A pooled employer plan (PEP) is a 401(k)-type retirement plan that lets unrelated small businesses join a single, professionally administered plan instead of each running its own. Congress created the structure in the SECURE Act of 2019, and employers have been able to join one since January 1, 2021, according to a U.S.
Department of Labor news release. For a small business that has avoided offering a 401(k) because of cost or administrative burden, a PEP shifts most of that work to a licensed outside administrator called a pooled plan provider. The employer still has a job to do, but it's a smaller one than running a standalone plan.
Table of Contents
- What Is a Pooled Employer Plan?
- Who Runs a PEP, and What Do Employers Still Have to Do?
- How Fast Are PEPs Growing?
- What Cost and Compliance Advantages Do PEPs Offer?
- Why Haven't More Small Employers Adopted PEPs?
- How Should a Small Business Evaluate a PEP?
- Frequently Asked Questions
What Is a Pooled Employer Plan?
A PEP is a single retirement plan that multiple, unrelated employers adopt together. Before the SECURE Act, a multiple-employer plan generally had to link businesses with some shared characteristic — the same industry, for example.
The SECURE Act removed that requirement for PEPs, letting any employers opt in, as described in the DOL's November 2020 announcement. Each participating employer's workers share one plan document, one trust, one set of investment menus, and one annual audit (when an audit is required at all — more on that below). The employer that would otherwise have had to shop for a recordkeeper, hire an auditor, and sign off on plan design instead adopts a plan someone else already built and runs.
Who Runs a PEP, and What Do Employers Still Have to Do?
Every PEP is run by a pooled plan provider, a firm that registers with the DOL and the Treasury before it can operate. The provider files electronically on EBSA Form PR through the efast.dol.gov system, generally at least 30 days before starting operations, according to the DOL's registration announcement. That provider has to formally acknowledge that it is a named fiduciary and the plan's administrator, carry a fidelity bond, and name a trustee to collect employer and employee contributions, per DOL guidance on pooled plan provider registration.
That's the core trade a PEP offers: the provider takes on day-to-day fiduciary and administrative responsibility that a standalone 401(k) sponsor would otherwise carry alone. Adopting employers aren't off the hook entirely. Each one keeps a fiduciary duty to prudently select the pooled plan provider in the first place and to keep monitoring it afterward — the same duty of care a company owes when picking any service provider that handles employees' retirement money. Starting with plan years after December 31, 2022, SECURE 2.0 also let a PEP designate a fiduciary other than a participating employer to handle contribution collection, and opened the door for 403(b) plans — the kind used by many nonprofits and schools — to join multiple-employer and pooled arrangements, according to a Groom Law Group comparison of SECURE 2.0 and prior law.
How Fast Are PEPs Growing?
PEP adoption has accelerated sharply since the structure launched. DOL filings counted at least 190 PEPs operating as of December 31, 2023, holding about $5 billion for roughly 618,000 participants — with nearly 70% of all PEP assets concentrated in just the 12 largest plans, according to Mayer Brown's analysis of DOL data.
Two years later, the numbers had grown substantially. PLANSPONSOR's 2026 Recordkeeping Survey found 330 PEPs holding $33.78 billion in assets for 10,797 participating employers, covering more than 1.2 million participants at the end of 2025 — more than double the prior year's asset total, according to the survey. That growth shows PEPs moving from a niche product used by a small number of large pools toward a broader base of participating employers, even as assets still skew toward the biggest plans.
What Cost and Compliance Advantages Do PEPs Offer?
The clearest financial advantage shows up in audit requirements. A standalone 401(k) plan generally needs an independent annual audit once it reaches 100 participants with account balances — an added cost that falls hardest on growing small businesses.
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A group of small plans pooled into one PEP can avoid that audit requirement until the PEP's combined participant count reaches 1,000, according to PKF O'Connor Davies' Employee Benefit Plans Alert. That threshold means a 40-person company that would trigger its own costly audit almost immediately after a few years of growth can instead stay under a PEP's shared 1,000-participant ceiling for much longer, deferring or avoiding that expense entirely while the business is still small. Beyond the audit threshold, pooling also spreads recordkeeping, legal, and investment-menu costs across every participating employer rather than charging each one separately — the same economy of scale that makes large-company 401(k) plans cheaper per participant than small-company ones.
Why Haven't More Small Employers Adopted PEPs?
Despite the growth, PEPs remain a small fraction of the small-business retirement market. On July 28, 2025, the DOL issued a formal Request for Information asking how PEPs are actually being used and what's keeping smaller employers from adopting them, citing low employer awareness as a central barrier and signaling it may consider a regulatory safe harbor to encourage adoption, according to ASPPA's coverage of the request.
Industry groups have pushed back on adding new requirements as the fix. The American Retirement Association's September 29, 2025 comment letter urged the DOL to prioritize changes that lower PEPs' cost and administrative complexity for small employers, rather than layering on additional obligations, according to ASPPA's summary of the letter. The tension is straightforward: a structure designed to simplify retirement plans for small businesses works against that goal if the compliance process for joining one stays complicated.
How Should a Small Business Evaluate a PEP?
A small employer weighing a PEP against starting its own 401(k), or against doing nothing, can work through a short checklist: Because PEPs are still a relatively young option — operating since January 2021 — a business considering one is evaluating a structure the DOL itself is actively reexamining, including whether future guidance will lower costs further or add new obligations for providers and employers alike.
- Confirm the pooled plan provider is registered with the DOL — this is required before the provider can legally operate a PEP.
- Ask how the provider handles its named-fiduciary responsibilities, including the fidelity bond and trustee arrangement for collecting contributions.
- Find out the PEP's current total participant count relative to the 1,000-participant audit threshold, since a plan already near that number offers less of a near-term cost advantage.
- Compare the PEP's fee structure and investment menu against what a standalone plan or a traditional multiple-employer plan would offer the same workforce.
- Document the employer's own ongoing due diligence in selecting and monitoring the provider — fiduciary responsibility doesn't disappear just because the plan is pooled.
Frequently Asked Questions
Can any small business join a pooled employer plan?
Yes — unlike older multiple-employer plans, PEPs don't require participating businesses to share an industry or other common characteristic, a change made by the SECURE Act, per the DOL's 2020 announcement.
Does joining a PEP eliminate an employer's fiduciary responsibility?
No. The pooled plan provider takes on named-fiduciary and administrator duties, but each adopting employer still must prudently select and monitor that provider, according to DOL registration guidance.
How many participants can a PEP have before it needs an independent audit?
A PEP can generally avoid the independent-audit requirement until its combined participant count reaches 1,000, according to PKF O'Connor Davies.
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