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Do I Join a PEP or Offer My Own 401(k) Plan?

When it comes to offering retirement benefits, employers today have more choices than ever before. Two standout options are the Single Employer 401(k) Plan and the newer Pooled Employer Plan (PEP). Both are designed to help employees save for retirement, and both can be excellent solutions depending on a company’s size, goals, and internal resources.


But how do you know which one is right for your organization?


Pink flamingo floaties in a pool. Text: "Join a PEP or Offer a Standalone 401(k)?" Spectrum Investment Advisors logo in corner.

Here’s a closer look at the key differences, benefits, and ideal use cases for each plan structure. These can help you make an informed, confident choice that supports both your business and your employees’ future.


What Is a PEP?

A Pooled Employer Plan (PEP) allows multiple unrelated businesses to participate in one group 401(k) plan, pooling their resources while outsourcing most of the administrative and fiduciary responsibilities.

With Spectrum’s PEP, known as the Spectrum Pathway Group 401(k) Plan, employers benefit from:

·         Shared plan expenses

·         Reduced fiduciary liability

·         Simplified plan oversight

·         Plan customization options

·         Premium, low-cost investment options

·         Advanced employee engagement tools

·         Tax credits available for new plans

It’s an efficient and cost-effective way to offer a competitive retirement plan. While especially attractive for small to mid-sized businesses, it is also a strong option for companies of any size that want to reduce complexity.


What Is a Single Employer Plan?

A standalone 401(k) is sponsored by a single employer, hence the name. A Single Employer Plan is tailored specifically to that organization. It offers greater customization and provider choice but typically requires more internal oversight or third-party coordination.

Key benefits of Spectrum’s 401(k) services include:    

  • Flexible plan design options to meet diverse workforce needs

  • Custom investment lineups

  • Direct control over service providers

  • One-on-one guidance from the Spectrum team

  • Robust employee education and financial wellness programming

This solution is ideal for businesses with the capacity and desire to tailor their plan to specific compensation structures, workforce demographics, or long-term growth strategies.


When Does a PEP Make Sense?

A PEP may be the right fit if your company:

  • Wants to reduce its fiduciary and administrative burden

  • Prefers a streamlined solution with fewer reporting requirements

  • Is a smaller business looking to offer retirement benefits without large overhead

  • Needs a plug-and-play plan to comply with state mandates

  • Seeks access to premium services at pooled pricing

With a single tax form, consolidated plan audit, and robust employee engagement features like seamless enrollment, targeted messaging, and a free financial wellness platform, Spectrum’s PEP is a powerful solution for simplifying retirement readiness.


When Is a Single Employer Plan a Better Fit?

A standalone plan may be more appropriate if your organization:

  • Has complex ownership or compensation structures

  • Requires unique plan design elements

  • Wants to maintain complete control over plan administration

  • Has the internal resources (or existing vendor relationships) to manage plan operations

  • Prioritizes a fully tailored benefits experience for employees

Spectrum supports 401(k) sponsors every step of the way, from investment selection and fiduciary oversight to year-end census data collection and annual plan audits. We serve as an extension of your HR and finance teams, helping you manage responsibilities while maximizing plan performance.



Chart compares Single Employer 401(k) Plan and Pooled Employer Plan (PEP) on design, admin, liability, cost, compliance, fit for companies.

Spectrum's Promise: Support, Service, and Strategy

No matter which plan structure you choose, Spectrum Investment Advisors is here to help you make the most of your retirement benefit. Our dedicated team acts as your partner in every stage of plan development and ongoing support, whether you're just starting out or looking to enhance your current offering.


Ready to Explore Your Options?

Let’s talk through your business goals, resources, and workforce needs to determine whether a PEP or a standalone 401(k) is the best fit. At Spectrum, we don’t believe in one-size-fits-all. We believe in what fits you.

 


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