In response to the SECURE Act’s provisions, Paychex, Inc. will be among the first retirement plan providers to introduce a Pooled Employer Plan (PEP) to help U.S. small businesses offer a cost-effective retirement plan option for their eligible employees.
The SECURE Act is a bipartisan bill passed into law on December 20, 2019, designed to aid Americans’ ability to save for retirement. The PEP is a solution for small to mid-sized businesses that may have been unable to offer a retirement plan due to the lack of affordable options or the time or resources needed to manage complex plan administration. Businesses currently offering an employer-sponsored qualified retirement plan can merge their plan and assets into a PEP to potentially save time and money.
Paychex Now Offers Pooled Employer Plan for Small Business Employee Retirement
“Not only has the COVID-19 pandemic made business more complex than ever before, but it’s also significantly impacted the financial security of millions of Americans,” said Tom Hammond, Paychex vice president of Corporate Strategy and Product Management. “Expanding retirement plan access is critical to the long-term financial wellbeing of workers nationwide.”
Through a PEP, employers can collectively participate in a 401(k) plan administered by a Pooled Plan Provider (P3). The P3 acts as both plan sponsor and formal plan administrator, relieving employers of significant fiduciary and administrative burden.
The Paychex PEP will include reduced fiduciary liability for employers, simplified plan management, and reduced plan expenses compared to single-employer retirement plan offerings.
Paychex PEP benefits include:
- Lowered administrative tasks by removing the need to contract with and monitor third-party fiduciary services providers;
- Reduced risk, as Paychex assumes many fiduciary responsibilities;
- Potential for greater levels of efficiency by integrating Paychex payroll with the PEP Opportunities for compliance cost savings.
Paychex will administer the required independent financial audit for the PEP to comply with IRS and Department of Labor requirements, which can cost large employers between $10,000 and $15,000 annually.
Paychex’s PEP will be available starting January 1, 2021. Visit Paychex.com to learn more about the features of this new retirement plan option.
Get the latest headlines from Small Business Trends. Follow us on Google News.
More in: Retirement