Both PEO 401(k)s and Multiple Employer Plans (MEPs, or the newer Pooled Employer Plans — PEPs) pool unrelated employers into a single retirement plan, reducing per-employer compliance burden. The difference: PEO 401(k) only fits PEO clients; standalone MEPs/PEPs are available without PEO co-employment.
| PEO 401(k) | Standalone MEP/PEP | |
|---|---|---|
| Co-employment required | Yes — must be a PEO client | No |
| Plan sponsor | PEO | Pooled Plan Provider |
| Compliance burden | PEO handles | PPP handles |
| Fiduciary liability | PEO assumes | PPP assumes |
| Fees | Bundled into PEO PEPM | Direct per-participant fees |
PEO 401(k) wins when: you're already using a PEO for HR offload — adding 401(k) is incremental and bundled.
Standalone MEP/PEP wins when: you want a 401(k) without entering PEO co-employment for everything else.
If you're going PEO anyway, the bundled 401(k) is usually the path of least resistance. If you don't want PEO co-employment, MEP/PEP gives similar pooling benefits.
PEO 401(k) wins when: you're already using a PEO for HR offload — adding 401(k) is incremental and bundled.
Standalone MEP/PEP wins when: you want a 401(k) without entering PEO co-employment for everything else.
If you're going PEO anyway, the bundled 401(k) is usually the path of least resistance. If you don't want PEO co-employment, MEP/PEP gives similar pooling benefits.
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