In 2024, Pooled Employer Plans (PEPs) stand as a transformative force in retirement planning, strategically addressing the challenges posed by the proliferation of small retirement plans in response to societal shifts. Unlike fleeting trends, PEPs have surfaced as a direct response to the surging interest of wealth advisors in 401(k)s and the convergence of wealth and retirement within workplace dynamics. Despite experiencing slower-than-anticipated growth, marked by the filing of over 500 PEPs, the industry confronts key inhibitors, notably traditional record keepers whose legacy distribution and pricing models do not align with the distinct demands of PEPs.
The industry is called upon to explore alternative business models and welcome the impending shift, potentially giving rise to increased competition, expedited record keeper consolidation, and the adoption of more efficient solutions in the administration, distribution, and record-keeping facets of the Defined Contribution industry. Notwithstanding these challenges, PEPs persist in gaining momentum, fueled by factors such as SECURE 2.0 tax credits, state mandates, and growing interest from wealth advisors. This trend presents a promising avenue for non-specialist advisors to strategically navigate the intricacies of retirement planning in the evolving landscape of 2024. To delve deeper into this topic, you can read Fred Barstein’s article, “2024 Will Be the Year of the PEPs.”
