Vestwell Expands MEP and PEP Solutions

Vestwell Holdings Inc., a digital recordkeeping platform, announced last week that it has expanded its pooled and multiple employer plan solutions, as the SECURE 2.0 Act of 2022 now permits more flexibility and provides more options for these types of plans.  

The new offerings include a range of “affordable 401(k) plan options” for advisers to offer small and medium-sized business clients, according to a press release. These plan options are available to both existing and new 401(k) plans. 

Vestwell provides a full digital plan setup and onboarding process for advisers, third-party administrators and payroll providers to manage and scale multiple plans simultaneously. The new MEP offering is designed to support professional employer organizations, associations, franchises and small business affiliates, the press release stated. 

“We’re proud to expand our pooled and multiple employer plan solutions and offer advisers additional tools for serving the small-plan market, delivering on the high level of inbound industry demand,” stated Richard Tatum, president of workplace savings at Vestwell, in a press release.  

SECURE 2.0’s Impact on MEPs and PEPs 

Under SECURE 2.0, 403(b) plans are now allowed to be a part of a multiple employer plan or pooled plan arrangement. This applies to plan years that began in 2023.  

Rosie Zaklad, principal of Groom Law Group, Chartered, said on a panel at the PLANSPONSOR National Conference in Orlando, Florida last week that this new provision can help small nonprofit organizations expand access to retirement savings.  

“This might be something that’s [of interest] to a small nonprofit that maybe doesn’t want to have their own plan, but they want to offer this benefit to retirees or to their employees,” Zaklad said.  

Pooled employer plans may also designate a named fiduciary (other than an employer in the plan) to be responsible for collecting contributions to the plan and for implementing appropriate procedures. Previously, it was unclear who owned the task of collecting contributions.  

Employers who join a MEP or PEP are eligible to earn start-up credits, as well. SECURE 2.0 provides clarity on this and makes this credit retroactively effective beginning with taxable years after December 31, 2019. 

Increasing Access to Retirement Savings 

Vestwell’s expanded solution also includes simplified administrative features and an extra layer of protection against fiduciary risks, providing compliance oversight typically only found in larger plans, according to the firm’s release. 

MEPs, PEPs and group of plans (as created by the 2019 SECURE Act) offer small businesses significant opportunities to expand retirement plan access to greater numbers of employers and employees, Vestwell argues. 

“As nearly half of the American workforce does not have a retirement savings plan through their employer, there is a great opportunity ahead for advisers to support the implementation of workplace savings programs, especially for small businesses typically excluded from offering these benefits,” Tatum said.  

Leading the expansion at Vestwell is Eli Landow, who was recently promoted to division vice president and head of institutional sales, along with Kevin Gaston, director of plan design and institutional consulting.