Tag Archives: PEP

Things I Worry About (23): Pooled Employer Plans and DOL RFI (4)


DOL
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Key Takeaways

  • The DOL has issued guidance about PEPs—pooled employer plans—that provides tips for adopting employers and questions about PEPs and that suggests a possible fiduciary safe harbor for small employers who adopt PEPs.
  • This article continues a discussion of the questions that the DOL says that employers should ask when considering adopting a PEP for their employees. The questions covered in this article are 4 through 6, which deal with fees and costs, investments and scope of fiduciary responsibility.
  • Both advisors and employers should consider the DOL Tips when deciding whether to join a PEP and, if so, which one.

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 article, Things I Worry About (22), started the review of issues identified by the DOL for deciding whether to join a PEP.

This is the second in a series of articles 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. My last article, Things I Worry About (22), covered the first three questions. This article and my next one cover the remaining DOL questions and comments, as well as my comments.

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Things I Worry About (22): Pooled Employer Plans and DOL RFI (3)


DOL
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Key Takeaways

  • The DOL has issued guidance about PEPs—pooled employer plans—that provides tips for adopting employers and questions about PEPs and a possible fiduciary safe harbor for small employers who adopt PEPs.
  • This article begins a discussion of the questions that the DOL says that employers should ask when considering adopting a PEP for their employees.

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. This article moves on to the questions that the DOL suggested employers ask when adopting PEPs. That section—entitled “Fiduciary Tips for Small Employers Selecting a PEP”—posed 9 questions that employers should ask. This article and my next two provide the DOL’s questions and comments, as well as my comments.

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Things I Worry About (21): Pooled Employer Plans and DOL RFI (2)


DOL, fiduciary
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Key Takeaways

  • The DOL has issued guidance about PEPs—pooled employer plans—that provides tips for adopting employers and questions about PEPs and a possible fiduciary safe harbor for small employers who adopt PEPs.
  • In addition, the preamble to the guidance includes some interesting information about the development of PEPs.
  • That information includes data about the successes of PEPs and also some considerations for evaluating PEPs.

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).

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Things I Worry About (20): Pooled Employer Plans and DOL RFI (1)


DOL
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Key Takeaways

  • The DOL has issued guidance about PEPs—pooled employer plans—that provides tips for adopting employers and questions about PEPs and a possible fiduciary safe harbor for small employers who adopt PEPs.
  • In addition, the preamble to the guidance includes some interesting information about the development of PEPs.

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)

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Things I Worry About (6): Automatic Enrollment (5) and PEPs


401(k), 403(b), SECURE 2.0
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Key Takeaways

  • The SECURE Act 2.0 required that “new” 401(k) and private sector 403(b) plans automatically enroll their eligible employees, but not until plan years beginning after December 31, 2024…just days ago.
  • “New” plans include most that were established on or after the enactment date of SECURE 2.0—December 29, 2022. “Old” plans—those adopted before the enactment date—are not required to automatically enroll.
  • However, it was not clear whether an “old” single employer plan that joined a “new” (post-enactment) PEP would be considered a new plan or an old plan. In fact, the IRS had issued some guidance that strongly suggested that it would be considered a new plan—which would mean that it would need to automatically enroll its eligible participants.
  • The IRS has just issued a proposed regulation on the SECURE 2.0 provision on automatic enrollment. The proposal provides that the “old” plan would continue to be considered an “old” plan even after joining a “new” PEP.

SECURE 2.0 was enacted on December 29, 2022. Among its provisions is a requirement that “new” 401(k) plans and private sector 403(b) plans must automatically enroll their eligible employees, but not until the first plan year beginning after December 31, 2024 (the “applicable date”). Since most participant-funded and participant-directed plans, such as 401(k)s and 403(b)s, operate on a calendar year, this article discusses the effective date as if it were for the 2025 calendar year…in other words the automatic enrollment requirement would apply beginning with the first payroll in January 2025.

The IRS previously issued Notice 2024-2 which suggests that, if a pre-enactment (“old”) 401(k) or private sector 403(b) plan joined (or, in IRS speak, merged into) a post-enactment (“new”) pooled employer plan, or PEP, the old plan would be treated as a new plan and would need to begin automatically enrolling its eligible employees. That presented a problem for plan sponsors of old plans who were considering joining a new PEP. Some simply didn’t want to automatically enroll their employees. Others who had rich matching formulas were worried about the cost. In any event, the Notice created a problem for many employers when considering joining a newly established PEP.

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