A pooled employer plan, or PEP, is a single 401(k) retirement plan that multiple unrelated employers join together instead of each running a separate plan. Created by the federal SECURE Act of 2019, a PEP is run by a professional "pooled plan provider" that takes on most of the legal and administrative burden small businesses used to carry alone, which Transamerica's 25th-anniversary release describes as letting unrelated small businesses share one professionally managed plan. For retirement savings, that structure matters because it changes who is responsible for the plan running correctly and who pays for running it. Employers that join share costs and oversight with everyone else in the pool, while a dedicated provider handles the paperwork, compliance, and investment menu that a single small business would otherwise have to manage on its own.
Table of Contents
- Who Actually Runs a Pooled Employer Plan?
- What Changed for Employers Under the SECURE Act?
- How Much Has Adoption Grown?
- Who Benefits Most From Joining a PEP?
- Is the PEP Market Only for Small Companies?
- Frequently Asked Questions
Who Actually Runs a Pooled Employer Plan?
A PEP cannot operate without a pooled plan provider (PPP) at its center. The Department of Labor requires this provider to register using Form PR at least 30 days before the plan begins operating, and the provider must acknowledge in writing that it is the plan's named fiduciary under the Employee Retirement Income Security Act (ERISA), according to the DOL's final rule on pooled plan provider registration. That registration requirement exists so a provider cannot quietly offer a PEP without first being accountable to federal regulators.
Once registered, the provider is legally on record as the entity responsible for the plan's day-to-day operation. In practice, the pooled plan provider serves as the plan's administrator under ERISA Section 3(16) and typically hires a separate investment manager under ERISA Section 3(38) to select and monitor the fund lineup. KeyBank's explanation of PEP fiduciary structure notes that this division of labor means a participating employer's main remaining duty is choosing and monitoring the provider itself, not running the plan's daily operations or picking investments.
What Changed for Employers Under the SECURE Act?
Before the SECURE Act, a multiple-employer plan carried a rule nicknamed "one bad apple": if a single participating employer failed to comply with plan rules, the entire plan could lose its tax-qualified status for every employer in it, not just the one at fault. The SECURE Act repealed that rule for PEPs specifically. Now, a noncompliant employer's failure no longer threatens the other participants, as long as the plan has a defined process for removing that employer's assets from the pool, according to Groom Law Group's analysis of the one-bad-apple relief.
Liability for the failure stays with the employer that caused it. This change is central to why PEPs are viable for unrelated businesses to share a plan at all. Without it, one company's payroll error or late deposit could have put every other employer's plan qualification at risk, which made shared plans too risky for most businesses to join before 2019.
How Much Has Adoption Grown?
PEP adoption has grown quickly in the past two years, though the exact scale depends on which data source is used. The PLANSPONSOR 2026 Recordkeeping Survey counted 10,797 employers participating in 401(k) or 403(b) PEPs at the end of 2025, up from 7,454 the year before, with total surveyed PEP assets reaching about $33.78 billion, more than double what they were at the end of 2024, per the PLANSPONSOR 2026 Recordkeeping Survey. Individual providers show similar growth.
Transamerica reported its own pooled-plan assets reached $34.2 billion in 2026, up from $21.3 billion in 2021, according to its 25th-anniversary announcement. Not every data source agrees on the scope of adoption. Cerulli Associates' July 2026 webinar materials cite more than 50,000 employers having adopted a PEP, nearly five times PLANSPONSOR's survey-based count, which Cerulli's webinar listing attributes to differing measurement methods across providers rather than one authoritative number. A reader comparing PEP statistics from different sources should expect this kind of variation rather than treat any single figure as definitive.
Who Benefits Most From Joining a PEP?
PEPs were designed with small businesses in mind, and the coverage numbers show why. About four in ten private-sector employees at businesses with fewer than 100 workers have no access to any workplace retirement plan, according to the Bureau of Labor Statistics' September 2025 Employee Benefits Survey.
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That gap is a real opportunity for PEPs to close. A May 2026 Transamerica Institute report found that 48% of employers currently sponsoring no standalone retirement plan said they would consider joining a PEP, multiple employer plan, or defined-contribution group, based on coverage of the Transamerica Institute findings. For a small employer with no plan today, joining an existing PEP can mean offering a 401(k) without building fiduciary and administrative infrastructure from scratch.
- A small business with no retirement plan: a PEP offers 401(k) access without hiring in-house plan administration staff.
- A small business already running its own 401(k): a PEP can reduce fiduciary liability by shifting administrative duties to the pooled plan provider.
- A larger employer: PEPs can still offer cost-sharing and reduced administrative load, even though the vehicle was built with small employers in mind.
Is the PEP Market Only for Small Companies?
The PEP market has started attracting a different kind of participant than it was built for. Tim Rouse of the SPARK Institute noted that larger employers joining PEPs has been an unexpected trend, according to SPARK Institute commentary reported by PlanAdviser. That shift suggests the appeal of a pooled plan extends beyond simply lacking the scale to run a standalone 401(k).
Larger employers joining a PEP are likely drawn by the same fiduciary risk-sharing and administrative simplification that originally attracted small businesses, even though they could sponsor their own plan if they chose to. For a reader evaluating whether a PEP fits their situation, the practical takeaway is that company size alone does not determine fit. The relevant question is how much in-house capacity and interest exists for running fiduciary and administrative functions directly, not just whether the company is small enough to need the cost-pooling.
Frequently Asked Questions
Who is legally responsible if a pooled employer plan is mismanaged?
The pooled plan provider is the plan's named ERISA fiduciary and administrator, so it carries primary legal responsibility, per the DOL's final rule on provider registration.
Can one employer's mistake in a PEP hurt every other employer in the plan?
No. The SECURE Act repealed the "one bad apple" rule for PEPs, so a noncompliant employer's failure stays contained to that employer if the plan has a process to remove its assets, according to Groom Law Group.
Are PEPs only for businesses with no existing retirement plan?
No. SPARK Institute data reported by PlanAdviser shows larger employers, which could sponsor their own plans, are also joining PEPs.
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