There are now many different retirement plan options for employers. It is becoming more common to see Pooled Employer Plans (PEPs) and SIMPLE IRAs evaluated against one another. Both types of plans can be good options for the right situation. We take a look at the differences between the two plans here:
| PEP | SIMPLE IRA | |
| Definition and Purpose | Provide the benefits of a 401(k) Plan at a lower price point and with outsourced administration. | Designed for small businesses willing to accept limited contribution options. |
| Eligibility | No restrictions on number of employees. | Limited to businesses with less than 100 employees. |
| Employee Deferral Limits (2025) | Employee contributions capped at $23,500, additional $7,500 catch-up for age 50+, $11,250 for age 60-63. | Employee deferrals capped at $16,500, additional $3,500 catch-up for age 50+, $5,250 for age 60-63. |
| Employer Contributions | Flexibility to make Profit Sharing, Safe Harbor, or Matching Contribution. No employer contribution is also an option. | Employer contributions at 3% match, or 2% non-elective. |
| Plan Administration and Support | Serviced by a co-fiduciary, providing support for both the employer and participants. | Each employee is responsible for their own individual brokerage account. |
Both SIMPLE IRAs and Pooled Employer Plans offer valuable retirement benefits for employees and employers. The choice between the two depends on factors such as the size of the business, administrative preferences, and the willingness to take on fiduciary responsibilities. It’s essential to consult with a financial advisor or retirement plan expert to determine which plan aligns best with your organization’s goals and workforce structure.
Looking to start a plan or make changes to your current plan? Contact our team!