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, fourth and fifth articles, Things I Worry About (22), Things I Worry About (23), and Things I Worry About (24), reviewed issues identified by the DOL for employers who may be deciding whether to join a PEP.

My last article Things I Worry About (25) began a series about the part of the guidance that is an RFI—Request for Information, where the DOL is soliciting information that would be helpful for future guidance. This article continues that discussion.

21. Should such a safe harbor [referring to “safe harbor” questions discussed in my last article] create any specific requirements regarding the offer of TDFs, the offer of managed accounts, the acceptable number of pooled investments offered as designated investment alternatives, or the asset class coverage of designated investment alternatives available to participating employers in a PEP?

Comment: In my view, these questions should be left to the private sector and prudent fiduciaries. Having said that, though, 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. I could also understand the imposition of a requirement that PEPs offer a QDIA compliant investment or service for defaulting participants.

22. Should such a safe harbor designate a permissible range of total fees for participants in the PEP? For this purpose, the safe harbor could define total fees as an average percent of assets.

Comment: Most commentators responded that the DOL should not establish a “range of total fees”. There are several difficulties with that. For example, PEPs that provide more individualized and more robust services will, by virtue of those services, charge more than PEPs that do not. The one should not be compared to the other. If a range were so broad as to incorporate all possible reasonable fees and costs—for both services and investments—it would be worthless since the cap would be too high for the “vanilla” plans and just high enough for the more complex plans. In any event, it is not a good idea for the government to establish fee limits for several other reasons, for example, the range may be viewed as a safe harbor and some PEP providers may park themselves at the high end of the “permissible” range. Also, circumstances change and what seems reasonable today may not be reasonable 10 or 20 years from now. It is harder than you might imagine to change laws and regulations. I am a hard “no” on this one.

23. Are there any issues specific to registered investment company funds or collective investment trusts that such a safe harbor should address? If so, what are they and why are they relevant for the safe harbor?

Comment: If the PPP—the pooled plan provider—who is the primary fiduciary, appoints a 3(38) investment manager for the PEP, it will be the job of the 3(38) to prudently evaluate the investments, including their fees and any conflicts. The DOL should make that clear in any guidance. Conflicts of interest, including proprietary products, is an obvious issue, but I will discuss conflicts in a future article.

24. Should such a safe harbor require the use of written representations or certifications by the pooled plan provider about the PEP and the pooled plan provider’s diligence in meeting the requirements of ERISA. Could any such written representations help participating employers satisfy their duty to prudently monitor the pooled plan provider, working similar to the way the written representations work in the fiduciary safe harbor in section 408(e) of ERISA (safe harbor for annuity selection)?

Comment: While I don’t think the DOL has the authority to issue a fiduciary safe harbor for the selection and monitoring of PEPs, I do think that it can make the job easier for adopting employers. Part of that could be mandated certifications. Generally, if the certifications are reasonable and adopting employers don’t have a reason to think that they aren’t accurate, that would be supportive of a prudent process. Also, the DOL could make clear that, as the PEP rules suggest (that is, ERISA sections 3(43) and 3(44)), adopting employers are only obligated to prudently select and monitor the PPP and other named fiduciaries (if the PPP has appointed a plan level 3(38) investment manager). In that case, the other named fiduciaries would be the directed trustee and the 3(38) investment manager (and possibly a 3(16) administrator if the PPP doesn’t serve as the 3(16) administrator). On the other hand, if the PPP doesn’t appoint a plan level 3(38) the adopting employers will also be fiduciaries for the investments or, if adopting employers hire the  3(38) investment manager, they will be fiduciaries for prudently selecting and monitoring the investment manager.

25. In addition to the safe harbor referenced in questions 15 through 24 for participating employers, do market participants see a need for a safe harbor for pooled plan providers themselves to encourage the formation of high-quality PEPs? If so, which service provider relationships (e.g., recordkeepers, consultants, trustees, investment managers) and which PEP model (e.g., bundled or unbundled) are most in need of a safe harbor or safe harbors? What should such a safe harbor include?

Comment: Since there are, I believe, around 200 PEPs, it is hard to argue that providers are reluctant to enter the market under the current laws.. For the time being, I think the DOL should hold off on this and clarify that it is the fiduciary responsibility of the PPP to select and monitor the other providers. At this time there doesn’t seem to be a shortage of providers willing to serve as a PPP. Where organizations have avoided that status, at least in my experience, it is because they want the PEP to engage their services and/or to use their investments, which is a conflict that likely is prohibited. The DOL could help with this point  by issuing reasonable prohibited transaction exemptions.

Concluding Thoughts

It seems clear from the guidance generally, and specifically from the RFI questions, that the DOL views PEPs favorably. While I doubt that the DOL has the authority to issue a “clean” fiduciary safe harbor for adopting PEPs, I believe that the Department can provide guidance about the processes and relevant considerations that will provide valuable to employers. The guidance could be, in effect, a checklist of factors to be considered and a discussion of how to consider those factors. In addition, the guidance could make clear that the only fiduciary responsibilities of adopting employers is to prudently select and monitor the PPP and other named fiduciaries and then require that the PPP provide the necessary information to adopting employers to do that job.

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.