While all the attention in the retirement plan world last week was on the One Big Beautiful Bill, cue the overly dramatic headlines and LinkedIn humblebrags\u2014there was another important development flying under the radar. On July 1st, the Department of Labor quietly submitted a request to the Office of Management and Budget (OMB) that, to those of us who live and breathe ERISA, felt like a \u201chey, pay attention!\u201d moment. It appears the DOL is teeing up a Request for Information (RFI) on pooled employer plans (PEPs). And let me be clear: I love PEPs. But we need more guidance.<\/p>\n
Let me explain.<\/p>\n
The OMB\u2019s regulatory dashboard (yes, I\u2019m the guy who checks that) now shows a pre-rule submission from the DOL focused on Section 101 of the SECURE Act, the very section that birthed PEPs by giving unrelated employers the ability to band together under one defined contribution plan, operated by a pooled plan provider (PPP). And while that\u2019s been a game-changer for many of us in the retirement space, it\u2019s also been a frustrating exercise in ambiguity.<\/p>\n
The Department\u2019s statement says it wants to consult a \u201cdiverse set of stakeholders,\u201d including employers, employees, and service providers, to determine where regulatory or other guidance would help in establishing and operating PEPs. In other words: we\u2019re finally going to have the grown-up conversation about what\u2019s working, what\u2019s not, and what guardrails are missing.<\/p>\n
PEPs Were Supposed to Be Easy. They\u2019re Not.<\/p>\n
On paper, PEPs are beautiful. Open MEPs, no commonality requirement, no industry restriction, no need for employers to even know each other, other than having the good sense to offer a retirement plan. Section 101 even took a chainsaw to the \u201cone bad apple\u201d rule, ensuring that a mistake by one participating employer doesn\u2019t ruin the plan for everyone. In theory, it was a new dawn for small and midsized businesses, finally a way to pool resources, reduce costs, and offload fiduciary liability to a professional PPP.<\/p>\n
But in practice, the DOL and IRS have left just enough open questions to make a lot of people nervous.<\/p>\n
What are the exact responsibilities of the pooled plan provider? What is the extent of their fiduciary oversight? What does operational compliance look like when you have 200 different employers, each with unique demographics, payroll systems, and HR practices? Can a PPP reasonably ensure compliance across that diversity without becoming a glorified babysitter? And how are recordkeepers, TPAs, and advisors supposed to coordinate in this new, semi-centralized structure?<\/p>\n
PEPs were sold as plug-and-play. But too often, what you get is plug-and-pray.<\/p>\n
Here\u2019s Why This Matters<\/p>\n
Look, I\u2019ve been a fan of PEPs from day one. I\u2019ve helped plan providers and advisors build PEP platforms, and I\u2019ve watched some of them scale faster than you can say \u201cSECURE 2.0.\u201d I also know the pain points. I know the PPPs who thought this would be easy and then got a rude awakening when their plan got flagged during a DOL audit because one adopting employer didn\u2019t process deferrals timely.<\/p>\n
Section 344 of SECURE 2.0 now requires the DOL to study the PEP industry and provide Congress with a report, including recommendations, within five years. That clock is ticking. We don\u2019t have five years to wait for clarity. We need it now, especially as more providers try to enter this space, and more employers consider joining a PEP rather than sponsoring their own plan.<\/p>\n
Let\u2019s also be honest: some PEPs out there are simply bundled garbage. Built with the same inefficiencies, same opaque fee structures, and same poor participant outcomes that gave MEPs a bad name ten years ago. If we\u2019re serious about making PEPs a success\u2014and we should be\u2014we need guidance that distinguishes quality from chaos.<\/p>\n
The RFI Is Our Chance to Speak Up<\/p>\n
An RFI doesn\u2019t have the glamor of a final regulation or the panic of a prohibited transaction class exemption, but it\u2019s the first step in shaping policy. The DOL is essentially saying: \u201cTell us what you need.\u201d And as someone who\u2019s spent 25 years navigating the potholes of retirement plan compliance, I plan to take them up on the offer.<\/p>\n
So should you. If you\u2019re a pooled plan provider, an advisor using a PEP platform, a TPA helping run one, or an employer thinking about joining one\u2014this is your moment. Let the DOL know where the confusion is. Tell them what\u2019s working. Show them what\u2019s broken.<\/p>\n
Because I still believe in PEPs. I believe in their ability to expand coverage, lower costs, improve outcomes, and make small businesses more competitive in the retirement benefits arena. But belief only goes so far. What we need now is clarity, structure, and rules that support innovation without inviting chaos.<\/p>\n
PEPs are not a fad. They\u2019re a fundamental shift in how we think about retirement plans for small employers. Let\u2019s make sure the DOL gives us the framework to do them right.<\/p>\n
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