Analyzing retirement plan options
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Pooled Employer Plans are here

The Setting Every Community Up for Retirement Enhancement (SECURE) Act that was passed at the end of 2019 contained some of the most exciting retirement plan related regulations since the Pension Protection Act of 2006. Although the SECURE Act produced some extremely useful provisions, one such provision has seemed to have stolen the spotlight: Pooled Employer Plans (PEPs). Not much different than Multiple Employer Plans (MEPs), PEPs are being touted as a superior alternative because there does not have to be commonality between each employer within the PEP. It’s wide open! The PEP acts as a single plan with a single plan document, a single 5500 filing and a single plan audit that multiple, unrelated employers, can adopt for their employees.

Promoters of PEPs believe that PEPs will expand the number of employees covered by an employer sponsored retirement plan by eliminating obstacles, such as plan fees and fiduciary risks, that have kept small employers from offering a plan to their employees. PEPs can potentially reduce plan expenses by pooling assets to achieve economies of scale for investments and eliminating redundant expenses through a single plan document, 5500 filing and plan audit. PEPs would also minimize the fiduciary burden on the plan sponsor because the law requires each PEP to be sponsored by a Pooled Plan Provider (PPP). The PPP will serve as the named fiduciary for the plan as well as the ERISA 3(16) fiduciary. It is also assumed that the PPP will retain an investment advisor to serve the plan as a discretionary investment manager under ERISA 3(38), thereby, also reducing the fiduciary liability to the plan sponsor.

If you would like more information, contact Matt Payne.

 Baker Tilly Wealth Management, LLC (BTWM) is a registered investment advisor. BTWM does not provide tax or legal advice. BTWM is not an attorney. Estate planning can involve a complex web of tax rules and regulations. Consider consulting a tax or legal professional about your particular circumstances before implementing any tax or legal strategy. The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Securities, when offered, and transaction advisory services are offered through Baker Tilly Capital, LLC, Member FINRA and SIPC; Office of Supervisory Jurisdiction located at 4807 Innovate Ln., Madison, WI 53718; phone: +1 (800) 362 7301. Baker Tilly Wealth Management, LLC and Baker Tilly Capital, LLC are wholly owned subsidiaries of Baker Tilly US, LLP. Baker Tilly US, LLP, is an independently owned and managed member of Baker Tilly International. © 2021 Baker Tilly Wealth Management, LLC

 

Matt Payne
Senior Advisor, Wealth, QPA, QKA, AIF®
Updates from the NAIC SAPWG May 2021
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