In response to the provisions of the SECURE Act, Paychex, Inc. will be among the first to introduce a Pooled Employer Plan (PEP) to help US small businesses offer their eligible employees an affordable retirement plan option.
The SECURE Act is a non-partisan law that went into effect December 20, 2019 and is designed to aid Americans’ ability to save for retirement. The PEP is a solution for small and medium-sized businesses that may not have been able to offer a retirement plan due to a lack of affordable options or the time or resources required to manage complex plan administrations. Companies currently offering an employer-sponsored qualified retirement plan can merge their plan and assets into a PEP, potentially saving time and money.
Paychex now offers a pooled employer retirement plan for small business employees
“The COVID-19 pandemic has not only made business more complex than ever, but has also seriously affected the financial security of millions of Americans,” said Tom Hammond, Paychex vice president of corporate strategy and product management. “Expanding access to retirement plans is critical to the long-term financial well-being of workers across the country.”
Using a PEP, employers can jointly participate in a 401 (k) plan that is managed by a Pooled Plan Provider (P3). The P3 acts as both a plan sponsor and a formal plan administrator, relieving employers of significant fiduciary and administrative burdens.
The Paychex PEP will include lower employer trust liability, simplified plan administration, and lower plan expenses compared to individual employer pension plans.
Paychex PEP benefits include:
- Reduce administrative burden by eliminating the need to contract and monitor third party fiduciary service providers;
- Reduced risk as Paychex takes on many fiduciary duties.
- Potential for greater efficiency by integrating Paychex payroll into the PEP options to reduce compliance costs.
Paychex will conduct the necessary independent financial review for the PEP to meet IRS and Department of Labor requirements, which can cost large employers between $ 10,000 and $ 15,000 annually.
Paychex’s PEP will be available from January 1, 2021. Visit Paychex.com to learn more about the features of this new retirement plan option.
Image: Paychex