Published: March, 2022
Pooled Employers Plans (PEPs) were born out of Congressional efforts to make employer-sponsored retirement plans available to more workers to help solve the retirement savings crisis. The SECURE Act, signed into law at the end of 2019, essentially created PEPs to address/solve a pair of longstanding issues that kept Multiple Employer Plans from achieving widespread adoption: the “one bad apple” rule and “common nexus” requirement.
A PEP allows business owners and employers to come together under one third party (the plan’s Pooled Plan Provider (PPP)) to offer a tax-advantaged retirement savings vehicle, all while delegating most of the day-to-day plan maintenance and fiduciary liabilities to the PPP.
There are approximately 50 PPPs from which to choose so it’s complicated, but the most important differentiator narrows the search considerably. The best PEP has the safest Qualified Default Investment Alternative (QDIA). A safe QDIA is not the most popular because the most popular QDIAs are risky.
A PEP with a safe QDIA is an asset. A PEP with a risky QDIA could become a liability.
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President, Target Date Solutions
Ronald J. Surz is president of PPCA Inc. and its division, Target Date Solutions. He is a pension consulting veteran, having started with A.G. Becker in the 1970's. Ron earned an MBA in Finance at the University of Chicago and an MS in Applied Mathematics at the University of Illinois.
He has published regularly in such publications as The Journal of Wealth Management, The Journal of Investing, Journal of Portfolio Management, Pensions & Investments, Senior Consultant, HorsesMouth and the IMCA® Monitor, as well as contributed to and edited several books. Ron's most recent book is Fiduciary Handbook for Understanding and Selecting Target Date Funds: It's All About the Beneficiaries. Ron has served as a member of the following boards and councils:
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