Pooled employer plan (PEP) costs and requirements

Last updated: July 11, 2026

Pooled employer plans (PEPs) allow businesses to participate in a shared retirement plan structure that centralizes certain administrative and fiduciary responsibilities. This model can help reduce some of the operational burden associated with retirement plan management, though the cost of a PEP is not always cheaper than that of a standalone 401(k) plan.

Consequently, employers considering adopting a PEP should evaluate not only projected expenses, but also provider support, workflows and administrative responsibilities. Financial advisors can play an essential role in such assessments.

Key takeaways about PEP costs and requirements:

• PEP costs vary based on plan size, workforce complexity, service structure and investment lineup.
• Employers reduce administrative burdens through pooled plan structures, but retain some responsibilities.
• Advisors play an important role in provider evaluation, fee oversight, communications and governance support.
• Payroll coordination, reporting workflows and documentation processes can affect long-term plan administration efficiency.
• Comparing pooled employer plan providers requires evaluating support and transparency alongside pricing.

What role does an advisor play in a pooled employer plan?

The role of pooled employer plan advisors is two-fold – they help employers choose a PEP provider, and they provide long-term oversight after implementation is complete.

1. Selection support
   Advisors help employers evaluate providers based on their service models, administrative capabilities and fee structures.
2. Ongoing oversight
   Advisors continually oversee plan investments and fees, and they may strategize ways to improve participant engagement.

What are pooled employer plan costs?

Pooled employer plan costs are the fees employers pay to participate in and maintain PEP retirement benefits. Examples include:

• Administrative fees – day-to-day plan management, compliance support, participant servicing and reporting
• Investment-related expenses – fund expense ratios and costs associated with different investment share classes
• Advisor or consultant expenditures – plan structure comparisons, fiduciary evaluations, fee transparency reviews and ongoing plan oversight

One-time vs. ongoing costs

Some PEP costs incur once; others recur. Here’s a comparison:

One-time PEP costs	Recurring PEP costs
Implementation and onboarding	Plan administration
Plan document setup or adoption support	Recordkeeping
Payroll alignment and data mapping	Payroll data integration or file maintenance
Participant transition and enrollment communications	Investment expenses, including fund expense ratios
Asset transfer or conversion support, if applicable	Advisor, consultant or fiduciary service fees
Initial employee notices and education	Participant servicing and education
Initial provider or platform setup fees	Compliance support, reporting and Form 5500 support
Optional plan design consultation	Audit-related support, if applicable

Depending on the provider, these costs may be bundled or itemized. Some of them may be charged to the employer, while others are deducted from the participants’ accounts.

Providers should disclose this information to plan sponsors, who may then turn to their advisors for help understanding what is included, what might cost extra and how expenses can change as the plan grows.

Fee	What advisors should review
Administrative fees	Whether plan administration, compliance support, reporting and participant servicing are included or billed separately
Investment expenses	How fund expense ratios and share classes affect participant account balances
Advisor or consultant fees	Whether advisory support is billed to the employer, the plan or participants
Participant charges	Whether individual services, transactions or account-level fees may apply
Service inclusions	Which services are bundled, and which may create additional costs

What affects PEP costs?

Variables that can impact PEP fees include:

• Employee head count
• Contribution formulas
• Payroll frequency
• Service expectations
• Investment lineup complexity

Pooled employer plan vs. traditional 401(k): Responsibility differences

Employers typically have more responsibilities with a standalone 401(k) than a PEP because the PEP allows them to shift important fiduciary and administrative tasks to a pooled plan provider (PPP) or designated fiduciary.

Employer responsibilities in a PEP:

• Keeping accurate payroll data
• Contributing to plans on time
• Managing employee eligibility
• Maintaining documentation and fiduciary oversight
• Communicating with employees

PPP responsibilities:

• Managing plan administration
• Conducting nondiscrimination tests
• Supporting legal and regulatory compliance

How do PEP audits differ from standalone plan audits?

Standalone 401(k) plans are generally audited at the individual plan level. PEP plans, in contrast, are audited at the pooled-plan level, which can help reduce duplicate work among participating employers. However, each employer in the PEP must maintain accurate and up-to-date plan information so the provider can fulfill filing, testing and audit requirements.

Employer responsibilities during an audit

Employers are responsible for maintaining a reliable audit trail. They may need to provide the following:

• Payroll records
• Contribution data
• Eligibility information
• Other supporting documentation

Advisors can help employers understand how often this information must be submitted and resolve any recordkeeping issues that arise.

How to evaluate pooled employer plan providers

Employers and advisors should evaluate pooled employer plan providers on more than price alone. They should also assess operational capabilities and service levels and compare fee disclosures side-by-side to understand how providers differ.

• Operational capabilities
  Evaluate the provider’s administrative infrastructure, participant education resources, fiduciary resources, payroll coordination and reporting processes.
• Fee transparency
  Review how providers disclose administrative fees, investment expenses, advisory costs, participant charges and service inclusions.
• Service level
  Understand how providers manage issue resolution, escalation procedures and ongoing administrative communication.

How ADP supports pooled plan administration and payroll alignment

ADP’s integrated retirement plan and payroll solutions help PEP sponsors improve operational efficiency, strengthen data integrity and support long-term success. Capabilities include:

• Built-in data verification processes identify potential issues before they affect participant accounts.
• Key administrative activities – such as eligibility tracking, contribution processing, rehire management and loan administration – are automated.
• Workforce data and retirement records are synced to support audit requirements and compliance reporting.
• Coordination between recordkeeping, contribution processing and plan administration improves accuracy and consistency.

What’s more, ADP offers retirement solutions for employers regardless of who processes their payroll.

For employers using ADP payroll

SMARTSync® connects ADP payroll and retirement plan recordkeeping systems so that data is continuously shared and verified between them. This integrated approach supports participant account accuracy, reduces manual processes and improves confidence in plan administration.

For all employers

ADP Retirement Services Connect seamlessly secures payroll, demographic and compliance data within ADP's recordkeeping platform. It helps streamline administration and supports accurate retirement plan operations.

Bottom line

• Pooled employer plans help businesses balance retirement plan access, administrative efficiency, fiduciary support and cost predictability within a shared structure.
• Evaluating pooled employer plan costs and requirements involves more than comparing pricing alone.
• Provider capabilities, audit readiness, payroll coordination and support models can all affect long-term plan administration outcomes.

FAQs about pooled employer plans

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Only registered representatives of ADP Broker Dealer, Inc. (ADP BD), Member FINRA, an affiliate of ADP, Inc., One ADP Blvd, Roseland, NJ 07068 may offer and sell ADP retirement products or speak to retirement plan features and/or investment options available in such ADP retirement products.