Retirement-plan decision guide · Updated August 18, 2026
MEP vs. PEP in 2026: What Employers Still Own
Compare the statutory PEP model with other shared plans, including Axiom's Open MEP with Transamerica as recordkeeper, and see what employers still own.
By Andy Zelt · 11 minute read
Quick answer
What is the practical difference between a MEP and a PEP?
A multiple employer plan, or MEP, is one retirement plan adopted by more than one employer. A pooled employer plan, or PEP, is a type of MEP created by the SECURE Act of 2019 that can include unrelated employers without a common business connection. A registered pooled plan provider sponsors and administers the PEP and assumes significant plan-level duties. Participating employers still must prudently select and monitor that provider, handle decisions not delegated by the plan, and send complete, accurate, timely employee and payroll information.
At a glance
The original version of this article was published in 2011, before pooled employer plans existed. Its core question—whether sharing a retirement plan can reduce the burden on one employer—is still useful. The answer now needs more precision.
A PEP can consolidate filings, administration, and service providers. But “outsourced” is not the same as “unowned.” The most useful way to compare retirement-plan structures is to map decisions, data, deadlines, fees, and escalation paths before comparing sales promises.
MEP, PEP, or single-employer plan: what changes?
MEP is the broad category. It describes a retirement plan maintained by two or more employers. Some traditional MEPs connect employers through a bona fide association, a professional employer organization, or another qualifying relationship.
A PEP is a specific kind of MEP. The SECURE Act of 2019 authorized PEPs to begin operating in 2021. Unrelated employers can participate without needing a shared trade, geography, or association beyond joining the plan. The arrangement must be operated by a pooled plan provider, or PPP, that registers with the U.S. Departments of Labor and Treasury.
Scroll the table horizontally to see all columns.
| Structure | Who can participate? | Plan-level administration | Common tradeoff |
|---|---|---|---|
| Traditional or association MEP | Multiple employers that satisfy the arrangement's eligibility and connection requirements | A shared sponsor or administrator operates the plan under its governing documents | Shared administration, with participation and design choices shaped by the sponsoring group |
| Pooled employer plan | Two or more employers that may be unrelated and need no common interest beyond adopting the plan | A registered pooled plan provider is the plan sponsor, plan administrator, and a named fiduciary | Reduced employer administration may come with less control over investments, vendors, or plan features |
| Single-employer plan | One employer or a group treated as one employer under applicable rules | The employer sponsors the plan and may hire recordkeeping, administration, and fiduciary services | More control and customization, with more direct governance and vendor-management work |
The label alone does not determine quality. Two PEPs can assign services, investment responsibility, fees, cybersecurity obligations, and employer choices differently. Compare the plan document, participation agreement, service contract, fee disclosures, and operating procedures together.
What SECURE 2.0 changes matter to employers in 2026?
First, correct the timeline: the SECURE Act of 2019 created PEPs. The SECURE 2.0 Act of 2022 changed many retirement-plan rules on a staggered schedule. Those changes affect plan operations whether an employer uses a PEP, another MEP, or its own plan.
- Automatic enrollment. Subject to statutory exceptions, many 401(k) and 403(b) plans established on or after December 29, 2022, must automatically enroll eligible employees for plan years beginning after 2024. The plan provider should confirm whether an exception applies and how elections and escalation are administered.
- Higher catch-up limit for ages 60–63. Beginning in 2025, eligible plans may permit a higher catch-up amount for participants who reach ages 60 through 63 during the year. For 2026, the IRS lists an $11,250 limit for most 401(k), 403(b), and governmental 457 plans in place of the regular $8,000 age-50 catch-up limit.
- Roth catch-up for certain higher-paid participants. Beginning in 2026, participants whose prior-year FICA wages from the employer sponsoring the plan exceed the indexed threshold must generally make catch-up contributions on a Roth basis when the plan offers catch-up contributions. For a plan maintained by more than one employer, the IRS rules generally test wages from the participant's common-law employer without combining wages from another participating employer. The IRS lists $150,000 as the 2026 prior-year wage threshold. Payroll and the plan administrator need an agreed method for identifying affected employees and coding deductions.
These are operational examples, not a complete SECURE 2.0 checklist. Eligibility, plan establishment date, plan type, employee population, and plan terms can change the result. The provider should give the employer a written applicability analysis and implementation calendar.
Who owns which responsibilities in a PEP?
The Department of Labor's 2026 PEP bulletin states that the pooled plan provider assumes most administrative and fiduciary responsibilities. It also states that participating employers retain fiduciary responsibility for prudently selecting and monitoring the PPP and remain responsible for decisions not delegated under the plan.
| Owner | Typical responsibilities to confirm in writing | Evidence to retain |
|---|---|---|
| Pooled plan provider | Serving as plan sponsor, plan administrator, and named fiduciary; performing or arranging necessary plan administration; maintaining its Form PR registration; coordinating the PEP's Form 5500 and Schedule MEP filing | Registration record, plan document, service agreement, fiduciary acknowledgments, filing calendar, completed filings |
| Participating employer | Prudently selecting and monitoring the PPP; handling decisions not delegated; supplying accurate employment, census, eligibility, compensation, and payroll data; forwarding withheld contributions promptly | Selection memo, periodic review minutes, fee review, payroll reconciliations, exception logs, transmission confirmations |
| Shared or contract-specific | Enrollment and notice workflows, eligibility corrections, contribution corrections, participant questions, loan and distribution data, cybersecurity events, merger or acquisition changes, and termination from the PEP | Responsibility matrix, escalation contacts, service levels, incident process, correction method, transition plan |
Axiom's arrangement: Axiom sponsors an Open MEP, while Transamerica provides recordkeeping. The sponsor and recordkeeper roles are distinct, and the plan's governing documents control the complete assignment of administrative and fiduciary responsibilities.
Do not accept a blank space between vendors. If the payroll provider says the recordkeeper owns eligibility, and the recordkeeper says the employer owns it, the employer needs the contracts and workflow corrected before the first missed employee or incorrect deduction reveals the gap.
What must payroll and HCM get right?
A PEP's legal structure does not repair a weak payroll feed. For many employers, the greatest day-to-day risk sits in the data moving between HR, payroll, the recordkeeper, and the plan administrator.
- Map plan compensation to payroll earnings. Document which regular pay, overtime, bonuses, commissions, fringe benefits, and other earnings are included or excluded under the plan document.
- Separate deduction types. Pre-tax, Roth, catch-up, loan repayment, and any after-tax contributions need distinct, tested codes and clear effective-date rules.
- Control eligibility dates. Hire date, birth date, hours, service, rehire status, union or class status, and prior service can affect plan administration. Identify the system of record for each field.
- Reconcile every transmission. Compare payroll deductions to the remittance file, provider acceptance report, bank funding, and participant posting. Resolve rejected records promptly.
- Forward contributions promptly. The Department of Labor says employers are responsible for forwarding participant contributions as soon as possible. The outside deadline is not a safe default operating target.
- Keep an exception trail. Late files, missed deductions, incorrect rates, terminated employees, acquisitions, and retroactive changes should have an owner, correction date, and retained evidence.
Where Axiom, Transamerica, and UKG Ready fit: Axiom sponsors an Open MEP, and Transamerica serves as its recordkeeper. Separately, a correctly configured HCM platform can support deduction codes, employee and census data, eligibility inputs, remittance files, and audit history. UKG Ready does not interpret ERISA, decide fiduciary questions, or replace the plan administrator. Axiom can explain its sponsored plan arrangement and help employers design and maintain the payroll and HR data handoffs. Legal, tax, fiduciary, and investment decisions still require the appropriate qualified professionals.
How should an employer evaluate a pooled plan provider?
Start with the provider's Form PR registration, but do not stop there. Registration is a threshold requirement, not a quality rating.
- Roles: Which entity is the PPP, plan administrator, named fiduciary, trustee, recordkeeper, investment manager, and third-party administrator? Which duties are subcontracted?
- Employer choices: Which contribution formulas, vesting schedules, eligibility provisions, automatic-enrollment settings, and investment choices can the employer customize?
- Total fees: What will the employer and participants pay for administration, recordkeeping, investments, advisory services, audits, transactions, corrections, conversion, and termination? Ask for dollars and percentages at realistic asset and participant levels.
- Monitoring evidence: What reports will help the employer review service levels, fees, investment oversight, cybersecurity, complaints, operational errors, and regulatory filings?
- Payroll integration: Is the connection a tested integration, a scheduled file, or manual entry? Who resolves rejected data, and how quickly?
- Corrections: Who identifies errors, calculates corrections, funds any required amounts, communicates with participants, and coordinates government correction programs?
- Cybersecurity: What controls, independent assessments, incident notices, insurance, data-retention rules, and subcontractor standards apply?
- Exit: What happens to records, participant assets, loans, fees, and payroll feeds if the employer leaves the PEP or the provider changes?
Ask the provider to show the answers in controlling documents and operating reports. A proposal deck is useful context; it is not the responsibility matrix.
When might a PEP, another MEP, or a single-employer plan fit?
A PEP may deserve consideration when an employer wants to reduce plan-level administration, values a bundled provider model, and can work within the available plan design. It may also offer purchasing scale, but cost savings are not automatic. Compare all-in fees and services against credible alternatives.
A traditional MEP may fit an employer that already belongs to a qualifying association or professional-employer arrangement and finds the sponsoring group's design and governance appropriate.
A single-employer plan may remain attractive when the organization wants more control over plan design, investments, vendor selection, participant experience, or acquisition strategy—and has the governance capacity to oversee it.
The decision is not “administration or no administration.” It is a choice about where administration sits, how much control the employer keeps, what it pays, and whether the remaining work is explicit and manageable.
Employer due-diligence checklist
- Confirm whether the proposal is a PEP, another type of MEP, or a single-employer plan with bundled services.
- Verify the pooled plan provider's Form PR registration and identify every subcontracted provider.
- Obtain the plan document, participation agreement, service agreement, fee disclosures, and exit provisions.
- Document which fiduciary and administrative duties the provider accepts and which decisions remain with the employer.
- Compare total employer and participant fees using the same employee count, asset level, and service assumptions.
- Test the payroll file, deduction codes, eligibility fields, effective dates, and rejected-record process before launch.
- Create a contribution-remittance calendar with named primary and backup owners.
- Define the recurring reconciliation among payroll deductions, funding, provider acceptance, and participant posting.
- Set a documented cadence to monitor the PPP, fees, services, cybersecurity, filings, and unresolved errors.
- Have ERISA counsel and qualified retirement-plan advisers review the final structure and documents.
Frequently asked questions
Does joining a PEP eliminate the employer's fiduciary responsibility?
No. The PPP assumes significant plan-level administrative and fiduciary duties, but the Department of Labor says participating employers retain fiduciary responsibility for prudently selecting and monitoring the PPP and responsibility for decisions not delegated under the plan.
Is a PEP the same as a PEO?
No. A PEP is a pooled employer retirement plan. A PEO is a professional employer organization that provides employment-related services. A PEO may be involved with a retirement arrangement, but the terms describe different things.
Does SECURE 2.0 require an employer to join a PEP?
No. SECURE 2.0 changed many retirement-plan rules, but it does not require an employer to adopt a pooled employer plan. The SECURE Act of 2019 created the PEP structure.
Can UKG Ready administer a PEP?
UKG Ready can support configured payroll deductions, employee data, files, and audit history used in a retirement-plan workflow. The PEP's registered pooled plan provider and its contracted specialists administer the plan. Confirm the exact integration and ownership model with the provider.
Who sponsors Axiom's Open MEP?
Axiom sponsors the Open MEP. Transamerica serves as the recordkeeper. The plan documents and service agreements define the remaining administrative, fiduciary, investment, and participating-employer responsibilities.
What is the annual administration fee, and what can an employer choose?
The annual third-party administration fee for Axiom's Open MEP is $1,250 per year. Each participating employer can choose its waiting period, company match, and age requirement.
Sources and review notes
- U.S. Department of Labor: 2026 Pooled Employer Plan Bulletin
- U.S. Department of Labor: SECURE Act of 2019 resources
- U.S. Department of Labor: Retirement Responsibilities for Employers
- U.S. Department of Labor: Tips for Hiring a Service Provider with Strong Cybersecurity Practices
- Internal Revenue Service: 2026 Catch-Up Contribution Rules
- Internal Revenue Service: Publication 560, Retirement Plans for Small Business
Primary sources checked August 18, 2026. Axiom's sponsor role, Transamerica's recordkeeper role, the $1,250 annual third-party administration fee, and the employer's waiting-period, company-match, and age-requirement choices were confirmed by Axiom founder Andy Zelt on August 18, 2026. Original article published October 4, 2011; substantially rewritten for current review. Because plan terms and government guidance can change, confirm the final arrangement with qualified ERISA counsel and retirement-plan advisers before publication or adoption.
Want to explore Axiom's Open MEP?
Axiom sponsors the Open MEP, Transamerica serves as recordkeeper, and participating employers can select their waiting period, company match, and age requirement for a $1,250 annual third-party administration fee.