that, at the least, the DOL guidance and these three articles provide a strong foundational starting point.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

The views expressed in this article are the views of Fred Reish, and do not necessarily reflect the views of Faegre Drinker.