In response to the provisions of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, Paychex will sponsor and maintain a pooled employer plan (PEP). Paychex’s goal is to make a cost-effective retirement plan available to all businesses nationwide. The Paychex PEP will include reduced fiduciary liability for employers, simplified plan management and reduced plan expenses, when compared with single-employer retirement plans.
“Not only has the COVID-19 pandemic made business more complex than ever before, [but] it’s significantly impacted the financial security of millions of Americans,” says Tom Hammond, vice president of corporate strategy and product management at Paychex. “Expanding retirement plan access is critical to the long-term financial well-being of workers nationwide. Our new PEP will provide business owners with a cost-effective plan option that relieves the compliance and administration burdens of a traditional 401(k) plan, giving their employees access to a robust retirement plan benefit and allowing them to confidently prepare for their financial future.”
Paychex notes that PEPs are a good solution in particular for small to mid-sized businesses that may have been unable to previously offer a retirement plan due to the cost, time and resources involved.
The Paychex PEP also offers greater levels of efficiency, as it can be integrated with the Paychex payroll. Paychex will also administer the required independent financial audit to comply with IRS and Department of Labor (DOL) requirements, which can cost large employers between $10,000 and $15,000 annually.
“For 10 consecutive years, Paychex has been named the No. 1 recordkeeper in the country by a number of plans, according to PLANSPONSOR Magazine,” Hammond adds. “As the industry leader, we’re uniquely qualified with the experience, the technology and resources to be the provider of choice for this new type of plan.”
Mesirow Financial will serve as the 3(38) investment manager of the PEP, and Mid Atlantic Trust Co. will serve as the trustee.
Paychex plans to make its PEP available starting January 1, the first day on which PEPs can be offered.