Glossary
Pooled Employer Plan
A pooled employer plan (PEP) is a single 401(k) plan that many unrelated employers join together, with a designated pooled plan provider handling most administrative and fiduciary duties.
Created by the SECURE Act and available since 2021, PEPs extend the older multiple-employer plan idea to businesses with nothing in common. Each employer adopts the shared plan rather than sponsoring its own, gaining scale pricing and outsourcing much of the fiduciary and administrative burden to the provider.
Why it matters in practice
For small employers, a PEP can deliver 401(k)-level benefits — real contribution limits, matching, pre-tax and Roth options — at lower cost and with less personal liability than a standalone plan, making it one of the middle paths between a state auto-IRA program and a full single-employer 401(k). The trade-off is standardization: less design flexibility, and provider quality varies, so fees and services still deserve comparison.
Related terms: 401(k) · Plan Sponsor · SECURE 2.0 · CalSavers · Recordkeeper