Paychex Pooled Employer Plan Accelerates Growth Adding 2,000 Companies in Three Months
Paychex, Inc., the HR software and services company that provides the power of simplicity for increasingly complex workplaces, announced their Pooled Employer Plan (PEP) offering added 2,000 clients since launch.
In the brief time since PEPs have become available as a result of the SECURE Act, the new Paychex PEP is proving to be an attractive option for business owners seeking a simpler, cost-effective plan option, both for themselves and their eligible employees. Paychex is the number one 401(k) recordkeeper in the country for the past 10 years (by number of plans), according to PLANSPONSOR magazine. The company was one of the first to introduce a PEP, among retirement plan providers.
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“From day one, it was our mission to get this solution to businesses which have long been on the sidelines without an established 401(k) plan or other retirement savings vehicle. Traditionally, the complexity of plan management and the overall cost has been a barrier. But with our PEP, many of those challenges have been addressed,” said Tom Hammond, Paychex vice president of corporate strategy and product management. “The Paychex PEP simplifies plan administration, and the sign-on process is easier too. With one signature, a business is set up with a fully managed retirement plan offering. We’re giving workers access to a robust retirement plan benefit and allowing them to prepare for their financial future confidently.”
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 PEP is especially well-suited for small to mid-sized businesses that may have been unable to offer a retirement plan previously due to the lack of cost-effective plan options or the time or resources needed to manage complex plan administration. PEPs also offer a more feature-rich alternative to the growing number of state-mandated retirement plan programs.
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Benefits of the Paychex PEP include:
- Cost savings opportunities:
- 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
- Employers with 100 or fewer employees who did not previously offer a plan may also be eligible for potential tax credits up to $5,000 per year for up to three years ($15,000 maximum) to offset costs of starting and maintaining a retirement plan
- Reduced administrative tasks for the business owner by removing the need to contract with and monitor third-party fiduciary services providers
- Reduced risk, as Paychex assumes many fiduciary responsibilities in its role as the P3
- Potential for greater levels of efficiency by integrating Paychex payroll with the PEP
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