Pooled Employer Plan (PEP)

The PEP, established by the SECURE Act, allows employers of any size to pool assets into a 401(k) plan professionally administered by SDM Advisors. The benefits? Simplified administration and enrollment, reduced liability, and the potential for savings, and in California, it will help you meet the mandate for the CalSavers program.

What is a Pooled Employer Plan?

The PEP is a multiple-employer plan designed to take the burden of administration off employers’ hands. Traditionally, businesses in a multiple-employer plan had to be related by industry or association (such as a trade group). This made it easier for them to share a single plan and not have to file separate Forms 5500 or do individual audits.

Now, under the SECURE Act, a PEP doesn’t require employers to be related. A professional Pooled Plan Provider (P3) is the named plan administrator for the plan and takes on most administrative responsibilities. This alleviates the burden of plan management and decreases fiduciary liability, making it more attractive to smaller businesses.

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Frequently Asked Questions

Is the Pooled Employer Plan (PEP) a good retirement plan for my business?

The PEP can be a great solution for small to mid-sized businesses that don't currently offer a retirement plan. It's a professionally administered retirement plan that includes reduced fiduciary liability, simplified plan administration for employers, and potential savings due to the pooling of resources. For those currently offering a retirement plan, this is a great solution that significantly reduces an employer's involvement with plan administration. The PEP also satisfies the retirement plan requirement in states that have this mandate.

I've wanted to start a retirement plan but it seems pretty complicated. How will the PEP be different?

Owners are busy running their business, so they may find it hard to devote time and energy to the complexities of 401(k) compliance and plan administration. Our PEP significantly relieves businesses of this burden by providing a professionally administered and cost-effective retirement plan. As the formal plan administrator, we bear the bulk of the fiduciary liability for administering the plan.

By integrating payroll with your retirement plan, our team helps employers achieve an even higher level of efficiency. Our integrated payroll and retirement solution simplifies administration, helps to reduce costs, and can increase reporting accuracy.

Will my business be eligible for tax credits for adopting the PEP?

Per the SECURE Act, employers may be eligible for tax credits, which can add up to $16,500 over 3 years (depending on eligibility and adding auto-enrollment).

As the Pooled Plan Provider (P3), what will SDM Advisors do for me compared to other retirement plan providers?

The PEP more fully approaches a "do-it-for-me" solution, relieving participating employers of many of the administrative tasks that are associated with most retirement plans. We will handle the hiring and monitoring of the 3(38) investment manager, complete the plan's independent financial audit, file the Form 5500, collect and store participant beneficiary information, deliver required participant notices, handle the loan, hardship, distribution, and QDRO (qualified domestic relations order) requests, and much more. Taking these tasks off your plate will help you focus more on your business and less on administering this valuable employee benefit.

If I wanted to adopt the PEP as a participating employer, how long will it take?

The onboarding process takes approximately 35 days to complete, depending on timing of information exchanges and payroll process.

Will participating in a PEP be expensive or difficult?

Participating in a PEP is particularly beneficial since it's a cost-effective way to offer a retirement plan to employees. For example, the enhanced tax credit potential (up to $5,000 for each of the first three years of the plan, plus an additional $500 for each of the first three years of the plan for auto-enrollment) can help offset startup costs for eligible employers. And with our PEP, we help make the process of establishing a plan as straightforward as possible. You will need to take some initial actions to enable us to administer the plan and meet certain legal requirements, but our trained retirement specialists are available every step of the way — from initial plan setup to onboarding and ongoing plan maintenance — to provide assistance.

Is your PEP customizable for my business and employees' specific needs?

Yes, our PEP has the flexibility to meet our customers’ unique needs by providing options for plan design features such as eligibility and vesting alternatives, optional matching contributions, safe harbor provision, Roth and pretax contributions for participants, auto-enrollment and auto increase, and profit-sharing options.

Which Fits Your Business Better?

Compare the highlights and features of a PEP vs. a traditional 401(k) plan. Both are excellent options for you and your employees to save for retirement and save on taxes. A traditional 401(k) with your choice of additional services gives you more control, but it can be costlier and entail more work on your part. In a PEP, the Pooled Plan Provider (P3) is the plan administrator, so you have less control but also reduced cost and liability.

PEP or Traditional 401(k)

Pooled Employer Plan

Traditional 401(k)


Reduced administrative costs. Economies of scale.

Potentially higher administration costs than a PEP.


The Pooled Plan Provider (P3) significantly reduces plan set-up responsibilities, including contracting with vendors and the investment manager.

As plan sponsor, the employer is involved in set-up such as plan design, choosing investments, and coordinating with vendors.


The P3 is the Plan Sponsor and relieves the employer of significant fiduciary liability.

The employer has more control but also more fiduciary risk.


The P3 assumes responsibility for audits, potentially saving employers $10,000-$20,000.

The employer of a large plan must oversee and pay for costly audits.

Tax Credits

May be eligible for up to $15,000 in tax credits over 3 years for new plans.

May be eligible for up to $15,000 in tax credits over 3 years for new plans.

Thought Leadership

Our Retirement Services Team

M. Thérèse Hjelm
Director, Wealth Management
Cody Martin
Advisor, Wealth Management
Daniel P. Rush
Vice President, Wealth Management

Securities and Advisory Disclosure:
Securities offered through ValMark Securities, Inc. Member FINRA, SIPC. Fee-based planning offered through SDM Advisors, LLC. Third-party money management offered through ValMark Advisors, Inc., an SEC-registered investment advisor. 130 Springside Drive, Suite 300, Akron, Ohio 44333-2431. 1-800-765-5201. SDM Advisors, LLC is a separate entity from ValMark Securities Inc. and ValMark Advisers, Inc.

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