What should a Nebraska employer review before joining a pooled employer plan?

Define the arrangement before comparing it

A PEP is a type of multiple employer plan. Under the current federal framework, it can allow employers with no common business relationship other than adopting the plan to participate in one individual-account defined-contribution plan.

The plan terms designate a pooled plan provider. The PPP must:

• be a named fiduciary and the plan administrator;
• acknowledge that status in writing;
• perform the administrative duties reasonably necessary for the plan’s compliance;
• ensure participating employers take required actions;
• ensure applicable bonding for persons handling plan assets or acting as plan fiduciaries; and
• register with the Labor Department and Treasury before beginning operations.

PEPs began operating under the SECURE Act framework in 2021. Current law can permit qualified individual-account arrangements described under Internal Revenue Code Sections 401(a) or 403(a), and certain 403(b) arrangements. The actual plan document controls.

Do not assume every product marketed as a pooled 401(k), open MEP, multiple employer plan, association plan, or professional-employer- organization plan is legally the same arrangement. Ask the provider to identify the exact plan type, statutory basis, PPP, plan sponsor, named fiduciaries, and Form PR registration.

Do not confuse a PEP with other pooled benefits

A union multiemployer plan

A collectively bargained multiemployer plan has a different legal and governance structure. Similar words do not make it a PEP.

A traditional multiple employer plan

Some MEPs involve employers with a common interest or a professional employer organization. A PEP can include unrelated employers without that commonality. The plan documents and provider should identify the arrangement.

A pooled health arrangement

Multiple Employer Welfare Arrangements and other pooled health plans concern health or welfare benefits. They are not retirement PEPs. Nebraska insurance rules for health arrangements do not define the retirement plan discussed here.

A cash-balance plan

A private-employer cash-balance plan is a defined-benefit pension plan. A PEP is an individual-account defined-contribution arrangement. Balance and pooled do not make them interchangeable.

A participant’s pooled investment fund

An investment fund inside a retirement plan may pool assets from many investors. That does not make the employer’s plan a PEP.

Use pooled employer retirement plan (PEP) in the opening and FAQ to prevent the common health-plan, public-plan, and investment-pool mismatches.

Begin with the employer’s needs and current plan

Document why the employer is evaluating a change:

• establishing its first workplace retirement plan;
• replacing an existing single-employer plan;
• seeking more centralized administration;
• reviewing fiduciary responsibilities;
• comparing plan costs and investments;
• addressing payroll or compliance failures;
• adding plan features;
• supporting a growing or distributed workforce;
• responding to a merger, acquisition, sale, or ownership transition; or
• assessing whether the current PEP still fits.

Then inventory the current state:

• legal entities and ownership;
• controlled-group and affiliated-service-group questions;
• employee census and payroll systems;
• existing plan documents and amendments;
• eligibility, vesting, contribution, and distribution features;
• service providers and written responsibilities;
• direct and indirect fees;
• investment lineup and default;
• latest Form 5500, testing, notices, and audit if applicable;
• participant loans, qualified domestic relations orders, and pending distributions;
• correction or enforcement history;
• cybersecurity controls and incidents; and
• contracts, termination rights, and transition restrictions.

A PEP should be compared with the employer’s real alternative, not with a stripped-down hypothetical plan.

Identify the duties the employer retains

PEP marketing often emphasizes transferred responsibility. The written plan and participation agreement must also identify what remains.

Under the federal framework, a participating employer retains fiduciary responsibility for prudently selecting and monitoring:

• the pooled plan provider; and
• any other person designated as a named fiduciary.

The employer also retains responsibility for decisions and functions not delegated under the plan. Depending on the arrangement, these can include:

• deciding to join and continue participating;
• choosing among plan-design options;
• selecting or approving contribution features;
• providing complete and accurate payroll, census, ownership, and employee data;
• transmitting employee and employer contributions;
• identifying related entities and other plans;
• distributing or supporting required employee communications;
• responding to PPP requests and correcting employer-level failures;
• monitoring fees, services, complaints, and contractual performance;
• maintaining internal cybersecurity and access controls; and
• deciding whether and how to exit.

Create a signed responsibility matrix. Do not rely on turnkey, outsourced, 3(16), 3(38), named fiduciary, or full service as substitutes for the actual allocation of duties.

Read the investment delegation carefully

The 2025 Labor Department guidance explains that participating employers retain fiduciary responsibility for investment and management of assets attributable to their employees to the extent the function has not been delegated to another fiduciary by the PPP.

Ask:

• Does the PPP appoint an investment manager under ERISA Section 3(38)?
• Who selected that fiduciary?
• Does the PPP accept sole discretion for selecting and monitoring the investment manager?
• Does the agreement ask the employer to authorize or ratify the appointment?
• Which investment decisions, if any, remain with the employer?
• Who selects and monitors the default investment?
• Who handles participant-directed investment requirements?
• Who monitors affiliated or proprietary investment products?
• Who documents the process?
• What co-fiduciary or other retained exposure remains?

If a properly appointed investment manager accepts the applicable investment responsibility, the allocation can differ materially from an arrangement in which the employer chooses the menu. The documents—not a sales presentation— control the result.

Do not state that a PEP or a 3(38) appointment eliminates all employer fiduciary liability.

Review the PPP as a fiduciary and operating company

The PPP is central to the arrangement. Due diligence should address both legal status and operational capacity.

Registration and public filings

Use the Labor Department’s public Form PR filing search to:

• confirm the legal name and employer identification number;
• identify the initial registration;
• identify PEPs operated by the PPP;
• review supplemental, amended, or final filings;
• review disclosed affiliates and service categories;
• identify reportable criminal, civil, or administrative proceedings; and
• reconcile the PPP and plan identifiers with the current Form 5500 and Schedule MEP.

A filed Form PR is a registration, not a government endorsement, quality rating, or guarantee.

Experience and organization

Ask for:

• ownership and financial condition;
• experience operating plans of similar size and complexity;
• responsible officers and compliance personnel;
• named fiduciaries and investment fiduciaries;
• affiliated and unaffiliated service providers;
• staffing and participant-service capacity;
• regulatory examinations, litigation, enforcement, and corrections;
• service-level performance and complaint data;
• business continuity and disaster recovery;
• fiduciary, errors-and-omissions, cyber, and crime insurance;
• bonding; and
• a succession or replacement process if the PPP fails, is acquired, or stops operating.

Registration alone does not prove that the PPP can operate the proposed plan well.

Compare plan design before administrative convenience

Some PEPs use largely uniform features. Others allow participating employers more choices. Standardization can support scale, but it can also limit control.

Compare:

• eligibility and entry dates;
• automatic enrollment and escalation;
• traditional and Roth deferrals;
• employer match and nonelective contributions;
• safe-harbor or traditional testing design;
• profit sharing;
• vesting;
• compensation definitions;
• participant loans;
• hardship and other in-service distributions;
• qualified birth or adoption and other optional distributions;
• beneficiary and spousal processes;
• qualified domestic relations orders;
• rollover acceptance;
• managed accounts or participant advice;
• default investments;
• amendment windows;
• employer-specific notices; and
• treatment of an employer that fails to provide data or contributions.

Ask which provisions are mandatory, optional, employer selected, PPP selected, or unavailable. Confirm how a later design change affects employees, notices, payroll, testing, fees, and the ability to remain in the PEP.

Test the workforce and related-employer facts

A PEP does not remove the employer-level tax-qualification rules that depend on its employees and other plans.

Provide:

• legal entities and employer identification numbers;
• direct and indirect ownership;
• family attribution;
• services among related businesses;
• common-law, leased, part-time, seasonal, and contract-worker classifications;
• employee compensation and service;
• highly compensated and key employee data;
• other qualified or retirement plans;
• acquisitions, dispositions, or ownership changes; and
• predecessor-employer or rehire information where relevant.

The IRS applies several MEP qualification requirements on an employer-by-employer basis. Current IRS guidance identifies employer-level issues involving coverage, nondiscrimination, compensation, ADP/ACP testing, top-heavy status, and limits where the employer also sponsors another plan.

Ask the PPP:

• which tests it performs for each participating employer;
• which facts it requires;
• how it validates or flags data;
• when results are delivered;
• how corrections are funded and implemented;
• what happens if the employer does not cooperate; and
• how acquisitions, sales, or related entities change the analysis.

The statutory exception to the historic one bad apple or unified-plan rule for qualifying arrangements does not excuse an employer’s own failure or eliminate the correction process. Current IRS guidance also states that final Treasury regulations under Section 413(e) are still pending; the plan’s procedures and any reliance position require qualified legal review.

Compare all fees and compensation

Request a complete schedule that covers:

• PPP and named-fiduciary fees;
• plan administration;
• recordkeeping;
• trustee and custody;
• investment management and advice;
• investment expense ratios and other fund costs;
• managed-account or participant-advice fees;
• audit;
• legal, consulting, and correction services;
• payroll integration;
• participant loans and distributions;
• qualified domestic relations orders;
• startup, conversion, or asset-transfer costs;
• per-participant, per-employer, asset-based, transaction, and minimum fees;
• data or cross-selling arrangements;
• revenue sharing and other indirect compensation;
• affiliated products and services; and
• withdrawal, transfer, termination, or market-value adjustments.

For each fee, record:

• recipient and affiliate relationship;
• service;
• amount or calculation method;
• payer: employer, plan, or participant account;
• approval authority;
• frequency;
• circumstances that change it; and
• whether the quote includes every investment and service layer.

Economies of scale can exist, but a PEP is not automatically less expensive. Compare total dollars and participant-level effects across a consistent period, workforce, asset level, and service scope.

Do not use the Labor Department’s marketplace observations or another employer’s quote as a promise that a Nebraska employer will pay a particular fee.

Evaluate the investment lineup and conflicts

Ask for:

• the investment policy or selection framework;
• the person responsible for selecting and monitoring the menu;
• the default investment and selection process;
• asset classes and participant use cases covered;
• benchmarks and risk characteristics;
• expense ratios and other investment costs;
• share classes or collective investment trust terms;
• revenue sharing;
• proprietary, affiliated, or party-in-interest products;
• target-date-fund glide path and vintages;
• managed-account and advice arrangements;
• securities-lending or other material revenue;
• restrictions or valuation adjustments on transfer; and
• the cadence and evidence for review and replacement.

The Labor Department’s 2025 review found different PEP business models, investment structures, and use of affiliated products. That is a reason to compare, not a basis for declaring one structure universally superior.

Do not present historical investment performance, a low fund count, target-date fund use, collective investment trusts, or a fiduciary label as proof of a better participant outcome.

Map payroll and contribution operations

The employer remains a critical source of payroll, census, and contribution data. A centralized plan can still fail at the employer-to-provider handoff.

Document:

• payroll systems and locations;
• file format and transfer method;
• deferral, match, and nonelective contribution calculations;
• pay-date and deposit calendar;
• new-hire, eligibility, and termination feeds;
• compensation and ownership changes;
• loan and garnishment data;
• error reports and reconciliation;
• approval and segregation of duties;
• correction escalation;
• participant notice support; and
• records retained by the employer.

Run a parallel test before the first live payroll. Reconcile payroll totals, participant allocations, plan trust activity, and employer records after each early cycle.

Ask what happens if:

• the employer submits a late or incomplete file;
• a contribution does not reconcile;
• payroll changes vendors;
• an employee changes entities;
• a worker was misclassified;
• a deferral election is not implemented;
• a loan repayment is missed; or
• the PPP identifies an employer-level failure.

Central administration does not make inaccurate employer data accurate.

Treat cybersecurity as plan governance

PEPs and their providers hold participant personal information, payroll data, account credentials, and plan assets across a network of systems.

The Labor Department’s cybersecurity guidance recommends evaluating:

• a formal security program;
• recognized standards and independent control assessments;
• annual risk assessments;
• access controls and multifactor authentication;
• encryption in transit and at rest;
• cloud and third-party risk management;
• vulnerability and patch management;
• personnel screening and training;
• business continuity and disaster recovery;
• incident detection and response;
• breach-notification timing;
• data use, sharing, retention, and destruction;
• insurance; and
• prior incidents and remediation.

Map data among the employer, payroll company, PPP, recordkeeper, trustee, investment providers, advisers, and participants. The contract should state who can access which data, why it may be used, when an incident must be reported, who investigates, and how the parties cooperate.

Do not upload a census or participant data through a general marketing form.

Review participant service and communication

Ask how employees will:

• enroll and change deferrals;
• choose investments;
• obtain the summary plan description and required notices;
• find fee and investment information;
• designate beneficiaries;
• request loans, hardships, and distributions;
• submit a claim or appeal;
• handle a qualified domestic relations order;
• obtain assistance in accessible languages and formats;
• report fraud or account-access issues; and
• escalate an unresolved complaint.

Review:

• contact channels and service hours;
• response and processing standards;
• abandoned-call and complaint data;
• identity verification;
• mobile and web accessibility;
• education versus individualized advice;
• advice-provider compensation and conflicts;
• data use and cross-selling; and
• how the employer receives and resolves recurring issues.

A plan can be easier for the employer yet frustrating for participants. Participant service belongs in the selection and monitoring record.

Plan the transition into the PEP

If the employer has an existing plan, create a written conversion map for:

• plan document and amendments;
• fiduciary and board or committee approvals;
• participant notices;
• blackout period;
• payroll mapping;
• participant elections;
• investment mapping and liquidation;
• default investments;
• outstanding loans;
• beneficiaries;
• qualified domestic relations orders;
• unvested balances and forfeitures;
• pending distributions;
• Roth and pretax sources;
• employer contributions and testing;
• records transferred and retained;
• final or successor Form 5500 responsibilities;
• provider termination fees; and
• post-conversion reconciliation.

Identify which action is a plan merger, spin-off, transfer, termination, restatement, or other legal event. Qualified counsel and the providers should confirm the sequence.

Do not say that joining a PEP avoids conversion work or guarantees a seamless transition.

Understand exit terms before joining

Federal law restricts unreasonable limitations, fees, or penalties on ceasing participation, distributions, and permitted asset transfers. That does not mean every exit is immediate or cost free.

Ask the PPP to explain:

• employer notice and approval requirements;
• available exit dates;
• plan amendment or successor-plan steps;
• asset-transfer method and timeline;
• investment liquidation or in-kind transfer;
• market-value adjustment, surrender, redemption, or trading restrictions;
• employer and participant fees;
• treatment of current and former employees;
• outstanding loans;
• unvested balances and forfeitures;
• pending distributions and claims;
• records and data export;
• final payroll and contribution reconciliation;
• responsibility for corrections discovered after exit;
• participant communications;
• fiduciary responsibility during transition; and
• support if the PPP terminates the PEP or ceases operations.

Run three exit scenarios:

1. the employer voluntarily moves to another PEP;
2. the employer establishes a single-employer plan after growth or a change in needs; and
3. the employer is sold, downsizes, closes, or fails to cooperate with the PPP.

The Labor Department specifically recommends understanding restrictions, fees, timing, penalties, market-value adjustments, and what happens to employee accounts before selection.

Evaluate small-employer tax credits separately

Federal law provides certain credits for eligible small employers that establish qualifying retirement arrangements or make qualifying contributions. Eligibility depends on employee counts, compensation, prior-plan history, controlled groups, plan year, contribution type, and other statutory requirements.

Ask the employer’s qualified tax adviser to review current Form 8881 and its instructions using the employer’s facts. Confirm:

• whether the employer is eligible;
• which plan is the eligible plan;
• which year is the first credit year;
• which employees count;
• which startup, automatic-enrollment, or employer-contribution costs qualify;
• how related employers and predecessor plans affect eligibility;
• who paid each cost or contribution; and
• what records support the return.

Do not use a tax credit to make an otherwise unsuitable PEP appear cost free.

Establish an ongoing monitoring file

Monitoring does not require running the PPP’s daily operations. It does require a reasonable, documented process.

At an agreed interval, review:

• Form PR and Form 5500 changes;
• PPP ownership, financial condition, litigation, enforcement, and insurance;
• named fiduciaries and delegated responsibilities;
• services delivered against the agreement;
• all fees and compensation against disclosures and invoices;
• investment process, lineup, defaults, fees, and conflicts;
• employee eligibility, contribution, testing, and correction reports;
• payroll reconciliation;
• participant complaints and service data;
• cybersecurity controls, audits, incidents, and remediation;
• business continuity;
• plan amendments and legal developments;
• the employer’s workforce, related entities, and other plans; and
• whether the PEP still fits compared with feasible alternatives.

Record the questions asked, documents reviewed, people involved, issues found, responses received, and follow-up date.

Nebraska-employer due-diligence worksheet

Employer and objectives

• Legal employer and EIN:
• Related entities and ownership:
• Workforce and locations:
• Current plan:
• Reason for evaluating a PEP:
• Plan features that are essential:
• Internal HR, payroll, finance, and governance capacity:
• Expected business or ownership changes:

PEP identity

• Legal plan name:
• Plan number:
• Plan type and Code section:
• PPP legal name and EIN:
• Form PR filing identifier:
• Latest Form 5500 and Schedule MEP:
• Named fiduciaries:
• Investment fiduciary:
• Trustee or custodian:
• Recordkeeper:
• Other affiliated and unaffiliated providers:

Retained employer duties

• PPP selection and monitoring:
• Other named-fiduciary selection and monitoring:
• Investment duties retained:
• Plan-design elections:
• Payroll and contribution duties:
• Census, ownership, and related-plan reporting:
• Participant communication:
• Correction responsibilities:
• Cybersecurity controls:
• Exit decisions:

Cost and conflicts

• Employer-paid fees:
• Plan-paid fees:
• Participant-account fees:
• Investment expenses:
• Direct PPP compensation:
• Affiliate compensation:
• Third-party compensation:
• Revenue sharing:
• Cross-selling or data use:
• Startup and conversion costs:
• Exit and transfer costs:

Operations

• Payroll integration:
• Contribution timing and reconciliation:
• Testing and correction:
• Participant service:
• Cybersecurity and incident notice:
• Service levels:
• Business continuity:
• Records access and export:
• Monitoring reports:

PEP comparison worksheet

Require each finalist and the single-employer alternative to use the same employer census and requested features.

Do not compare only the headline per-participant fee.

Fifteen questions for a pooled plan provider

1. What is the legal name, EIN, and current Form PR filing identifier for the PPP?
2. Which PEP, plan number, Form 5500, and Schedule MEP would cover our employees?
3. Which named fiduciary, administrator, investment, and operational duties do you accept in writing?
4. Which fiduciary and non-fiduciary duties remain with us?
5. Who selects and monitors the investment menu and default, and has the PPP appointed an ERISA Section 3(38) investment manager?
6. Which plan features are mandatory, optional, or unavailable?
7. How do you perform employer-level coverage, nondiscrimination, top-heavy, compensation, and contribution-limit work?
8. What do you need from our related entities, payroll, workforce, and other plans?
9. What is the complete direct and indirect compensation of the PPP, affiliates, investments, and other providers?
10. How do you use participant and employer data, including for cross-selling?
11. What independent cybersecurity assessments, incident history, insurance, access controls, and notification terms can we review?
12. What service levels, complaint reports, and escalation paths apply?
13. What happens if our data or contributions are late or wrong?
14. What happens if we leave, are acquired, close, or you stop operating the PEP?
15. Which records, reports, and data will we receive for ongoing monitoring and an eventual transition?