About the TFO Advantage PEP

What Is a PEP and What Are Its Advantages?

Under the SECURE Act, the first significant retirement-related legislation in more than a decade, employers of all sizes can now offer retirement plans to their employees through a Pooled Employer Plan. A PEP is a new kind of defined contribution plan arrangement similar to the 401(k) plans offered today by individual employers, but with many advantages for you and your employees.

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Audit Requirement

Your company will not be subject to an audit. The entire PEP will be audited, which is the responsibility of the Pooled Plan Provider (PPP) not the individual company.

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Administrative Relief

Save your team time as the PPP and 3(16) plan administrators oversee the majority of day-to-day tasks.

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Reduced Liability

Fiduciary support and responsibility are assumed by professional plan administrators.

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Customized Plan Features

The PEP allows you to retain the majority of your current plan provisions.

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Investment Selection and Performance Oversight

Reduce your liability by having the 3(38) fiduciary select and monitor the investment line up.

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Participant Communications and Plan Support

State of the art technology will provide your participants with access to retirement planning and financial wellness tools and easy access to making investment, contribution and beneficiary changes.

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Time Savings

The ERISA 3(16) fiduciary services offloads much of the day to day and year to year workload creating time savings and giving you the ability to focus on other business matters.

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Potential Cost Savings

Economies of scale may provide cost reduction not only in the form of fees but manpower as well.

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We are very excited about this new plan offering. It has the potential to greatly enhance your experience as well as the participant’s experience.

Chris Winters, CRPS®Director of Retirement Plan Services and Retirement Plan Strategist quote
The Impact of a PEP

PEP Summary and Who Can Benefit

In a PEP, employers of all sizes, industries, locations, etc. can join together and become an “adopting employer.” The PEP is offered by a Pooled Plan Provider who is responsible for the establishment, management, and operations of the plan on behalf of all the adopting employers, as well as many of the fiduciary functions.

Summary of a PEP

For Adopting Employers

  • 402(a) named fiduciary
  • Integrated 3(16) administrative fiduciary
  • 3(38) advisor support services
  • Integrated trust and custody services
  • Digital access to all plan functions and information
  • Payroll contribution tracking and integration
  • Integrated non-qualified plans

For Individual Employee Participants

  • Full-function participant website and call center
  • Spanish website
  • Full suite of participant educational materials
  • Financial wellness resources
  • Integrated managed account services

A PEP May Be Right For Employers That:

  • Historically, have not sponsored a retirement plan due to costs, time to dedicate to running a plan or concerns over potential fiduciary risk
  • Currently sponsor a plan and are seeking to outsource time consuming activities
  • Are comfortable utilizing the available plan documents and features in the PEP
  • Wish to delegate investment decisions to an investment manager

FAQs

The existing plan will be merged into the PEP and will no longer exist as a standalone plan. If you choose to leave the PEP, you will need to re-establish a new standalone plan and transfer the assets from the PEP to the new plan.

  • Select the plan provisions.
  • Submit payroll (or establish the payroll integration with your payroll provider)
  • Complete annual compliance questionnaire and confirm annual census data.
  • The fiduciary responsibilities outlined below
  • Selecting and monitoring the plan providers (Pooled Plan Provider, Investment Adviser)
  • The investment selection and monitoring shifts to the ERISA 3(38) Manager (TFO Wealth Partners)
  • The administration of the plan shifts to the ERISA 3(16) fiduciary (Newport Group)
  • The Plan Administrator role shifts to the ERISA 402(a) (Newport Group)

No, if you are in a PEP, you won’t individually be subject to audit, the PEP will be audited as a whole, and your company will have a very limited role.

No, one 5500 is filed for the PEP, which covers all participating employers.

  • The plan provisions are flexible with a few exceptions:
    • Eligibility options are 90 days, 6 months or 1 year.
    • Plan must allow for in-service distributions at age 59.5, hardship distributions, and distributions from rollover sources.
    • The plan year must be the calendar year.
    • Compensation is defined as W2 wages with no exclusions.
    • Distributions in the form of lump sum or partial payments and installments are only allowed for RMD purposes.
    • In-Plan Roth Conversions are allowed for all vested balances.
  • The PEP has one investment lineup managed by the ERISA 3(38) fiduciary (TFO)
    • Within the investment lineup there are four tiers to choose from
      • TFO Wealth Partners Risk Based Model Portfolios
      • Target Date Retirement Funds
      • A menu of individual mutual funds to build your own portfolio.
      • Managed Account Service (additional 0.30% fee applies).
  • Self-Directed brokerage accounts are not permitted.
  • Participants will have online access to their accounts via desktop and a mobile app.
  • Participants will also have access to a team of professional and credentialed advisers who will provide access to both group education and customized individual financial advice.
  • Financial Wellness Tools.
  • Retirement Income projections tools.
  • Yes, plans with union employees, ERISA 403(b) plans and plans that are not covered by ERISA such as government and non-profit plans.

Request For Proposal

For more information regarding the PEP and if your organization is a fit, please enter your contact information below along with the additional information. Optionally you may upload the following documents so that we may prepare a review of your plan.

Plan Adoption Agreement

Listing of Plan Asset by Investment

Plan Fee Disclosure

For additional information or questions please contact Chris Winters at 419-794-1062 or cwinters@tfowealth.com.

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